Non-Liable Party

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Why Non-Liable Parties and Spouses Have to Provide Financial Information
when dealing with the Collection Division

This report is to explain why your roommate's or spouse's information is required to negotiate a reasonable agreement with the Internal Revenue Service on resolving your delinquent taxes, even though he/she is not jointly liable for the taxes owing.

The Internal Revenue Service must determine the reasonable collection potential of your tax debt.  When one party or spouse is not jointly liable for the taxes, that personís income and assets are protected from Internal Revenue Service collection actions, such as levy or seizure.  The Internal Revenue Service cannot touch them (in States that do not have community property law). If the non-liable spouse holds a joint interest in property with the spouse who does owe, the non-liable spouseís share is exempt from Internal Revenue Service collections (dependent on State law. Consult with a local real estate attorney.).

When one spouse owes taxes the Internal Revenue Service must determine reasonable payment potential.  The Internal Revenue Service has to look at total household income and allocate joint household expenses to the liable party. The non-liable party's income will not be taken into account for payment ability. Only to allocate joint household and family expenses to the liable party.

If you live in a state with community property laws then your spouse may be jointly and severally liable for your taxes. You should consult with a family law attorney in your state.

Community property states: AZ, CA, ID, LA, NV, NM, TX, WA, WI


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