Innocent Spouse Representation
We have successfully represented numerous clients who have been assessed enormous taxes, penalties and interest as a result of spousal action or inaction.
Most married couples have "joint and severable" tax liability for each spouse’s income tax liabilities, meaning both spouses are responsible for the total tax stated on the joint tax return regardless of who earned the income or took the tax benefits, since they file joint income taxes. The IRS and/or applicable taxing agency can collect the liability for the full amount (plus penalties and interest) reported on the tax return from either spouse, regardless of current marital status, and the government may also collect from a subsequent spouse.
The IRS and/or applicable state taxing agency may grant a spouse relief from paying the tax, penalties and interest if the spouse can prove they did not know, or have reason to know, any unreported income and/or erroneous items stated on the return. The IRS and/or applicable state taxing agency may also grant a spouse relief from paying tax when it would be inequitable to hold them responsible for the deficiency.
We have experience assisting many clients in preventing their future spouses from being subjected to “enforced collection” actions by the IRS and/or state tax agencies for the taxes incurred by the former spouse. Marital laws in many states, such as California, provide that income and property from an individual, whose spouse has delinquent tax liabilities, can be seized to pay their tax debts once they are married. This is true even if the tax liabilities were incurred long before this marriage.
We often help clients stay happily married by protecting one spouse from the other’s mistakes, or a former spouse’s mistake.
*The State of Washington (“The State”) assessed a business owner approximately $180,000 of state sales tax liability. After making the assessment, the State attempted to collect the tax from the business owner’s former spouse (our client), and issued a tax warrant against her. Before an Administrative Law Judge, Moskowitz LLP demonstrated why and how our client should not be liable for the tax assessment. The Judge agreed, and ruled in our client’s favor.