Spouses who file joint federal tax returns are both generally liable for the tax owed. But filers who qualify may seek “innocent spouse relief” from liability. One business owner, whose wife helped with bookkeeping, was found to have years of unfiled tax returns. Also, he’d collected payroll taxes from employees but failed to submit them to the IRS. The IRS filed a criminal case against the business owner for the unremitted payroll tax. The husband pled guilty and his wife filed for innocent spouse relief. A U.S. Tax Court denied her request. Though most factors were in her favor, one weighed against her: she knew or had reason to know that the tax debt wouldn’t be paid. (TC Memo 2021-110)


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