On the Hook for Your Ex's Tax Debt? We Can Help

On the Hook for Your Ex's Tax Debt? We Can Help

• Nov 15, 2021

Divorces and taxes have a few things in common—they can be complicated, unpleasant to go through, and you probably want them over with as quickly as possible. But one thing that’s worse than dealing with either of these things is dealing with both of them at once. One situation that many divorcing spouses find themselves in is sorting out responsibilities for tax debts, either as a part of the divorce proceedings or in the aftermath of their divorce. If you’ve divorced and find yourself still on the hook for a tax debt you believe is your ex’s responsibility, we may be able to help. Here’s how.

What Is Innocent Spouse Relief?

This might not sound like a program for you after you’ve divorced your spouse, but the Innocent Spouse Relief program is designed to offer tax relief to both current and former spouses who don’t believe themselves responsible for their (ex-)spouse’s tax debt. Generally speaking, if you filed a joint return with your spouse, it’s presumed that the IRS can collect any taxes owed from either filer on the return. However, there are some circumstances in which you can request relief from your partner’s (or former partner’s) tax debt.

For example, let’s say that your ex was self-employed. As a self-employed individual, they’re expected to make quarterly estimated tax payments. But they didn’t, so when you filed your last joint return, your tax bill was enormous and included fees for underpayment. Should you be on the hook for the tax debt they created by failing to make regular payments on their income? Well, unless you file for Innocent Spouse Relief, you probably will be.

Isn’t It Settled in a Divorce?

If you’re aware of the tax debt issue when you’re going through your divorce, it’s possible that the judge will order your ex responsible for tax debts. However, the IRS will still be trying to collect that debt from you. The IRS is not privy to your divorce decree, and they’re not legally bound by it either. This means you’ll still be facing those collection issues until you file for Innocent Spouse Relief.

While filing for this relief can, of course, be done while still married, filing for it with a divorce decree in hand—especially one that orders your ex responsible for any tax debts—will make receiving that relief much easier for you.

Does It Have to Be a Recent Debt?

What if your ex’s tax debt is an old one? Does it then become “marital property” in terms of the divorce, requiring you to split it evenly? You’ll be happy to know that Innocent Spouse Relief is actually available for as long as the IRS is legally able to collect those overdue taxes. That means you have a full 10 years to file Innocent Spouse Relief and be freed of your ex’s tax debts.

What about State Taxes?

If your ex’s tax debt is with the state and not the federal government, relief could still be available for you. However, the exact method and rules for receiving that relief will vary by state. Several states follow the same rules as the IRS, but others have their own version of the Innocent Spouse Relief program. We can help you research the provisions in your state so you know if and how you can apply for relief from your ex’s tax debt on the state level.

Are There Any Downsides?

It is important to note that there is one downside to applying for Innocent Spouse Relief: If your request for relief is denied, the IRS will be given more time to collect the tax liability from both you and your spouse. So, if you’re applying for relief on an old tax debt, you might find yourself on the hook for debt that would have otherwise already passed the 10-year collection mark and expired.

How to Apply for Relief

On the surface, applying for Innocent Spouse Relief Sounds simple; just fill out and file Form 8857. However, this form can be confusing and misleading in many ways. For example, many of the sections on the form are actually optional, and request information that isn’t relevant to the relief program. In many ways, the form is designed in such a way that filling it out in its entirety is more likely to rule out relief than to grant it.

It’s important that, when applying for the Innocent Spouse Relief program, you do so with professional guidance to improve your chances of qualifying. At the IRS Advocates, we specialize in helping our clients get the tax relief they deserve. Contact us today for help with receiving Innocent Spouse Relief or any other type of tax debt relief or repayment program.