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Did your divorce spark trouble with the IRS?

May 9, 2021 | Divorce & Retirement Assets

Do you suspect that your spouse tried to beat the system during property division proceedings in a West Virginia court? When you filed for divorce, you no doubt understood that you and your soon-to-be ex would have to resolve certain financial issues, especially if you are parents. Every state has guidelines and laws that govern such matters, and you were both obligated to disclose all assets and liabilities to the court.  

If you suspect that your former spouse was deceitful and that he or she was hiding assets that included falsifying tax returns, you might be eligible for “innocent spouse relief” from the Internal Revenue Service (IRS). Encountering legal challenges with the IRS or West Virginia family justice system can be stressful, which is why it’s always a good idea to tap into local resources for support rather than trying to resolve a specific problem on your own.  

What do hidden assets in a divorce have to do with the IRS? 

In order to obtain a fair settlement in a divorce, it pays to be well-versed in the financial issues of your household. It’s not uncommon, however, for one spouse or the other to take care of things such as filing income tax returns. If your spouse failed to report income to the court or IRS, or claimed erroneous deductions on tax returns, you might be able to request innocent spouse relief to avoid being liable for owed taxes.  

Failing to report income or claiming deductions for expenses that never got paid or didn’t exist are often issues that are part of hidden asset schemes in divorce. For instance, if your spouse typically contributed $7,000 per month toward household expenses during your marriage but told the court or IRS that his or her monthly income was $4,000, that means that there’s $3,000 per month unaccounted for.  

Proving that you qualify for innocent spouse relief 

The good news is that you don’t have to sit back and do nothing if you believe you have evidence that your ex pulled a fast one over the IRS and family court judge during your divorce. You do, however, have to provide such evidence to the court and to the federal government to substantiate your claim. The IRS will want proof that you had no knowledge or reason to have knowledge about the false information your ex submitted on your joint tax returns.  

You will have to show that you did not receive any benefits from your former spouse’s illegal actions. The IRS will take numerous factors into consideration, including investigating whether your spouse’s actions were part of a hidden asset scheme in a divorce. After reviewing your case, the IRS will determine whether it’s unfair to hold you accountable for misrepresentation on the tax returns in question.  

Stay calm and know how to protect your interests 

It’s understandable that you might feel betrayed and angry upon discovering that your ex has not been honest with the court or the IRS regarding marital property during your divorce. The best thing you can do is try to remain calm and resolve the issue through the recourses provided under West Virginia law.