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  • Writer's pictureP. Diggs-Costen EA, MBA

Innocent Spouse Relief

Updated: Jun 29, 2019

Mike owns XYZ Plumbing company and filed a joint tax return with his wife Pat. The IRS decides to audit their return and discovered during the audit that Mike has substantially underreported his business income and assessed an additional $20,000 tax to Mike and Pat. Pat, a stay at home mother, is unaware that Bob underreported his income. Eventually Mike and Pat divorce and Mike has not paid the tax debt. 

Is Pat technically liable for taxes? Yes, she is because she signed the tax return. However, the IRS has provided options through the Innocent Spouse Relief, particularly when one spouse is a viable collection option and the ex-spouse will experience economic hardship.

I will briefly explain the relief under understatement of income on a jointly filed tax return. There are four main requirements to request relief:

  1. You filed a joint return.

  2.  You did not know about the understatement of tax.

  3.  Pursuing you for collections would create undue economic hardship.

  4.  You and your former spouse have not engaged in a fraudulent scheme such as transferring property.

Further, there are many other factors the IRS will consider upon receiving your request for Innocent Spouse Relief.

Because of the complexity of this issue, we can advise you of your rights on either side of the case and determine if this is a viable option for you.

Contact us today at 770-575-9737!

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