Client's ex and payment plan (he says)

[Margaret CPA in OH]

New client last year in the process of divorce came with IRS letter about MFJ 2010 return. Major balance due and ex tight with info. I got POA for her and transcript, recreated the return both MFJ and MFS. He 'forgot' to input basis of stocks sold and took loss of $3000. With MFS, she clearly had a refund from withheld tax. All stocks were in his name only and she 'trusted' him and his accountant and signed returns.

I advised filing 8379 but she demurred thinking it was too invasive and 'sure' the ex would get this straightened out. Last week she received Final Notice of Intent to Levy. This, after her 2013 refund of $1800 was confiscated and still a balance due. She did manage to get her refund from him but now is afraid of intent to levy. Of course we can have a hearing but right up front she should include an 8379. I told her it may not help now as sol is expired. She called ex, he says he now has a payment plan. She wants me to check and see. I know of no way to confirm that as I do not have his POA.

Any ideas? My suggestion was to get in his face, demand that he get a loan and pay the balance then deal with IRS and his so-called basis on his own. She is very concerned now about her credit and house she just bought.

[kcjenkins]

If he has a payment plan, he should have something in writing proving that. But even if he does, that will not stop them from going after her too. That is the reality of a MFJ return. Best advice is to help her work out a payment plan too.

[Pacun]

I don't see any hostilities on the separation so I would ask the lady to call the IRS and explain the situation and to see if the levy can be lifted.

[mcb39]

In my experience with this type of case, the levy will not be lifted. The IRS will go after the most accessible party. They will take the money owed from the easiest source. In many cases, it is the wronged spouse who ends up paying the bill.

[kcjenkins]

Marilyn is exactly right, the IRS actually is REQUIRED under the law to go after anyone who owes, and with a joint return, both of them owe it.

[mcb39]

We had a case this year wherein we furnished the IRS with phone numbers, addresses, etc. of the guy who did not report his Exxon restitution in 2010. That was the last year they filed MFJ before divorcing. My client, who has a steady job as a teacher and is a homeowner, got slammed for the entire arrears. They never even made an attempt to get it from him. She never knew about the restitution. Sour grapes all around.

[Margaret CPA in OH]

Yes, I think she is screwed now. I think she lost her best shot when she decided against innocent spouse and now sol is past. I told her my opinion was that an agent in a hearing may seem sympathetic but would lose that when told that client decided against timely filing innocent spouse on advice of CPA (me).

My question was whether there was a way to find out if ex actually did have an agreement if he decided not to show her paperwork to prove it. Because he would have signed it, does that mean she was not required to also sign and/or be informed if he did?

[kcjenkins]

Yes, his agreement is his, they can't show it to his ex.

[mcb39]

On the other hand; my client had filed innocent spouse every year that she was married to this piece of work. I had filed her (their) returns every year until 2010 when I could no longer deal with him and would not report his SE income the way he wanted it reported. I referred them to another preparer. However, since the Exxon income was not included in the return, the innocent spouse issue did not enter into it. After their divorce in 2011, SHE returned to me and HE remained with the other preparer. She got hit with the levy in 2013. We were unable to find any way to get out of her paying. The agents were adamant that she was married to him; therefore since he wasn't willing to pay; she had to. She did pay before any more interest accumulated.