The Doctrine Of Innocent Spouse: Part 1

Posted on April 19, 2012

Today and tomorrow we talk about something called the doctrine of Innocent Spouse. Innocent Spouse is typically claimed where one spouse is at home or working elsewhere and the other spouse is typically self employed. They file joint returns together and the IRS later audits that return and finds unreported income. Because the return is a joint return, the IRS holds both spouses jointly and severally liable for the additional tax, even though one of the spouses was unaware of or did not benefit from the unreported income. On March 28, 2012, the United States Tax Court issued a ruling against a woman that claimed the Innocent Spouse defense. In this case, the IRS had indicted the husband for criminal tax fraud. The IRS then went after the wife by asserting the civil fraud penalty against her. In ruling against the wife, the Court noted that she was still married to her husband, a negative factor, would not experience an economic hardship because she had assets, had reason to believe that her husband would not pay the tax in issue and received a significant benefit from the unpaid taxes. Although the wife also alleged abuse, which is another factor the Court can consider, her allegations were vague and unsupported. Do you have tax returns that may not be honest because of your spouse