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Posted on Sep 30, 2009 in Offer in Compromise | 0 comments

Submitting an IRS Offer in Compromise after Divorce

Going through a divorce can muddy the waters when it comes to whose responsibility the IRS tax liability becomes.  In a divorce case, the Court could order that one party of the other is solely responsible for the tax liability.  However, because a family court is a state court it does not have authority to order the IRS to only seek repayment of the tax liability from one of the parties if the original tax liability is a joint liability.

That means if you and your former spouse have joint liability with the IRS the IRS can come after both of you even if your spouse is ordered by the family court to pay all of the debt.

So what can you do?  You may qualify for an offer in compromise.  If you file an offer in compromise, you can negotiate and settle your tax debt with the IRS and not have to worry about them coming after you any more.  The total tax debt you and your former spouse owe would be reduced by the amount that you and the IRS agreed to and your spouse would be liable for the balance due.

At this point, you could be “made whole” by contacting your divorce attorney to work on a contempt action against your former spouse in family court since you had to come out of pocket and pay some money to the IRS when the family court had already ordered your former spouse to do it.

If your divorce order was silent about the tax liability then you can file an offer in compromise separately from your former spouse.  Your offer in compromise will not affect their liability, however, so you will only be settling on behalf of yourself.  Your former spouse would be required to file an offer in compromise or work out some other type of resolution with the IRS for the tax debt on their own.