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What Happens in Divorce Court Can Get Reported to the IRS

Las Vegas is one of the few places that anything stays secretive.  Divorce court isn’t as guarded as some would like it.  In fact, what happens in divorce court can extend pretty far.  In some cases, what happens in divorce court can actually get reported to the IRS.

To the IRS?  As in the Internal Revenue Service?  Are we serious?  Yes, absolutely!  And, just wait until you hear who makes the reports to the IRS.  And, likely triggers an audit.  It’s all a matter of law.

Divorce Cases and Tax Evasion

There’s an interesting case that discusses this issue that dates back to 1990, called Sheridan v. Sheridan.   Since it is considered the precedential case, we’ll tell you something about the Sheridan’s story.

Suzanne and Charles Sheridan were married in 1977 and separated in 1989.  The couple described their marriage as one that went from “rags to riches” and then back to “rags”.   At the closing of one of their homes, they literally took money from a paper bag.  And, paid for the home in cash.

In five years, Suzanne and Charles showed expenditures of over $325,000.  Their tax return listed Suzanne as a homemaker with zero income.  Charles declared income of under $20,000 as an oil truck delivery driver.  One might say the figures just didn’t jive.  Or, that they raised eyebrows.  Or, questions.

During court testimony, Suzanne testified that she believed Charles was skimming off the oil company’s profits.  There was also some inheritance money and gift cash.  The couple didn’t bother to enter any of the extra dollars on their tax returns.  They stored away the cash and didn’t report it.

So, what does a judge do when there is the issue of unreported and undeclared cash?  Can you guess?

We’ll give you a hint.  Good citizens set good examples.  And, judges are to set the ultimate examples as good citizens.  It is therefore up to the judge to report any illegal activities.  The judge in this case felt it was necessary to report the Sheridan’s failure to pay appropriate taxes.

This is how it was handled for the Sheridans.  And, how the law works going forward.  If a matrimonial judge finds that someone has cheated on a tax return, he or she has an ethical obligation.  The report to the IRS will put them on notice.  The Internal Revenue Service will then make the decision whether or not an audit should be initiated.

Contact Us

At the Law Offices of Sam Stoia, we have years of experience helping people with both simple and complex divorces.  Contact our office to set up a complementary appointment.

What Happens in Divorce Court Can Get Reported to the IRS

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