Discovering Unreported Income: Practical Issues

What factors should an attorney consider if he/she believes to have substantial proof that the other spouse has hidden assets and that the income from those assets is being held in a third party's name?  Marcyan proposes that the following points will, in large part, determine the best approach:

  • Opposing counsel's recognition of his client's risk
  • Opposing counsel's control over the client
  • Opposing counsel's understanding of the risk and possible criminal liability
  • Your own client's exposure and possible liability for earlier jointly filed tax returns
  • Your client's potential success in seeking "innocent spouse" status with the IRS
  • The likelihood of the judge's reporting tax fraud to the IRS and relevant state taxing authorities
  • The likelihood of courtroom personnel's reporting such testimony to the IRS in hopes of receiving a "Whistleblower's Award"
  • The adequacy of your expert witness's testimony before the divorce judge to support the fraud claim
  • Your ability to "prove up" the fraudulent activity without an expert and through the opposing spouse or his employee(s)
  • The persuasiveness of your presentation of evidence before the judge
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