Divorce involves many financial decisions, and IRS tax liens can add another layer of difficulty. When one or both spouses owe unpaid taxes, the IRS may place a lien on their property or assets. A lawyer, like an IRS tax lien lawyer, knows that this can impact property division, spousal support, and future financial stability. Addressing tax liens during divorce is important to avoid unexpected financial consequences.
Tax Liens And Property Division
A tax lien is the government’s legal claim against property when a taxpayer has unpaid debt. If the IRS has placed a lien on a home, bank account, or other assets, those assets cannot be easily sold or transferred during a divorce. Even if a court awards the property to one spouse, the IRS may still collect on the lien. In some cases, both spouses may be responsible for the debt, even if only one person was primarily responsible for the taxes.
When Both Spouses Are Liable For The Lien
A family law lawyer knows that if a couple filed joint tax returns during their marriage, both spouses may be responsible for any unpaid taxes. This means the IRS can pursue either person for payment, regardless of how assets are divided in the divorce. Even if the divorce agreement states that one spouse is responsible for the debt, the IRS can still seek payment from the other if the responsible spouse does not pay.
Options For Resolving Tax Liens In Divorce
There are a few ways to handle a tax lien during a divorce. If both spouses are still on good terms, they may be able to work together to pay off the debt before finalizing the divorce. If paying the full amount is not possible, they can explore options such as setting up a payment plan with the IRS or requesting a lien withdrawal if they qualify. Selling an asset to cover the tax debt may also be an option, but the IRS may need to approve the sale if the lien is attached to the property.
Innocent Spouse Relief And Divorce
In some cases, one spouse may be able to avoid responsibility for a tax lien through Innocent Spouse Relief. This applies when one spouse was unaware of errors or fraud on a joint tax return. If approved, the IRS may release that spouse from responsibility for the tax debt. However, this relief is not guaranteed and depends on the specific circumstances of the case.
How Tax Liens Affect Spousal Support And Credit
Unpaid taxes and IRS liens can also affect financial stability after divorce. If a person is ordered to pay spousal support but has a tax lien, their income and assets may be subject to collection efforts, making it harder to meet support obligations. Attorneys like those at Crepeau Mourges can attest to how tax issues affect financial decisions during divorce proceedings. Dealing with a tax lien as soon as possible can prevent future financial problems. Understanding how the IRS may enforce collection and taking steps to resolve the lien before finalizing the divorce can make the transition easier. When you need help, reach out to a lawyer you can rely on.