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George Saenz, the Bankrate.com Tax Talk columnistPaying the ex's IRS debt

Dear Tax Talk,
I've been divorced for several years. Because of my ex-husband's manner of filing taxes while we were married, I am responsible for paying the back taxes, late fees and interest.

At the time of our marriage, my income was not a large contribution to the household. I have now received a levy of wages that will begin late July. I am able to keep a little more than half my check. As a single mother of two, I am taking a huge hit.

My ex-husband, who is self-employed, is not being levied. He said it's because his business is under a "corporation" status. He and his assets are protected by this. Our divorce papers state that he is responsible for paying the taxes for the years that we filed together. What kind of responsibility does he have toward paying this debt?
-- Alice

Dear Alice,
Your situation is not all that uncommon. Many married taxpayers choose to file a joint tax return because of certain benefits this filing status allows. Both taxpayers are jointly and individually responsible for the tax and any interest or penalty due on the joint return, even if they later divorce. This is true even if a divorce decree states that a former spouse will be responsible for any amounts due on previously filed joint returns. One spouse may be held responsible for all the tax due even if all the income was earned by the other spouse.

In some cases, a spouse (or former spouse) will be relieved of the tax, interest and penalties on a joint tax return.

Three types of tax relief available:

Innocent-spouse relief and relief by separation of liability generally only apply if the Internal Revenue Service later determines that you owe additional tax as a result of underreporting income or overstating deductions. The premise with relief under these alternatives is that while you were married, all your taxes were paid, but later after separating the IRS finds out you owe more taxes and it's attributable to the other spouse's actions.

Under equitable relief, the IRS can relieve you of the burden of unpaid taxes that were due with the original return as well as later understatements. Since you didn't provide detail as to the levy, it's hard to tell what type of relief is applicable. However, if you feel that you are being unfairly held liable for the debt, you need to act quickly to preserve your rights. Whether the IRS can collect the debt from your husband does not change your ability to apply for relief.

To ask a question on Tax Talk, go to the "Ask the Experts" page, and select "taxes" as the topic.

Bankrate.com's corrections policy -- Posted: July 28, 2006
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