Spouse Can’t Claim Innocence to Avoid Overpaid Refund Liability

A taxpayer can’t escape repaying the government for a refund she wrongfully received by claiming she’s an innocent spouse, the US Tax Court said Wednesday.

The erroneous refund was made up only of statutory interest, meaning there’s no tax deficiency to which the innocent spouse provision could apply, the court said.

Maryland found Dominick LaRosa and his business guilty of tax fraud from 1981-83, after which the LaRosas settled with the IRS and agreed that they had underpaid $9.74 million in taxes for those years. The family later filed a refund claim, arguing they had overpaid interest and were owed ...