Joint and Several Liability and Federal Tax Debt
A tax debt liability from the filing of a joint tax return, including interest and penalties, is considered to be a joint and several. Joint and several liability means that two or more individuals are each responsible for full payment of the same tax debt. In the case of a federal tax liability, a joint and several liability usually arises when a married couple files a joint tax return.
This means each spouse is individually responsible for the entire tax debt even if only one spouse earned all of the income.
The Internal Revenue Service (IRS) can collect the entire amount of the joint tax debt from one or both spouses. For example, if Mr. and Mrs. Taxpayer owe $5,000.00 jointly to the IRS, the IRS can collect the full $5,000 from either Mr. Taxpayer, Mrs. Taxpayer, or both Mr. and Mrs. Taxpayer.
The IRS can collect from either Mr. or Mrs. Taxpayer even if a divorce decree states one of them is solely responsible for the tax debt. The good news is that the IRS cannot collect more than is actually owed.
Joint and several liability is an important concept because it allows the IRS to collect a joint tax debt from more than one source. After a divorce occurs, one spouse may enter into an Installment Agreement, be placed into Currently Not Collectible status, reach a tax settlement by filing an Offer in Compromise, or be relieved of all or part of a joint liability through Innocent Spouse Relief, while the other spouse has no formal arrangement with the IRS.
The IRS can and usually does continue to pursue collection of a joint tax debt from the spouse that has no formal arrangement.
The IRS will use all available tools including Wage Garnishments, Bank Levies, Federal Tax Liens, and – sometimes – Asset Seizures to collect a tax debt.
If a taxpayer and a former spouse jointly owe the IRS, it is important that each have a formal arrangement with the IRS, whether it is achieved by filing an Offer in Compromise, establishing an Installment Agreement, or requesting Currently Not Collectible status.
