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Texas divorce could lead to Internal Revenue Service audit

Wednesday, June 20, 2018

It is difficult to imagine receiving a letter stating that the Internal Revenue Service is preparing to do an audit of one's finances. The thought can be nerve-racking. However, the possibility of undergoing such an audit is real for people who have just gone through a Texas divorce and had to involve the court in their affairs.

The Internal Revenue Service maintains a large databank of Americans' personal information, including when people are married or divorced. Following a divorce, this federal organization may choose to audit a couple if information exposed during the divorce proceeding raises red flags. During a divorce, a forensic audit is required to uncover the undisclosed income and hidden assets of either party.

The forensic audit is necessary so that accountants can properly assign values to the assets that the couple will have to split as part of their divorce. However, if the judge finds any discrepancies in the information revealed, he or she legally has to relay this to the Internal Revenue Service. The organization then has three years to complete its own audit of the two parties' finances during their marriage.

Understanding how to properly address areas such as property division and the distribution of assets while maintaining one's rights can help a person to avoid audit-related problems long-term. A Texas divorce certainly is complex, and it can be easy to neglect essential aspects of the process. Both parties, however, have the right to seek their best interests while pursuing a comprehensive and fair solution with their soon-to-be ex-spouses.

Source: Forbes, Divorce Causes Tax Audits, Cameron Keng, Feb. 10, 2014

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