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.
In March 2019, the petitioner filed an objection with the IRS to his ex-wife’s request for relief, claiming that he did not receive notice of her request and therefore lacked an opportunity to file a timely objection. In addition, the petitioner sought innocent spouse relief on his own behalf. The IRS determined that the petitioner was not entitled to relief because the unreported income was attributable to him. The petitioner appealed the IRS ruling to the Tax Court.
In ruling against the petitioner, the Tax Court agreed with the IRS that the petitioner was not eligible for innocent spouse relief because the errors made in the 2015 and 2016 tax returns related to his own income. Accordingly, the court explained that it lacked the authority to reverse or adjust the innocent spouse relief already granted in favor of the petitioner’s ex-wife. Furthermore, the Tax Court noted that the petitioner appeared more interested in precluding his ex-wife from obtaining innocent spouse relief than he was in obtaining it for himself.
Is the IRS Seeking Payment for Your Former Spouse’s Tax Errors?
If you recently received a notice from the IRS indicating that you are responsible for tax debt relating to a former spouse, you may be eligible for innocent spouse relief. At Brandywine Tax Resolution, we have extensive experience helping prepare petitions for innocent spouse relief on behalf of our clients. To learn more, and to speak with a West Chester tax attorney about your situation, contact Brandywine Tax Resolution at 610-235-7577. You can also reach us through our online contact form.