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Will you face criminal charges over your spouse’s tax error?

On Behalf of | Aug 11, 2022 | Tax Law

The Internal Revenue Service (IRS) takes federal income tax obligations seriously. Even mistakes made because of an earnest misunderstanding of the law or a failure to apply new tax rules to someone’s income tax return can result in financial penalties and prosecution. The IRS can charge people with tax fraud and tax evasion if they intentionally avoid paying what they should in income taxes. You could have put yourself at risk without even realizing it.

You may have agreed to let your spouse pay the monthly bills and file your tax returns. It may have been one of the only household duties that they assumed total responsibility over, which you appreciated. While you may have had total faith in their ability to handle your taxes, you may have since learned that you misplaced your trust.

If the IRS has sent a notice about significant tax arrears or initiated an audit, could you be at risk of criminal charges because of how your spouse handled your returns?

The IRS knows that one spouse may do the tax work

It is common for spouses to divide their responsibility for different household obligations. Especially in situations where one spouse earns more than the other or wants to hide misconduct, they may volunteer to manage tax responsibilities for the household. You may have signed tax returns without realizing that they included inaccurate statements or misinformation.

The IRS does allow those who did not engage in fraudulent financial activity to claim innocent spouse relief. If you can assert that you were not the one who prepared the tax returns and that you were unaware of your spouse’s misconduct, you can potentially avoid prosecution. You have to show that you did not have actual knowledge or reason to know about your spouse’s financial mistakes or misconduct.

Will you have to testify against your spouse?

Even if you claim innocent spouse tax relief, the IRS cannot compel you to testify against your spouse in criminal court proceedings. If you divorce, you will lose that special privilege and may find yourself expected to testify in a criminal matter. Learning more about the rules that govern major income tax issues can help you protect yourself if you suspect your spouse of misconduct.