Divorce, Lies, and Joint Tax Returns
Ken White, a divorce attorney, and Michael Maye, a certified financial planner and certified public accountant are interviewed by NJ Money Help to answer a question about divorce, joint tax returns, lies, and potential liability.
Question about liability on joint tax returns
I’m getting a divorce, and I think my husband wasn’t honest on our past tax returns. We have never been audited, but I’m worried about what could happen. What should I do?
Divorce Attorney and CPA Consulted to discuss options
Answer – Potential delays in divorce settlement, Arbitration, and more
Since this divorce has not yet been settled, divorce lawyer, Ken White was approached to provide insights into this question and how it might impact the divorce proceedings.
In New Jersey you will have the opportunity to address your concern about potential tax liability in a divorce settlement. It is possible to have your divorce lawyer include language in the Marital Settlement Agreement to indemnify you of all liability of previously filed joint tax returns. This language could be contested or the IRS might still consider you responsible.
Each marriage and each divorce is different and Ken highly recommends that you contact him to review your divorce case or to seek legal counsel near you. The specifics in your particular case could mean delays in your divorce because it is contested, and you might need to go through arbitration, or to the Superior Court of New Jersey.
“Any time a judge hearing family court matters has reason to suspect that a fraud has been committed upon the IRS, that judge is ethically and legally obligated to freeze the litigation and contact the IRS, so as to allow the IRS an opportunity to investigate,” White said.
Such situations arise in contested litigation when one party is self-employed and may fail to report certain income, may take questionable deductions or other issues, he said.
“In such situations, parties typically agree to present their litigation to arbitration as opposed to a judge, as an arbitrator is not bound by the same ethical and legal obligations as a judge, and therefore can decide the matter without contacting the IRS,” White said.
“A divorce decree stating the former spouse will be responsible for potential tax liabilities for past jointly filed tax returns does not protect the other spouse in the eyes of the IRS,” said Michael Maye. Read the full article “When a spouse lies on a joint tax return” in Ask NJMoneyHelp.