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Divorce is also referred to as the death of a marriage, and the IRS does not necessarily consider the same. Tax-wise, your joint filings in the past are a bound contract that your divorce decree cannot legally annul.

A lot of people are simply appalled because even after a judge orders their ex-spouse to pay back their taxes, they are still being knocked on by the IRS.

At Leading Tax Group, we are in the business of protecting clients against the financial consequences of tax negligence by their former partner. It is important to know how the tax debt is distributed and how to hedge to achieve your future financial life after the divorce.

The assumption that the most perilous one you can make in life is that the IRS is interested in your divorce agreement. In case you have been co-filing a joint return (Married Filing Jointly) together with your husband or wife, you have become joint and severally liable.

This means:

• IRS is in a position to recover 100 percent of the debt on either of the spouse.
• A divorce court of a state does not bind the IRS.

When your former spouse cannot be contacted or does not own any property, the IRS will attack the party with the greatest collectible assets, regardless of the income earner.

The manner in which the courts treat tax debt would very likely be different depending on where you live.

When a person enters into debts throughout the marriage, as a rule, these debts are treated as community debt. This implies that the court will normally divide the liability 50 -50, whether the cause was by the defendant or not.

It is what is fair that is examined by the court, as opposed to a 50/50 division. Such aspects as earning potential and financial contribution are considered during the assignment of debt.

In case you believe that your spouse is concealing earnings or making some fanciful deductions, or just refuses to pay what he is supposed to pay, the most appropriate defense would be never to file jointly again.

This change to Married Filing Separately (MFS) leads to a psychological barrier between your taxes. Although MFS can cause more of a higher tax rate, it is a certainty that you will only have to pay your own tax payment.

The IRS does not follow your divorce decree, but your ex-spouse does. An effective Tax Indemnification and Hold Harmless Clause should be incorporated by your attorney.

• This provision must mention that in case the IRS collects a debt on behalf of your ex, the court appointed to your ex will have to compensate you for the tax, interest and penalties/legal charges.
• It gives you the legal grounds to be able to sue your former spouse in the civil court, so that the IRS can reimburse you the money they took.

In case you are already divorced, and the IRS is chasing you because of your ex-spouse’s misdeeds and misfilings, you are a possible candidate for the Innocent Spouse Relief (IRS Form 8857). This is a petition to cut off your liability. There are three types:

• Classic Innocent Spouse Relief: In those cases when your ex-spouse missed out on tax returns (such as by not reporting their income) and where you had no reason to notice that they did.
• Separation of Liability: This gives the taxation bill to you according to your respective incomes. Only the now-divorced or legally separated can use it.
• Equitable Relief: A more general provision when the former two fail, but it would be unfair in the extreme to make you liable (e.g., in cases of domestic violence or financial coercion).

It is dangerous when one goes through these waters alone. To establish the existence of knowledge, IRS Criminal Investigation or civil auditors consider the education level and activity in family finances.

A tax attorney is an intermediary who has to submit the facts that should prove that you are not guilty and has to negotiate with the IRS or the state authorities, such as the California Franchise Tax Board (FTB).

The debt of tax does not necessarily have to be an inseparable connection with the past. Knowing what joint liability is and using such devices as the Indemnification Clause or the Innocent Spouse Relief will help you to separate your financial future from the misjudgment of the ex-spouse.

Yes. In case you file a joint return, and your spouse has the so-called offset debts (such as child support or student loans), the IRS can claim your share of the money. In order to avoid this, you should make a 8379 Form (Injured Spouse Allocation). This will enable you to get your own fair portion of your refund in advance before it is dissipated in paying the debts of your spouse.

California is a community property state, and thus, it is a bit difficult but not impossible. There is also an Innocent Spouse Relief by the Franchise Tax Board (FTB). In the event of federal relief being granted to you by the IRS, the FTB usually (also not always) goes in its footsteps. You need to submit the FTB Form 705 to obtain relief at the state level in terms of California income taxes.

In cases where you were a victim of domestic abuse or have been coerced into signing a falsified or no-pay refund, the knowledge that this requirement of relief is frequently dispensed with. The IRS understands that the threat of revenge will keep a spouse quiet when filing an appeal of the return. In such a situation, an Equitable Relief claim depends on documentation of abuse.