Does the IRS Have to Recognize Liabilities Assigned in a Divorce Decree? 3

If the Court Says One Party Has to Pay Joint Debt

As part of the property settlement in a divorce, the court may (and often does) order one party or another to pay a particular joint debt in full.

This order is enforceable in court by one spouse against the other.  If the spouse ordered to pay the debt doesn’t and the other spouse ends up having to pay it, the paying spouse can sue his or her ex to get back the money paid (because the divorce decree ordered the ex to pay the debt).

The order does not however change any liability that the spouses have to the creditor, in this case, the IRS.  The IRS does not have to abide by the divorce decree nor does the decree “legally” remove the joint liability. That means that if you and your ex owe taxes jointly, the IRS is free to collect from either party.

The solution then, is to seek reimbursement from your ex. This could be in the form of a cash payment or even in the form of a property exchange.  Assuming you and your ex are still on good terms, the two of you should be able to work out an amicable arrangement.

If this is the case, there’s probably no need to involve the courts. If you want the arrangement documented, you can simply draw up a simple agreement on paper for you and your ex to sign.

Many times, however, the ex isn’t quite so agreeable, seeing the situation as a windfall in his or her favor.

Your only recourse in this situation would be to take your ex to court. You can do this either in court via a civil suit or you may also want to consider going back to divorce court and asking the judge find your ex in contempt of court and/or to modify your property settlement to make up for the loss.

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Discussion

  • scot mckay

    If there are rearages in alimony and child support does the receiving spouse have to pay taxes on the whole amount in the receiving year?.

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  • Barbara

    My divorce was final in March 2007, I was supposed to be removed from the a mortgage debt. The words to the paragraph I am referring to is as follows …”The Respondent has agreed to be responsible for payment of the mortgage debt on the Business property and to refinance this debt as soon as possible, but no later than Aug. 1, 2007, to remove Petitioner’s name frome the mortgage note. Respondent shall hold Petitioner harmless from the mortgage debt and he shall reimburse her for any expense she incurs due to this debt.” The following paragraph states “The parties have agreed that the Petitioner’s marital lien on the Business property shall be subordinated to Responden’ts refinancing of the $84,000 mortgage debt.”

    My question is can he threaten to make me pay half of it? He’s left some voice message that are not physcially threatening but legally threatening.