Spouses who file joint tax returns are typically both responsible for any deficiency. For example, if the couple pays less than they owe, the IRS can go after either spouse to recover any unpaid amounts. However, sometimes it is unfair to hold one spouse responsible for unpaid taxes, and the IRS will sometimes grant an innocent spouse relief.
Disadvantages of Filing Jointly
Generally, it makes good financial sense for married couples to file as “married filing jointly.” The deductions are greater, and the couple will qualify for more deductions. However, by filing jointly, they are “jointly and severally” liable for any deficiency. This is true even where only one spouse earned income or where one spouse deliberately lied about their income. It’s also true even when the spouse who is responsible for the deficiency dies.
When the IRS needs to collect on a deficiency, it can bring several different actions against either spouse. The IRS may do any of the following:
- Garnish your wages
- Put a lien on your home and other assets
- Levy your bank accounts
Although it generally makes sense to file jointly, there are situations where one spouse is on the hook for tens of thousands of dollars in unpaid taxes through no fault of their own. In this situation, you’ll need a tax attorney to relieve you of IRS collection actions.
Relief is Available
The federal government has recognized the unfairness of holding a blameless spouse responsible for tax deficiencies, so it allows you to claim relief as an innocent spouse. Typically, you will need to prove the following to the IRS:
- You filed a joint tax return.
- There is a deficiency (understatement) related to that return.
- Only one spouse is responsible for the understatement.
- One spouse did not know or have reason to know that there was a deficiency. (This is the “innocent spouse”).
- It is unfair on the facts and circumstances to hold both spouses legally responsible for the deficiency.
- The innocent spouse has requested relief within two years of the IRS beginning collection action.
Some of these elements are easier to prove than others. For example, you can quickly show that you filed a joint tax return by producing a copy of it. The IRS is also well aware of a deficiency, so you won’t have trouble proving that, either.
However, you’ll need a good tax attorney to convince the IRS that you satisfy the other requirements. For example, why shouldn’t you have known that your spouse was reporting an understatement on the tax return? This is a tough standard to meet, especially since you signed the joint tax return. Also, it can be difficult to show why it is unfair to hold you jointly responsible when you had the option of filing “married filing separately.”
Call an Atlanta Tax Attorney Today
Innocent spouses shouldn’t suffer IRS collection actions when they aren’t to blame for errors on a tax return, but you’ll need an aggressive tax attorney in your corner. Jeffrey L. Cohen, Attorney at Law, has three decades of experience in IRS tax law and is available to help. Call for a free teleconsultation at 404-937-1414 or complete an online contact form.