Page 65 - Family Law Services

• reduction in the payor spouse's ability to pay or recipient spouse's needs.

The recapture rules do not apply to

• payments that are terminated because an ex-spouse dies or remarries before the end of the third
postseparation calendar year;

• payments made under temporary support orders; or

• payments that are a fixed portion or percentage of income.

Electing Out of Taxable and Deductible Alimony

When there is the likelihood of alimony recapture or the payor spouse cannot currently utilize the deduc-
tion, the spouses can elect out of deductible and taxable alimony under IRC Section 71(b)(1)(B).

Divorcing Individuals’ Responsibilities

Joint and Several Liability

When taxpayers file a joint income tax return, the law makes both spouses responsible for the entire tax
liability (IRC Section 6013[d][3]). This is called joint and several liability. Joint and several liability ap-
plies not only to the tax liability shown on the return but also to any additional tax liability the IRS de-
termines to be due, even if the additional tax is due to income, deductions, or credits of the former
spouse.

Joint taxpayers remain jointly and severally liable for the taxes, plus penalties and interest. The IRS can
collect from either spouse, even if a divorce decree states the other spouse will be solely responsible for
the tax. To protect each spouse, the divorce decree should provide guidance about how an individual is
made whole if he or she is required to pay a tax liability allocated to his or her ex-spouse during the di-
vorce but collected from the individual. In jurisdictions that allow for it, it is common for this recovery
provision to be structured as a spousal support obligation because in those jurisdictions, support is not
dischargeable in bankruptcy.

Audits

Audits can occur after the date of the divorce and cover periods prior to the divorce. A provision in the
divorce decree should be included, detailing who is responsible for providing which records and how
expenses associated with the audit will be paid. A provision can also be included regarding who is re-
sponsible for paying any additional tax, interest, or penalties or who is entitled to any refunds. However,
under the Joint and Several Liability rules discussed previously, the IRS can collect any unpaid tax, in-
terest, or penalties from either spouse, regardless of what the divorce decree states.

Innocent Spouse Rules — IRC Section 6015

Provisions contained in IRC Section 6015 can, under specific circumstances, relieve individuals from
joint and several liability resulting from a jointly filed tax return. These provisions are commonly called
innocent spouse or abandoned spouse provisions. Requesting relief is done by filing IRS Form 8857.

Three different types of relief are available to individuals who filed joint returns:

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