Taxation & Estate Planning

Does the IRS follow a divorce decree?s statement of responsibility to pay a joint tax liability?

By howardlevy

IRS problems and divorce often come bundled together.  Here is my response to a question I recieved about how a divorce decree impacts the IRS in the collection of an unpaid tax liablity:

My ex was self-employed when we were married, and he never paid his taxes. I made the mistake of signing joint returns. When we got divorced, we signed papers stating he would pay our back taxes, but the IRS coming after me.  Will my divorce decree help?

The decree may have value to you if you believe you are an innocent spouse. The IRS does consider the decree as one of several factors in reviewing your claim.  Those factors include abuse, what you knew about the unpaid taxes, involvement in family finances, and whether you benefited from the unpaid taxes.

Bear in mind that your divorce decree does not, standing alone, bind the IRS. When you signed the return, the liability became “joint and several.”  You became responsible for the accuracy of the return and for the payment of the liability on it, even if it was not yours.  The decree will not automatically make it go away or cause the IRS to shift their attention to your ex.  

If you can prove to the IRS your signature on the joint return was forged or you signed the return under fraud or duress, the IRS will convert your joint liability to a separate one.  This relieves you of paying your ex’s taxes.

You may also have solutions to the collection of the liability against you: Bankruptcy, offer in compromise, uncollectible, or the statute of limitations on collection.

Full post as published by IRS and the Law on March 27, 2009 (boomark / email).