The IRS’s Innocent Spouse Clause

“…the IRS wants to collect over $680,000 from me for my ex-husband’s tax avoidance schemes…” excerpt from Elizabeth Cockrel’s story.

Imagine trying to get your life back on track after it has been shredded by divorce. Now imagine you have the Internal Revenue Service breathing down your neck, demanding that you pay them for delinquent taxes, interest and penalties your ex-spouse owes. Taxes you knew nothing about. Taxes you don’t have the money to pay. Taxes you have become completely responsible for because the IRS was unable to collect from your ex. Taxes you became liable for when you signed a joint tax return. Imagine yourself facing bankrupty or worse.

Like countless others, Elizabeth Cockrel lived such a nightmare. She took her battle to the Supreme Court and due largely to her efforts, Congress changed the liability rules for couples who have separated or divorced.

Previously, the IRS allowed exceptions in rare cases where “innocent spouses,” could prove they had no knowledge that the joint returns contained “grossly erroneous items.” That’s not such an easy thing to do in the eyes of the IRS.

In 1998, legislation was enacted that makes it easier for taxpayers to claim “innocent spouse relief,” and, it allows divorced and separated spouses to claim responsibility only for their individual shares of IRS debt (generally the tax each spouse would have owed by filing a separate return). Not every spouse will qualify, but many will.

“…Many married taxpayers file a joint tax return because of certain benefits this filing status allows. If you did so, you may be held responsible for monies due, even if your spouse earned all of the income – And this is true even if a divorce decree states that your spouse will be responsible for any amounts due on previously filed joint returns….”