When a married couple files a joint tax return, they are jointly and severally liable for any tax debt. The result is that the IRS can come after either spouse for the total amount of tax owed, even if one spouse was primarily responsible for earning the income and preparing the return. Notably, this also includes any amount of tax that arises due to an error in the preparation of the return. Thus, if a couple files a return and subsequently divorces, it is possible for the spouse who had nothing to do with filing the return to receive a letter from the IRS demanding they settle the tax debt from years earlier. However, the IRS will relieve a spouse of their tax obligations in certain circumstances. This is referred to as the “innocent spouse” rule.
Earlier this year in Farmer v. Commissioner of Internal Revenue, the U.S. Tax Court ruled on a husband’s request for innocent spouse relief after his wife obtained relief years earlier. According to the court’s opinion, the petitioner and his wife filed a joint tax return in 2015 and 2016. Subsequently, the IRS identified deficiencies related to unreported income that were attributable to the petitioner.
By 2018, the petitioner and his wife had divorced in what appears to be a rather messy ordeal. The petitioner’s wife sought innocent spouse relief from the couple’s tax obligations from 2015 and 2016, which she received.