Divorce is a complicated matter, especially if you and your spouse have significant assets. Although you might think you know every financial detail of your relationship with your spouse, we know all too well that this often isn’t the case. In fact, many people don’t find out about financial issues until it’s too late and they’ve lost out on financial resources to which they are entitled, or someone comes looking to collect a debt.
Neither situation is ideal, but the latter can be frightening. This is especially true when the federal government is involved. In some instances, though, the IRS comes knocking, looking to collect taxes owed, interest on those outstanding taxes, and penalties for failing to pay them. If the taxes involved a business or other significant income, then the amount of money being demanded by the IRS can be overwhelming. But you don’t have to reach into your pocketbook and immediately pay the IRS for something that your spouse has done.
In fact, the federal government often grants tax relief to those who are innocent in the allocation of the outstanding tax debt. For those who are going through divorce, this means that they signed a joint tax return but either didn’t know or had no reason to know that the tax amount was understated on the return. Simply turning a blind eye isn’t enough to protect you.
There are many ways the IRS scrutinizes innocent spouse relief, though. Amongst them are whether the claiming spouse received anything of benefit from the understatement of tax, whether holding you responsible for the tax debt is fair, and you and your spouse have recently separated or divorced.
Dealing with complicated financial matters, like those pertaining to taxes, can be stressful and overwhelming. Yet, the outcome of these issues can set the stage for your post-divorce finances for years, perhaps even decades, to come. Therefore, you shouldn’t leave anything to chance. If you want to know more about what legal options you have available to address your business and tax considerations during divorce, then please think about discussing your situation with a law firm that is well-versed in these matters.