Lifestyle was too lavish for spouse to be 'innocent.'
Article Abstract:
The issue of omission of income in a request for innocent spouse relief is whether or not the taxpayer was or should have been aware of an income producing transaction that the other spouse failed to report. Mere knowledge of the existence of the transaction disqualifies the taxpayer for the innocent spouse relief claims. When disallowed deductions are involved, the issue becomes whether or not the taxpayer was aware or had reason to be aware that a deduction would result in a considerable tax understatement. In both situations, taxpayers must prove they did not know or have reason to know about the understatements. In one case, a bankruptcy court denied a taxpayer's request for innocent spouse relief as, apart from other factors, she was aware of the lavish spending habits she and her ex-spouse practiced and had reason to know there were understatements in their tax returns.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
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Service's honest mistake not grounds for quashing summons
Article Abstract:
The Court of Appeals for the Ninth Circuit held in one case that a summons issued by the IRS was valid because the plaintiffs were unable to prove that the agency issued the summons in bad faith or for an improper purpose. In this case, the taxpayers' representative had approached the IRS and was incorrectly informed that there was no investigation related to the taxpayers. The IRS was able to prove that the misinformation was communicated to the taxpayers because several IRS employees did not follow the proper reporting procedures. The court ruled that none of the IRS' errors in this instance were intentional and the misrepresentation was honest and not committed for a sneaky, deliberate deception or in bad faith.
Publication Name: Practical Tax Strategies
Subject: Law
ISSN: 0040-0165
Year: 1999
User Contributions:
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