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Can someone facing tax issues qualify for innocent spouse relief?

On Behalf of | Mar 21, 2024 | Tax Law |

Spouses often find creative ways to share marital responsibilities. It is common for each spouse to assume certain obligations related to the household in addition to whatever economic contributions they might make. For example, one spouse might manage the household schedule, while the other maintains the family’s budget. Married couples usually file their tax returns together, a decision that could allow one person to blissfully avoid tax controversies for years.

However, the person not involved with the preparation of taxes could end up implicated by the mistakes of the other. If the Internal Revenue Service (IRS) accuses married spouses of improper financial disclosures or underpaid taxes, both spouses could be at risk of legal and financial complications. Can the spouse who didn’t file tax returns potentially qualify for innocent spouse tax relief?

The IRS understands that one spouse alone might file

Technically, both spouses usually sign off on income tax returns. However, someone who trusts their spouse to be honest and accurate has little reason to go back over the figures in any degree of detail. Thankfully, the IRS recognizes that someone who misrepresents their finances to the government might also gloss over their financial misconduct when talking with a spouse.

In scenarios where one spouse was unaware of financial misconduct on tax returns, they can sometimes qualify for innocent spouse relief under current IRS policies. Innocent spouse relief is available to those living in community property states, including Texas.

The spouse requesting relief needs to assert that they were unaware of the misconduct and typically cannot have derived direct personal benefits from the alleged tax evasion or tax fraud. Someone who successfully qualifies for innocent spouse tax relief can avoid prosecution and also financial responsibility for the taxes that their spouse failed to pay in full. Innocent spouse tax relief is only one of several options available to those facing some kind of income tax controversy with the IRS.

There may be other options available to those facing allegations of underpaid taxes and similar tax errors. Learning more about options for those accused of tax-related misconduct may benefit those concerned about the possibility of financial penalties and prosecution.


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