Tuesday, November 24, 2009

New Divorce provisions - Income Tax

It is easy for the attorney to become complacent about income taxes. The client is not a millionaire, the spouse is a working man, and exotic investments are just not a problem. It has been suggested, however, that ( 1 ) if one of the parties may work for cash on the side, ( 2 ) or income tax returns are not being filed as they should, ( 3 ) or if one of the parties may not follow the East Texas "do right" rule, then some added protection should be added:

It Is Ordered that Bad Boy shall pay the income taxes for the tax year 2009 [ and tax years..... ], and shall hold Good Wife harmless from the payment of income taxes for the same years. It Is Ordered that in the event the Internal Revenue Service, for the tax year 2009 taxes, audits Good Wife, seeks to collect income taxes from Good Wife, garnishes wages of Good Wife, seeks to collect penalties from Good Wife, seeks to collect interest from Good Wife, or files a tax lien on property of Good Wife, then Bad Boy husband shall pay Good Wife the sum of $5,000 in legal fees for her legal defense to the Internal Revenue Service claims. It Is Ordered that Bay Boy shall additionally pay Good Wife's expenses, and taxes, interest and penalties owed by Good Wife.

The attorneys fees provision is in line with the costs of wrestling with the Internal Revenue Service over income the Good Wife may not have known existed, on paperwork and from jobs the Good Wife never knew about. Being as specific as possible, especially as to the money to be paid, is best.

This is just a suggestion, of course, and the idea is to be specific, so that the Bad Boy, the Judge, and the Internal Revenue Service, all know exactly what you need to protect yourself from a nightmare.

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