Offer in Compromise for a divorced couple

In my last blog we looked at what usually happens when one ex-spouse is ordered to pay all of the delinquent taxes and files an Offer in Compromise.  Today I’m going to propose another solution to the problem that will not only relieve the liability of the spouse that files an Offer in Compromise but also

 

that of the other ex-spouse.  However, both spouses must be willing to cooperate!  Even though they are divorced, two ex-spouses can still file a joint Offer In Compromise, assuming the tax liability is a joint liability.  This will involve knowing the assets and earning power of both, which also means that they will have to disclose their assets to each other.  If an Offer is possible considering all of the assets combined, then the delinquent tax would be completely satisfied by the amount of the Offer.  That is, the liability of both parties will be completely satisfied by the amount of the Offer.  Pursuant to the Court Order ordering one spouse to pay all the tax, that person would have to pay the total Offer amount, but this would still be a lot less than the total owed. The IRS does not care who pays the Offer, only that it is paid.  This is the best solution if both spouses can work together.