In a recent case before the tax court, a couple’s divorce decree provided that the parties IRS obligations are to be divided equally. (Asad, TC Memo. 2017-80). After the divorce, the IRS claimed that they are not bound by the divorce decree and may collect the taxes owed on the parties’ joint tax returns in any proportion the IRS determined it wanted. The tax court agreed with the IRS, saying that the allocation set forth in the divorce decree does not control the couple’s liability to the agency.
When faced with a situation such as above, it is important that the parties build in contingencies, to the extent possible, to account for the divorce court’s inability to restrict a third party’s rights under the law. One possibility would be that the divorce decree contained indemnification language requiring the party who paid more of the obligation to seek indemnification and reimbursement from the other spouse. To the extent property is available; the court may use the property as security to enforce the divorce agreement. You should discuss the available options with an experienced family law attorney.
If you have any questions regarding a post-divorce financial matters, contact an attorney at Hamblett & Kerrigan and put their experience to work for you.
Kevin P. Rauseo is a former director at Hamblett & Kerrigan P.A. and has since been appointed as a Justice for the New Hampshire Circuit Court. Please feel free to contact another attorney at Hamblett & Kerrigan to discuss your legal issues.