Divorce Expert Witness
Family attorneys know to engage a forensic accountant in all but the simplest cases. They may ask the accountant to perform tax services, such as investigating finances, in addition to normal divorce-related tasks. However, your client may benefit more from a tax attorney who can act as a divorce expert witness.
A tax attorney can better serve your client when:
- Income tax returns have not been filed. Most CPAs impulsively file immediately, which is a trap for the unwary. Failing to file tax returns by the deadline may be a civil or criminal tax matter. If it is a criminal act, filing the tax return later does not provide a cure. No red line separates neglect from willful conduct. Only a tax attorney can investigate and advise your client on the consequences of filing delinquent returns with attorney-client privilege.
- Previously filed returns contain serious errors or omissions. This event is similar to filing delinquent returns in that the amendment does not eradicate the problems created by the original return. Filing an amended tax return is an admission that the previously filed return inaccurately understated the tax amount. Only a tax attorney can safely investigate the returns and advise your client on filing amended tax returns without risk of criminal sanctions or excessive civil penalties.
- Property is to be received in a divorce settlement after IRS tax liens have been recorded. Even if your client has filed separate income tax returns, the liens can attach to his or her interest in marital property that was jointly owned. The priority of tax liens is a legal matter that should be handled by a tax attorney.
- The IRS contacts your client about a tax debt that it attributes to a former spouse. Form 8857, Request for Innocent Spouse Relief, is a tricky legal document that requires skilled legal preparation by a tax attorney.
- The division of marital assets anticipates a transfer of money or property out of one spouse’s controlled corporation. Corporate distributions may cause unintended tax consequences unless the transfer is part of a properly structured corporate redemption or reorganization. These are complicated transactions that a tax attorney should oversee.