Many individuals believe that once a divorce is finalized, they are no longer responsible for tax issues connected to their former spouse. Unfortunately, that is not always the case.
When a married couple files a joint tax return, both spouses generally become jointly and severally liable for the taxes owed. This means the IRS may pursue either spouse for the entire balance, regardless of what a divorce judgment or settlement agreement says.
Even if your divorce agreement states that your former spouse is responsible for paying the tax debt, the IRS is not bound by that agreement. If the taxes remain unpaid, the IRS may still attempt to collect from you directly.
This can include:
- Wage garnishments
- Bank levies
- Federal tax liens
- Seizure of tax refunds
- Ongoing penalties and interest
In many cases, taxpayers do not discover the issue until years later when they begin receiving IRS notices or collection letters.
Common Post-Divorce Tax Issues
Post-divorce tax problems often arise when:
- Income was underreported on a joint return
- Tax returns were filed incorrectly
- One spouse handled all financial matters during the marriage
- Payroll or business taxes went unpaid
- A former spouse failed to comply with the divorce agreement regarding taxes
These situations can become especially stressful when the taxpayer had little involvement in the finances or was unaware of the issue altogether.
Innocent Spouse Relief
In some circumstances, taxpayers may qualify for Innocent Spouse Relief or other forms of IRS relief.
Innocent Spouse Relief may be available when:
- A joint return was filed
- The liability resulted from the other spouse’s actions
- You did not know, and had no reason to know, about the issue
- Holding you responsible would be unfair under the circumstances
The IRS evaluates several factors when reviewing these requests, including financial involvement, access to records, education, and whether one spouse controlled the finances during the marriage.
Do Not Ignore IRS Notices
IRS collection matters rarely resolve themselves. Ignoring notices can lead to additional penalties and more aggressive enforcement action over time.
Addressing the issue early may help preserve important resolution options and reduce the risk of escalating collection activity.
At Wilson Tax Law Group, we assist taxpayers with IRS and California tax controversies, including Innocent Spouse claims, collection defense, and post-divorce tax disputes.
Wilson Tax Law Group, APLC is a boutique Orange County tax controversy law firm that specializes in representation of individuals and businesses before federal and state tax authorities with audits, appeals, FBAR, offshore compliance, litigation and criminal defense. Firm founder, Joseph P. Wilson, is a former Federal tax prosecutor and trial attorney for the IRS and California Franchise Tax Board. Wilson Tax Law Group, APLC, is comprised of former IRS litigators & Special Agents, and Assistant US Attorneys from the US Attorney’s Office, Central District of California, Tax Division, which at the time handled both civil tax lawsuits and criminal tax prosecutions on behalf of the United States of America.
For further information, or to arrange a consultation please contact: Wilson Tax Law Group, APLC Tel: (949) 397-2292 (Newport Beach Office) Tel: (714) 463-4430 (Yorba Linda Office)
Disclaimer: This blog post is for informational purposes only and does not constitute legal, tax or financial advice. Please consult with a qualified attorney, accountant or financial advisor for specific guidance related to your circumstances.
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