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John E. Pytte Oct. 29, 2021

The IRS collected $80,477,475 from individual income tax and employment taxes in Georgia in 2020, according to the IRS Data Book. Yet many people in Georgia still owe back taxes – or their spouse owes, and they’re wondering if they’re on the hook.

So, are you responsible for your spouse’s (or your ex-spouse’s) overdue taxes? The answer is complicated, but an experienced tax attorney can help you understand the facts of your case.

I am proud to say that I always fight for the truth. My team at Pytte Law and I will take a close look at your situation and help you present the truth to the IRS. I provide expert legal advice to all my clients in Savannah, Hinesville, and throughout Georgia, including Chatham County, Liberty County, Bryan County, and beyond.

Do I Have To Pay My (Ex) Spouse’s Overdue Taxes?

The answer to this question is complicated. Paying overdue taxes for your spouse or ex-spouse depends on several key factors. In some cases, you must pay them, but in others, you may be able to qualify for relief.

If your spouse (or ex-spouse) has overdue household employment taxes, individual shared responsibility payments, business taxes, or a trust fund recovery penalty for employment taxes, these are not eligible for innocent spouse relief.

However, in other overdue tax situations, you may be able to qualify for innocent spouse relief.

What Is Innocent Spouse Relief?

Innocent spouse relief frees you of responsibility for paying tax, interest, and penalties if your spouse or ex-spouse did not report, or incorrectly reported, items on your tax return.

If you are jointly and individually responsible for any tax, interest, and penalties, then you do not qualify for relief. It’s important to know that innocent spouse relief only applies to individual income or self-employment taxes.

Who Qualifies for Innocent Spouse Relief?

To qualify for innocent spouse relief, you must meet all four of the following requirements.

Requirement 1:

You filed a joint return which has an understatement of tax due to erroneous items of your spouse or ex-spouse.

Requirement 2:

When you filed the joint return, you did not know, and you had no reason to know, that there was an understatement of tax, per the “actual knowledge or reason to know” condition.

Requirement 3:

It would be unfair for you to be held liable when all circumstances and facts are considered. There are certain conditions that must be met that indicate unfairness.

Requirement 4:

There was no fraudulent scheme, meaning that you and your spouse or ex-spouse did not transfer property to one another. The victim of a fraudulent scheme would include the IRS, a creditor, ex-spouse, business partner, and others.

What Is Meant by “Actual Knowledge or Reason To Know?”

Part of the second requirement to qualify for innocent spouse relief is that you had no actual knowledge or reason to know of an understatement on the tax return.

Actual Knowledge

Actual knowledge has a specific definition meaning that you actually knew about an erroneous item that belongs to your spouse or ex-spouse. If that is the case, then you don’t qualify for innocent spouse relief.

There are further conditions to determine whether you actually knew about the item, including whether you knew the item of unreported income was received, if you knew of the facts that made an incorrect deduction or credit unallowable, or if you knew that a deduction was not incurred or inflated.

Reason To Know

Similarly, if you had reason to know about an erroneous item on the return, then you will not qualify for innocent spouse relief. The IRS will take into account all facts and circumstances, including the nature of the erroneous item and its amount relative to other items.

When determining if you had reason to know, the IRS will also consider:

  • your educational background and business experience

  • if and how much you participated in the activity that resulted in the erroneous item

  • your financial situation

  • your spouse’s (or ex-spouse’s) financial situation

  • if you failed to ask about the item before or when you signed the tax return, according to if a reasonable person would have asked about the item

  • if the erroneous item had previously been reported in the past

Trust the Experience of a Skilled Tax Attorney

Filing for innocent spouse relief is a complicated process. I can make sure that you’ve considered every important detail. With my years of experience and dedication to advocating for the truth, I’ll help you fight for your case.

I’m proud to provide excellent and trusted legal service to my clients in Savannah, Hinesville, Statesboro, Richmond Hill, and Ludowici, Georgia, and the nearby counties. Contact my firm today to schedule your free consultation.