Income tax cheating is very common. The problem comes up when one spouse threatens to tell the IRS about under-reporting of income excessive expense charges, fake dependents and other types of cheating.
In New Jersey, if either party testifies in court that either of them or they jointly filed an incorrect, or fraudulent tax return, the judge MUST turn the parties over to the taxing authority.
In most cases the parties signed joint tax returns and they are equally liable for any penalties, taxes and interest due to the IRS.
All of the money that is paid to the IRS comes out of the same marital assets. The net effect of informing the IRS or the court is to decrease the amount of money available to both parties and increases the marital debts.
Tax blackmail is sometimes used successfully as a negotiation tool but should never be taken to the level of causing an audit, trial testimony or investigation for tax fraud.
Ann O’Flanagan is an attorney who handles family law exclusively in Flanders, New Jersey.