Court Grants Partial Innocent Spouse Relief to Ex-Wife

Posted on December 02, 2018

In a recent case, the ex-wife brought suit against the IRS claiming that she was an innocent spouse related to her tax liability for 2009.  During that year, the husband operated an air conditioning business.  Although the wife was listed as the resident agent of the business, her involvement in the business was minimal.  The husband also persuaded the wife to withdraw $30,000.00 from her 401K to allow her husband to make an investment that subsequently failed.  On their joint tax return for 2009, they listed the withdrawal from the 401K and self-employment income from the husband’s business.  The tax return listed an unpaid liability of nearly $5,000.00.  Although the wife knew that there was a liability on the tax return when it was filed that could not be paid, she believed her ex-husband’s representations that there was an imminent big contract that would pay the liability due to the IRS in full.  The wife filed a claim for innocent spouse relief with the IRS claiming that she was verbally abused in the marriage.  Unfortunately, the IRS denied her request for innocent spouse relief.  The taxpayer then brought suit against the IRS after paying the liability for 2009 in full.  The Court looked at the requirements that a taxpayer must demonstrate in order to be eligible for innocent spouse relief.  After reviewing the facts in the case, the Court ruled against the taxpayer related to the tax on her own withdrawal of funds from the 401K account.  However, the Court held in favor of the taxpayer related to the tax on her ex-husband’s income from his air conditioning business.  Do you owe money to the IRS related to a joint tax return you filed with your ex-spouse?  Call us, we can help.

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