July 02, 2015
Article by David Glusman, Advisory Services Partner, "Innocent Spouse Tax Relief: Facts and Circumstances Will Prevail," Featured in The Legal Intelligencer
By David Glusman, Partner, Advisory Services
One of the more challenging issues an accountant or attorney will face is when a client receives a notice from the Internal Revenue Service assessing additional tax, penalties and interest. It can become even more interesting when the IRS is assessing significant penalties for intentional understatement, and the client has no idea where the notice came from, where the alleged understatement occurred, and claims not to have signed the tax return. The fact that the client professes no knowledge of the underlying audit or the significant errors and omissions on the tax return will, in a few circumstances, lead the practitioner to discuss the possibility that "innocent spouse" protection may apply.
If the issues being addressed by the IRS notice relate solely to one spouse, and the other spouse knows nothing of either the audit or the issues, it is important to investigate the facts and circumstances pertaining to the client. In some instances, there may be protection for the so-called "innocent" spouse from collection efforts against his or her separate assets by the IRS. Knowing when or if this protection is available, and how to react early in the process, can make a significant difference in the ultimate outcome.
While generally the IRS believes that both individuals named on a joint tax return are jointly and severally liable for all amounts found to be due to the government, there are exceptions.