PROBLEM:
Your debtor has been in charge of handling the family’s finances throughout your marriage and you’re completely in the dark as to what is on your tax returns.
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SOLUTION:
We spend an awful lot of time telling you how valuable your debtor’s tax returns will be on your searc
h for hidden assets. You might be surprised to learn that your debtor can actually use taxes as a means of hiding money. For instance, sometimes one spouse will overpay taxes one year to look as though they have less money, fully expecting the IRS to refund the overpayment next year, after the divorce.
It may be tricky to detect if your debtor is purposely overpaying his taxes, as it could be a somewhat subtle change from what he normally pays. The best way to figure it out is to review his historical tax returns. If you file jointly, you can request the returns directly from the IRS. Otherwise, if your debtor won’t hand them over to you, be sure to ask for them during the discovery process. Look for noticeable differences in the amount of tax paid over the years. Did he get a hefty return last year, but somehow owe a significant amount this year? This could be the result of a change in financial situation, but if you have a hunch that something is off, you may want to hire a forensic accountant to look further into it.
Before hiring a forensic accountant, give your family accountant a call if you have one. Assuming you file jointly, your accountant should not have a problem answering questions regarding your joint return. Remember, it is not out of the ordinary for someone to owe taxes come April 15th, but if it seems abnormal in light of recent tax years, you should make sure you find out why. Even if your debtor is not intentionally overpaying his taxes, a stark change in taxes from year to year may signal that he’s hiding something else.
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