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Am I responsible for my former spouse’s tax debt?

On Behalf of | Apr 11, 2024 | Divorce |

Divorce in Mississippi involves property division, which means splitting your marital assets and debts. This can be a complicated process, and when you owe tax debt, the situation can become even more contentious and complex.

Ultimately, you and your spouse will either agree on how any tax debt should be paid or a court will decide for you. If you have a court order stating that your former spouse must pay any owed tax debt, you should be good, right?

Not necessarily. The IRS will still likely come after you for any tax debt from when you were married, even if you have a divorce decree stating your former spouse must pay.

The IRS is generally not concerned about what your divorce decree says. Their only priority is getting their money. The same goes for any other creditor.

Creditors and the IRS are usually not bound by the terms of a divorce decree. This means you can show them a copy of your decree confirming that you are not responsible for paying and it is unlikely to make any difference.

Joint and several liability

Legally, you are still responsible for the debt under the theory of joint and several liability. Either spouse can be held responsible for any tax debt acquired during the marriage, including any interest and fees.

This not only means that you must find a way to pay it if your former spouse is not going to, but you could become subject to creditor harassment and debt collection tactics.

Even worse, the IRS may engage in any of their usual actions to collect the debt, including putting a lien on any real estate you own, garnishing certain wages or seizing your assets.

However, there are options available to you. The IRS allows spouses to be relieved of the obligation of paying owed taxes if their former spouse omitted or entered any incorrect information into a tax return, resulting in an understatement of income.

Innocent spouse relief

This is called innocent spouse relief. You must meet several requirements to qualify for innocent spouse relief.

You must show that the jointly filed return showed an understatement of income due to your spouse’s action. You must show you had no knowledge of the incorrect information when you signed the return.

Additionally, you must show that it would be unreasonable to hold you responsible for paying the owed tax and you and your former spouse did not conspire to defraud the IRS.

You must file for innocent spouse relief no later than two years from when the IRS first began collection activity against you.

Additional evidence that could help

Some other factors that IRS can consider when deciding whether to hold you accountable for the owed taxes is any domestic abuse during the marriage, your physical or mental health at the time you signed the joint return and how much you benefitted from the unpaid taxes.

You can also file a petition for contempt with the court that handled your divorce. If you end up having to pay the tax debt out of your own pocket, you can provide proof of this to the court and ask for an order requiring your former spouse to reimburse you for the amount.