How the IRS Can Be Notified of a Divorce
If the IRS Finds Fraud
After a divorce, the IRS has three years to audit your finances during the marriage. This period can be prolonged depending on the scale of “discrepancy” or the existence of “fraud.” If there is a discrepancy of more than 25 percent, the review period, or “statute of limitations,” will be extended to 6 years. If fraud is involved, it could extend the review period indefinitely, thus causing the IRS to audit you for fraud.
If You are Innocent and Your Spouse is Not
What happens if you are innocent, but the IRS audits you because of an ex-spouse? In this case, an option that might be available to you is the “innocent spouse relief.” In cases where you are completely innocent, you may ask the IRS to assign the fault to the “right” spouse or the guilty spouse. Three types of cases are possible: (1) innocent spouse relief, (2) separate of liability relief, or (3) equitable relief.
If your spouse failed to report income, reported income improperly, or claimed improper deductions or credits, the Innocent Spouse Relief provides relief from the additional tax you owe.
Separation of Liability Relief provides for the allocation of additional tax owed between you and your former spouse or from a current spouse with whom you are separated due to an item not being reported properly on a joint return. You are then responsible for the tax allocated to you.
Equitable Relief may apply when you do not qualify for Innocent Spouse Relief or Separation of Liability Relief for something not reported properly on a joint return and most generally attributable to your spouse. You may also apply for equitable relief if the correct amount was reported on your joint return, but the tax was not paid with the return.
These are the general rules, but qualifying for these types of relief is taken on a case-by-case basis. This is why it is important to discuss any tax scenarios involving your ex with your divorce attorney or seek professional help from an accountant who specializes in matters like these.
If you are facing a divorce, Stange Law Firm, PC can help. As a firm that focuses exclusively on family law, it has the attorneys with the knowledge and experience to get you what you need in terms of child custody, child support, paternity, and asset and property division.
To schedule a confidential consultation to meet with an attorney, call Stange Law Firm, PC at 855-805-0595 or visit us online.
Source: Divorce Causes Tax Audits, By Cameron Keng, Forbes
