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Rogue Valley Tax Tips and Insights: My Spouse ALWAYS did our Taxes…

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Education & Training with First Response Resolution, LLC

Welcome to the Tax Tips and Insights series of First Response Resolution, LLC’s official blog! We are a specialty tax firm practicing right here in Southern Oregon near Medford and the focus of my practice is solving tax problems for individuals and businesses and representing taxpayers before the IRS and State Departments of Revenue. We offer our services online nationwide from the comfort of our client’s homes and will provide services on-site to businesses in our area upon request. Think of our firm as your Financial First Responders who specialize in saving troubled taxpayers. We help people who are struggling with tax problems get their lives back on track so they can focus on what matters most to them.

There has been a LOT of interest this year in the topic of Innocent Spouse Relief. Taxpayers can get into trouble when they have historically filed their tax returns Married Filing Joint but were not aware of the specific details of the return, specifically the understatement of income, or the deduction of items that have no basis in fact or law. Prior to 1928, before Congress allowed Joint Filing, everyone with taxable income filed individual tax returns. This legislation evolved in 1938 to incorporate the Joint and Several Liability provisions that hold each spouse on a Joint Return responsible for ALL of the taxes due. In 1948, the concept of Income Splitting was added to the Internal Revenue Code. As time went on and additional court cases were adjudicated, proceeds from illicit activities were held to be considered taxable income and the IRS and DOJ pursued the spouses of outlaws for the tax due on their spouse’s illegal enterprises. This eventually led to the creation of an Internal Revenue Code (IRC) section pertaining to Innocent Spouse Relief.

Given that IRC § 6013(d)(3) states that if a joint return is filed, the tax shall be based upon the aggregate income and any liability shall be Joint and Several, there had to be circumstances under which a spouse without knowledge of the improper facts presented on the return could seek relief. This is because seeking to collect from the party without knowledge of these issues could lead to inequitable results. The Innocent Spouse may now be a widow, may be separated or divorced, or could have never provided consent or proper signature for the return to be filed. Currently IRC § 6015 specifies the types of relief and conditions that must be met for an Innocent Spouse to qualify for reprieve from the relentless collection efforts of the IRS pertaining to taxes due related to the activities of their current or former spouse.

As stated in our previous post, the IRS does NOT recognize a Divorce Decree, which is as simple as a paragraph included in divorce agreements making one spouse liable for taxes due. This really only lays the foundation for the other spouse to sue their ex when the IRS seizes their assets. The divorce decree will be one item considered under equitable relief, one of the three types of Innocent Spouse Relief, but it doesn’t have the effect of persuading the IRS to walk away from collecting the taxes owed. As we wrap up the series of posts on this popular topic, we will outline the specific types of Innocent Spouse Relief and cover the important concept of whether or not the tax return was a VALID Joint Return.

If you or someone you know is in the midst of an IRS issue, contact me at either 541-293-8449, by email at zach@firstresponseirs.com, or through our website. We specialize in solving tax problems! We will thoroughly investigate and evaluate your specific situation and consider ALL OPTIONS available to you. All discussions are kept strictly confidential, and we offer no obligation initial consultations of up to one hour.

Is your agency interested in having me speak to your team of realtors in person or over Zoom at one of your weekly sales meetings free of charge? I have a presentation developed to address the following:

  1. Taxation and your clients,
  2. Tax tips for saving on your own tax returns, and
  3. Tax Problem Solutions.

 

Contact us today!