It’s no secret that financial problems can lead to marital discord; and eventually to divorce. It is also common that when money is tight, people will do desperate things to make ends meet. One of the efforts of desperation involves fudging numbers on one’s tax return in an effort to avoid paying taxes (and to secure a refund).
Depending on the level of deceit, spouses could be charged with tax evasion (or fraud). After all, married couples can be held jointly liable for false information included in a return. This is because when spouses affix their names to a tax return, they are both attesting that the information included is true and correct.
Fortunately, for spouses who did not actively participate in creating fraudulent returns, there are a couple of meaningful defenses. This post will highlight them.
Equitable relief – For an unwitting spouse accused of tax fraud, he or she can claim that they were not actively compliant in submitting a false return, and reasonably believed that their tax return was truthful and accurate. Also, spouses seeking equitable relief can claim they may have had little if any input in completing the return, and what little information they were privy to genuinely seemed accurate for the circumstances.
Innocent spouse defense – Where a spouse signed a tax return under duress, the innocent spouse defense may be available. This commonly applies to spouses in abusive relationships. Spouses in these situations would have previously not had the ability to challenge the return (or know their contents) out of fear of retaliation.
If you have questions about your potential liability regarding past tax returns, a family law attorney experienced with tax issues can advise you.