What if one spouse files false information on a joint tax return?

Despite the emancipation of women, very often in marriage a wife will sign what her husband tells her to sign. This can be a problem later if the ex-husband files false information on joint tax returns. The wife, acting in good faith, signs a return she did not understand, and later in the divorce the truth comes out.

If she were honestly unaware of the misstatements, she can try to prove that she is what is called an "innocent spouse." Section 434(c)(1) of the Internal Revenue Code protects an innocent spouse from tax fraud prosecution under certain conditions provided 1) a joint return was filed, 2) the return contains a "grossly erroneous" error, 3) the spouse establishes "lack of knowledge," and 4) it is "inequitable" to impose the tax on him or her. The Innocent Spouse Rule, as it is called, does not shelter a spouse from any legitimate tax obligations for which she (or he) is responsible under the doctrine of joint and several liability.

No one should ever sign anything he or she does not understand. The I.R.S. has rules that cover the innocent spouse, but basically she has to show that she didn’t know, and had no reason to know, of the false statements.

This can be difficult to prove. The I.R.S. will look at what is called the "totality of the circumstances"; that is, all of financial dealings, in order to make a determination. Needless to say, she should have a lawyer when trying to employ the "innocent spouse" defense.