Refunds After Innocent Spouse Relief Granted

If a taxpayer pays the couple’s income taxes and is then granted innocent spouse relief for the liability, is the innocent spouse entitled to a refund of the amount paid?  The 9th Circuit Court of Appeals addressed this in Orlock v. Commissioner. Facts & Procedural History The IRS granted the wife innocent spouse relief. Prior to…

Tax Disputes Involving Alimony Payments

If payments qualify as alimony pursuant to federal tax law, the payments may be tax deductible by the payor spouse and included in gross income to the payee spouse.  The opposite is true if the amounts are not alimony for federal tax law.  Whether an expense counts as alimony is frequently the subject of disputes…

Innocent Spouse Relief for Ex-Spouse’s Income

Innocent spouse relief can provide a much-needed remedy for divorced or separated taxpayers who filed a joint income tax return.  This relief is commonly granted where the income that gave rise to the tax liability was earned by one spouse.  The recent Mapp v. Commissioner, T.C. Summary Opinion 2008-76, case provides an opportunity to consider these…

Can One Spouse Cause IRS to Void Other’s Alimony Deduction?

If a divorce decree says that a payment to an ex-spouse, does that mean that it is alimony the ex-spouse has to report as income for Federal income tax purposes?  And if not, can the ex-spouse who receives the payment request a ruling from the IRS to say that the payment was not taxable to…

Bankruptcy Filing Does Not Prevent Innocent Spouse Relief

Can one spouse prevent the other spouse from  obtaining innocent spouse relief by filing bankruptcy?  The court addressed this question in Kovitch v. Commissioner, 128 T.C. 9 (2007). The Facts & Procedural History The Kovitch’s were divorced. The IRS then issued a notice of deficiency to both spouses for their joint tax liability. Only the wife…

Ex-Spouse’s Defense for Tax Discharged in Bankruptcy

Ex-spouse’s Defense For Tax Discharged In Bankruptcy

What if an ex-spouse who is jointly liable for the tax waits until after the other ex-spouse’s bankruptcy discharge and argues that the taxes were not discharged in bankruptcy as the tax return was invalid?  The court addressed this in Kuhl v. United States, No.?05-6570-BK (2nd. Cir. 2006).   Facts & Procedural History Ms. Kuhl owed the IRS…