Filing joint tax returns offers married couples some financial benefits and could be a simpler alternative for many couples than filing separately. However, when a couple files a joint return, each must certify with their signature that the return is accurate, and each is liable for the entire tax debt.
If it becomes apparent later that someone made an error or filed a false return, their spouse could be on the hook for back taxes, interest, and penalties. If you learn that the IRS is initiating a collection action based on a return you filed with your spouse, contact a tax attorney immediately. The IRS has a program that can relieve a husband or wife of liability for their spouse’s erroneous or false filing in some circumstances.
A Vienna innocent spouse relief lawyer could examine your potential exposure and advise whether you have a viable claim to be relieved of the tax debt from a joint return. If so, they could help you complete the application and initiate the procedure to free you from liability.
It is important to act when an individual receives an official notice from the IRS. If it concerns a joint return, a spouse has legal responsibility even if they are no longer married, and even if a divorce decree placed tax liability for any joint returns on the other spouse. Ignoring communications from the IRS diminishes the opportunities for settling the matter.
When consulted early in the process, a Vienna innocent spouse relief attorney could investigate the available methods of resolving the dispute. If a spouse acts before two years have passed since the IRS sent its first collection notice, the lawyer could explore whether this specific form of relief is an option.
The IRS recognizes that sometimes when couples file joint returns, one spouse has more knowledge of the couple’s finances than the other. Married couples are not always truthful with each other about financial matters. The IRS provides innocent spouse relief from tax liability to spouses who can prove that they did not knowingly sign a false or erroneous return or have a hand in the deception.
To obtain innocent spouse relief, the taxpayer must file Form 8857. They must demonstrate that the remaining tax liability is due solely to an error that their spouse or former spouse made on the return. The error could be unreported income, an improper deduction or credit, or an incorrect property basis, among others. The spouse also must prove that they had no reasonable way of knowing the return was erroneous or incomplete.
Proving these facts requires professional knowledge and skill. It is important to have a Vienna attorney who is familiar with the IRS’s innocent spouse relief policy and could guide a taxpayer to a positive outcome.
The IRS also allows other forms of relief to spouses in some cases. For example, if a couple is divorced, legally separated, or has not shared a household for at least one year prior to IRS collection efforts, they could seek Separation of Liability. If granted, the IRS would collect only a portion of the amount owing on a joint return and pursue the other spouse for the balance.
Innocent Spouse Relief and Separation of Liability require a taxpayer to request the relief within two years of the IRS’ first collection efforts on the joint return. If a spouse does not act within two years, these methods of escaping full liability for tax owed will be closed.
However, a taxpayer who misses the two-year deadline could request Equitable Relief at any time the debt remains collectable—usually ten years. This form of relief is available if the return was erroneous, or if the return was correct but the tax was not paid. A Vienna attorney could advise whether seeking Equitable Relief is a viable option in a specific situation.
When spouses sign a joint tax return, federal tax law makes them each responsible for their entire tax liability. However, the IRS acknowledges that there are occasions where one individual did not take part in the wrongful activity.
A Vienna innocent spouse relief lawyer could explain how to make your case to the IRS that you should not be responsible for your spouse’s actions. Get in touch with us as soon as you discover a potential controversy.
Pontius Tax Law, PLLC is a tax law firm that strives to resolve sensitive tax problems through trust, dedication and value. The law firm was founded by John Pontius with offices in Washington, DC, Rockville, MD, Bethesda, MD, Vienna, VA, and Alexandria, VA. Mr. Pontius represents individual and business clients with sensitive and serious tax matters before the Internal Revenue Service and state taxing authorities. His client base is local, national, and international.
Over the course of his career, Mr. Pontius has represented businesses and individuals with complex tax issues in the following areas: FBAR examinations, offshore and domestic disclosures, FATCA, FIRPTA, tax planning, unfiled tax returns, release of tax liens and levies, trust fund recovery penalty, IRS and state audit examinations, as well as appeals, penalty abatement, U.S. Tax Court litigation, along with defense of tax fraud and evasion. If you require assistance from a tax lawyer, contact Mr. Pontius to discuss your situation.