Tax Controversy Update - Innocent Spouse Relief and Responsible Party Assessments
Part 1: The Joint Return and Innocent Spouse/Injured Spouse Liability
IRC §6013 imposes joint and several liability on spouses who choose to file a joint individual income tax return. As a general rule, married persons who file jointly end up owing less tax than if they chose to file as married persons filing separately, so the default choice among most return preparers, if not all, is to prepare a joint return.
- What happens if the return shows a significant balance due when it is finally prepared?
- Does the return preparer have an obligation to inquire whether, when and how their joint return clients are going to pay the balance?
- If one spouse is an unemployed homemaker, does the return preparer have an obligation to tell the unemployed spouse that s/he is jointly and severally liable for the amount due?
- If the "breadwinner" chooses to leave town without paying off the liability, will s/he be held liable for the entire amount due?
- Are these obligations different if the return preparer happens to be a lawyer, CPA, or Enrolled Agent?
Part 2: Liability of Third Parties for Unpaid Taxes - the "Responsible Person"
Becoming an officer, shareholder, partner, or member in an organization can have devastating consequences, as well as significant financial rewards. If that organization has outstanding employment taxes or has not collected and paid over its sales and use tax obligations to the appropriate tax authority, certain members of that organization, whether they were responsible for making sure those obligations were met or not, can be held liable.
- What should advisors tell their clients about these obligations?
- How are the Massachusetts rules and procedures different from the IRS?
- What should preparers look out for when preparing corporate income tax and informational returns?
- Does the preparer have an obligation to inform an unsuspecting employee that s/he could face "Responsible Person" liability?
Ample time will be provided to respond to your questions.
Breakfast will be served.
There is no cost to attend.