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Q: The IRS has assessed fines and penalties against my former husband and me for taxes due on three tax returns filed while we were still married. I was not involved in the preparation of the returns. Should I be liable?
A: A husband and wife are generally jointly and individually responsible for the entire tax due on a joint return. However, relief from this rule is available under certain circumstances. The most substantial relief will be available to you if you can show evidence that:
A. At the time of the signing of your tax return you did not know, or have reason to know, there was an understatement of tax, and
B. Based on all the facts and circumstances it would be unfair to hold you liable as ... you are innocent.
A key consideration for the IRS will be whether you benefited from the understatement of tax.
If you fail to meet the above criteria you could apply to have your personal tax liability separated from that of your former spouse. The burden will be on you, however, to prove the tax bill owed by you and your former spouse.
For more information, obtain publications 971 and 555 from www.IRS.gov.
This article originally appeared in The Business Owner Journal, the periodical of choice for owners of small and midsize private businesses. All rights reserved, D.L. Perkins LLC. © 2010.
This publication is intended to provide general information on the subject matters covered. It is sold and distributed with the understanding that neither the publisher nor any distributor or advertiser is engaged in providing legal, tax, insurance, investment or other professional advice. The advice of a qualified professional should be sought before any reader applies a concept presented herein to his or her particular situation or business.
D.L. Perkins, LLC is solely responsible for this content.
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