@Opus 17
This has nothing to do with responsibility for a joint return, so innocent spouse relief does not apply (nor would injured spouse relief apply).
As I understand it, a 1099-C (Cancellation of Debt) was issued by a lender. Apparently the 1099-C was issued to the OP, but she has not confirmed that. The divorce decree says that the ex-husband is responsible for the debt that was later canceled. Both the OP and her ex take that to mean that he is responsible for paying the income tax on the canceled debt. He reported the canceled debt on his tax return and paid the tax on it. The OP feels that that should settle the matter. But since the 1099-C was issued to the OP, not to her ex, the IRS does not connect the canceled debt reported on the ex-husband's tax return with the 1099-C issued to the OP, so the IRS is saying that the OP has to report the income from the cancellation of debt.
As a matter of tax law, the OP is in fact responsible for reporting the canceled debt from the 1099-C that was issued to her, no matter what the divorce decree says. Note that the issue is the tax on the canceled debt, not the payment of the debt itself.
This looks like a typical case of the divorce lawyers and judge not understanding the tax law, or perhaps they did not anticipate that the debt might be canceled, so they did not address that possibility.
What I think the OP and her ex might be able to do to satisfy the IRS is for the OP to pay the tax, and her ex-husband reimburse her for the tax. Then he could file an amended return removing the cancellation of debt income that he reported unnecessarily, to get a refund of the tax that he paid. @Mike9241, would that work?
