The Supreme Court of Georgia recently reversed a decision of the trial court in a divorce case, which made certain directives regarding the parties’ tax liability. Symms v. Symms, S10F1783 (2011). During the final hearing in that divorce case, there was testimony that “the parties had failed to report income from the [wife’s] photography business for the purpose of the assessment and payment of income tax.” Id. at 2. The trial court's final judgment and decree of divorce included several provisions addressing tax issues, including, but not limited to, ordering the parties to amend four years of income tax returns (for which the court specified exact dollar amounts to be used for income) and ordering that the parties be equally responsible for any tax liability and/or penalties. Id. The husband appealed, arguing, “the superior court exceeded its authority in ordering the filing of amended tax returns reflecting the legal determination of joint and several liability and the factual determinations of income.” Id. at 3.
The Supreme Court of Georgia agreed, stating generally “our State Courts are not authorized to impose income tax liability.” Id., quoting Blanchard v. Blanchard, 261 Ga. 11, 15 (1991). Specifically, the Court held that ordering the parties to be jointly and severally liable for any tax liability or penalties was “premature because of the Husband’s contested claim that he qualifies as an ‘innocent spouse’,” and that he is entitled to an IRS determination of his status as such. Id. at 3. In addition, the Court held that the dollar amounts that the trial court ordered be reported on the amendment of the previous tax returns were “either largely speculative…or blatant misrepresentations” with no accurate documentation backing them up. Id. at 4. Thus, the portion of the final judgment and decree of divorce related to the parties’ taxes could not stand.