How hard is it for a spouse to claim "Innocent Spouse Defense" when they are found to owe millions in taxes to the IRS?

Asked about 1 year ago - Costa Mesa, CA

A plaintiff is claiming to own a business that is clearly not hers (because it was community property from the other spouse's prior marriage.) However, she is suing me for that company saying I stole it. I have found she owes millions to the IRS...Can she play it both ways? Win in Civil court as the legal owner of the company, yet claim the company is not hers when it comes to owing the IRS?

Additional information

No....it's not for me!!! But, thank you for your concern! It's the plaintiff in a case whereby she filed suit against us for basically "stealing her company." I know she will play "Dumb" when it comes to the IRS, however, she has filed suit against us and is NOT the legal owner of the company, as we will prove in court. Just wondering what her chances are for her lies of trying to get off? BTW...I've reported the fraud to the IRS.

How did such a simple question become so complicated? I simply wanted to know a person could claim innocent spouse defense in a criminal case involving the IRS , yet use a different defense in a civil case?

Attorney answers (4)

  1. Bruce Givner

    Contributor Level 19

    6

    Lawyers agree

    Answered . Mr. Smith has given you excellent advice. The IRS would be very interested in finding a taxpayer taking an inconsistent position in civil litigation from the position that the taxpayer is taking with the IRS. However, the defendants in the lawsuit will have no access to the position that the taxpayer is taking with the IRS: tax returns are privileged in state court litigation, so if she lies, you probably won't be able to prove it..

  2. Phillip Monroe Smith

    Contributor Level 18

    5

    Lawyers agree

    Answered . You need to hire an attorney immediately if you are being sued because you are waiving privilege and confidentiality by disclosing your litigation matters on AVVO.

    THESE COMMENTS ARE NOT LEGAL ADVICE. They are provided for informational purposes only. Actual legal advice can... more
  3. Evan A Nielsen

    Contributor Level 18

    2

    Lawyers agree

    Answered . Agree with my colleagues here - both have given excellent advice. And please be very careful what you disclose on this public site.

    Good luck.

    Evan A. Nielsen is licensed to practice law in California and handles federal tax matters throughout the U.S. The... more
  4. Richard Gordon Stack

    Contributor Level 13

    2

    Lawyers agree

    Answered . As Mr. Smith has indicated, discretion is the better part of valor, especially when you have a "live" suit., as here.

    Do you know whether plaintiff has filed an innocent spouse claim with the IRS? If so, then her ex-husband has a right to oppose her claim and to intervene in Tax Court in the event that the IRS administratively denies her claim and she files a Tax Court petition from such denial. Your attorney should reach out to the ex-husband to ascertain the basis of plaintiff's innocent spouse claim because he is entitled to receive any document that plaintiff submitted in connection with the administrative innocent spouse proceeding before the IRS, provided that he filed a timely opposition to her innocent spouse claim (he had 30 days to do so). By contacting the ex-husband, you will effectively be able to obtain discovery of plaintiff's innocent spouse submissions, notwithstanding the broad taxpayer privacy provisions of I.R.C. Sec. 6103.

    Good luck in your litigation!

    The answer to this question does not establish an attorney-client relationship. Moreover, this attorney is... more

Related Topics

Small business taxes

Small business taxes include state and federal income taxes and employment taxes, self-employment taxes, and excise taxes.

Small business income tax

Filing an income tax return is required for all businesses except partnerships, which file an information return instead.

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