Follow The Money

“My spouse is hiding income!”  My spouse earns cash under the table.”  I hear these allegations often in my family law practice.  If your spouse is self-employed, or is able to earn cash, you are probably correct.  However, before you tell a family law judge that your spouse lies on his or her tax returns, think about this: How many times did you sign those tax returns?  Be careful if your family law attorney tells you that you’ll be treated as an “innocent spouse” by the IRS.  Remember, if there is a tax audit, or worse, you have the burden of proof to show the IRS that you are the “innocent souse.”  In other words, you’ve just bought yourself a bunch of work and probably the need to hire a tax attorney or even a criminal defense attorney, possibly at your own expense.  Dealing with unreported income, especially where parties have been filing joint tax returns for years, can be problematic.  One way to avoid this problem: Hire a private judge and keep all the allegations about failing to report income out of the public eye. And, if you are the spouse who has unreported income, think about this: Either you are going to be reasonable when it comes to child and/or spousal support, or you are going to put your spouse into a corner where they’ll feel they have nothing to lose by exposing you in a public courtroom. 

What if you need to follow the money?   Money almost always leaves a trail, but following the money can be expensive. Your attorney will need to do an extensive amount of discovery, including but not limited to Interrogatories, Demands for Production of Documents, and Depositions.  You’ll need to issue subpoenas to banks and financial institutions, lenders, etc., and you’ll need to hire a forensic accountant and perhaps even a private financial investigation team.  These costs can be prohibitive and are usually only justified in cases where large amounts of assets are being hidden.
Remember, your attorney needs to present admissible evidence to a judge.