Hire a tax professional to represent you in any type of audit. The goal of the tax professional is to limit the scope of information the agent examines. If the IRS is trying to collect a tax debt that your spouse (or former spouse) incurred, you may qualify as an innocent or injured spouse. If you don't qualify as an innocent or injured spouse, you may qualify for an Offer in Compromise or you may apply for an Installment Agreement. 

Married people usually file a joint return because it reduces the combined tax liability. When you file a joint return, you are jointly and individually liable for any and all taxes, penalties and interest due on that joint return. This is true even if a divorce decree or other agreement states that your former spouse will be responsible for any amounts due on previously filed joint returns.

In most cases, you will need to consult with a tax professional in order to find out if you qualify for innocent spouse relief. Congress took action in 1998 to protect the "Innocent Spouse" and provide relief under certain conditions. This relief falls into three categories: 

  • Innocent Spouse Relief

  • Separation of Liability

  • Equitable Relief

Three Innocent Spouse Defenses

  • A joint return was filed and there is an understatement of tax due to erroneous items by the spouse or former spouse.

  • The party claiming the relief did not know or have reason to know at the time of signing the tax return of the understatement of tax.

  • Taking into account all facts and circumstances, it would be unfair to hold your client liable for the understatement. You need to show that your client had no idea as to what was happening in regard to the disputed items or was financially so uneducated that they could never have understood the tax understatement and how it came about.

Injured Spouse

The difference between Innocent Spouse and Injured Spouse relief is based upon whether the tax liability has been paid or is still outstanding. Injured Spouse relief is sought when you discover that your refund has been applied against your spouse’s past-due tax debt, child or spousal support, or state income tax. In most cases, you will need to consult with a tax professional in order to find out if you qualify for injured spouse relief.

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