Innocent Spouse Defense Lawyers

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Most Common Finance Law Issues:

Am I Liable for My Spouse's Debts?

The debt incurred by an individual is owed only by that specific individual. However, a person can be liable for a spouse's debt in two ways. First, in community property states, assets that are jointly held in community property can be used to pay off debts. Secondly, taxes owed can also become a liability for both spouses if they have chosen to file joint tax returns.

The Impact of Filing Joint Tax Returns

Married couples who file joint tax returns are jointly and severally liable for taxes due. This means that even if the tax debt is a result of only one spouse's actions, the other is equally liable.

The Innocent Spouse Defense

Recognizing that joint and several liability for taxes can result in an unfair burden on one spouse, Congress established the Innocent Spouse Defense to discharge an "innocent" spouse of unfair liabilities.

There are five elements of the Innocent Spouse Defense which must be met:

When Can the Defense Apply in Bankruptcy Proceedings?

Generally, the courts have evaluated three different scenarios when determining whether the Innocent Spouse Defense can apply in a bankruptcy proceeding:

How Does the Court Determine Whether the Defense Succeeds?

If the court has jurisdiction to consider the innocent spouse defense, the evaluation will turn on the specifics of the substantial understatement as well as the knowledge requirements - what the innocent spouse knew, didn't know, and should have known. This evaluation can be difficult and the courts have been split in their findings. Usually, the determination depends on the particular facts and circumstances of the case.

What Happens If the Defense Succeeds?

The court can grant full relief to the innocent spouse either in full or in apportionment.

What If I Am No Longer Married?

For purposes of this defense, innocent spouses who are no longer married to, are legally separated from, living apart from for at least 12 months, or who are widowed, are considered no longer married. They can assert the Innocent Spouse Defense to limit their liability.

Do I Need an Attorney?

The application of the innocent spouse defense varies by jurisdiction. If you are an innocent spouse facing bankruptcy proceedings and tax liabilities as a result of your spouse's actions, you should consult an experienced family law attorney to determine whether your liability can be reduced or eliminated.

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Last Modified: 06-12-2014 05:23 PM PDT

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