Like any major life change, divorce of a married couple has financial consequences. One of the issues involves income tax. In addition to dividing other assets and liabilities, divorce includes consideration of tax debt.
Completion of enrolled agent continuing education requirements provides the necessary training to assist taxpayers with these matters. Simply addressing tax liability in a divorce decree document is not sufficient for the IRS. This is because the IRS considers all taxes owed on a jointly filed tax return as joint and separate obligations. Therefore, the IRS may levy the bank account of any one spouse for taxes owed regardless of which spouse received the income.
A former spouse faced with these circumstances can obtain relief from the IRS. The skills obtained in tax CPE by enrolled agents prepare them for providing assistance with such measures.
One option is obtaining status as an innocent spouse.This is usually available for one spouse who was unaware that a jointly filed tax return contained incorrectly reported information. The burden of proof for an innocent spouse is lack of knowledge about a misrepresentation of income by the other spouse. The pleading therefore is that only the other spouse is responsible for back taxes due.
Another avenue is injured spouse relief. This is easier to obtain then innocent spouse status. EA CPE also addresses how to receive this injured spouse relief. An injured spouse applicant requests a division of the tax liability from a joint tax return.IRS approval is obtained for an equitable allocation of tax debt.
A dividing of tax liability for an injured spouse results is an assignment of debts in fair relation to the party who retained the income and thus the ability to pay the taxes. However, a separation of liability is denied for individuals who were aware that their spouses recorded erroneous information on the joint tax return as well as persons involved in a fraudulent transfer of assets between spouses.
Form 8879 is required for injured spouse relief. Innocent spouse relief is obtained by filing Form 8857. Enrolled agent continuing education covers both types of forms, including the requirements and results expected for either of them.
California enrolled agents have extra considerations because that is one of the ten community property states. These states consider debts accumulated during marriage - including tax debt - as evenly divisible between divorcing spouses. All other states use a division of debt in accordance with repayment ability.