Einhorn Barbarito Co-Managing Partner Gary R. Botwinick, who co-chairs the firm’s Trusts & Estates and Taxation practice groups, was quoted in an article in USA Today titled “Tax debt in a divorce: Are you responsible for your ex’s taxes?”
The article discusses how divorced individuals can still be held fully liable for tax debt resulting from a jointly filed tax return during a marriage.
“Divorce ends the marriage, but it doesn’t end the joint tax return,” Botwinick tells USA Today. “In practical terms, the IRS can collect 100% of the balance from either former spouse, no matter who earned the income or who caused the problem.”
Botwinick adds that a divorce agreement doesn’t typically change that responsibility in the eyes of the IRS. While a divorce decree may state that one former spouse is responsible for the full bill, if that person doesn’t pay, the IRS might still pursue the other former spouse for the shared debt.
“The IRS isn’t a party to your divorce, so it isn’t bound by your divorce decree or property settlement agreement,” Botwinick says.
That said, just because an individual is responsible for a shared debt doesn’t necessarily mean they will have to pay all of it. Depending on the circumstances and how the debt came about, an individual may qualify for one of several forms of IRS relief. These programs include innocent spouse relief, separation of liability and equitable relief.
Even if a person doesn’t qualify for spousal relief, they are not completely out of options. Whether or not that person thinks they can pay their tax debt now, “the worst move is ignoring it,” Botwinick says. Rather, if a person is still responsible for debt, they can work with a tax professional or directly with the IRS to make a payment plan.
Read the full article at USA Today.