mrichman333 Posted February 12, 2015 Report Share Posted February 12, 2015 I have a customer with a irresponsible husband who decided to have next to nothing withheld from his pay and he took an early distribution from his retirement account back in 2010 he result a tax due of $5,907. I filed a instilment agreement with them that they only kept up with for a few months. 2011 she filed separately and they took her $3.112 refund 2012 she filed separately and they took her $1,180 refund 2013 she filed separately and they took her $1,343 refund With all the interest and penalties' she owes the IRS $6,998.86 She just came to my office with a 1 inch pile of papers from the IRS. The woman at the IRS office told her to file innocent spouse relief. WHAT. She doesn't qualify as I see it. for 1. there wasn't a "understated tax" due to erroneous items Then there is Separation of liability relief. She doesn't qualify because they are not divorced or legally separated and they ARE members of the same household. Finally there is Equitable Relief Which I don't see her qualifying for either SO what to do. She goes to the IRS office and is told to file for innocent spouse relief and I tell her she doesn't qualify or do I just file it and let the IRS reject her. Quote Link to comment Share on other sites More sharing options...
kcjenkins Posted February 13, 2015 Report Share Posted February 13, 2015 I hate it when a client gets bad advice from some smuck at the IRS, because the client always gives a lot of weight to the fact that they "heard it direct from the IRS". You are correct, of course. After telling her the truth, if she wants you to try it anyway, why not? Quote Link to comment Share on other sites More sharing options...
mrichman333 Posted February 13, 2015 Author Report Share Posted February 13, 2015 I hate it when a client gets bad advice from some smuck at the IRS, because the client always gives a lot of weight to the fact that they "heard it direct from the IRS". You are correct, of course. After telling her the truth, if she wants you to try it anyway, why not? Yep, in some peoples mind anything they hear from a IRS employee must be true. In highlighted the parts in the publication she gave me that shows why she does not qualify, if that's not enough for her I'll file it. Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted February 13, 2015 Report Share Posted February 13, 2015 My only caution would be signing something you know not to be true. Before doing so, you just might want to ask your E&O insurer. Quote Link to comment Share on other sites More sharing options...
mrichman333 Posted February 13, 2015 Author Report Share Posted February 13, 2015 My only caution would be signing something you know not to be true. Before doing so, you just might want to ask your E&O insurer. I was thinking of teller her I'll fill out the form but wont sign it Quote Link to comment Share on other sites More sharing options...
Margaret CPA in OH Posted February 13, 2015 Report Share Posted February 13, 2015 Maybe check with your insurer. At the risk of losing a client who could cost you in more ways than you would like, it doesn't seem to me the best idea to prepare something you don't sign where she could come back with a "You gave it to me so it must be right even if you didn't sign it."As a percentage of your total income, is this client or couple worth this risk and aggravation? A few years ago I went round and round with a long time client who absolutely did not qualify to take her 26 year old son as a dependent. I gave her the correct paper form with CLIENT COPY to review and never heard a peep about filing. I'm sure she went elsewhere. The fee is unpaid but I am relieved to not have to deal with it any longer or signing a return I know was wrong. 1 Quote Link to comment Share on other sites More sharing options...
Max W Posted February 14, 2015 Report Share Posted February 14, 2015 I think it does qualify for Equitable Relief. http://www.irs.gov/Individuals/Innocent-Spouse-Tax-Relief-Eligibility-Explorer-21 Quote Link to comment Share on other sites More sharing options...
easytax Posted February 14, 2015 Report Share Posted February 14, 2015 I think it does qualify for Equitable Relief. http://www.irs.gov/Individuals/Innocent-Spouse-Tax-Relief-Eligibility-Explorer-21 I am wondering why you think she qualifies? She signed the original return (assuming), signed the payment agreement (assuming); so how would she be eligible? It is agreed that there may not be a "loss" to ask, but especially given the IRS need for dollars, I do not see where they would be "understanding" and drop the dollars owed. MRICHMAN333, For the Equitable Relief mentioned, do you think that to "ask" would be improper? I err on the side of asking a lot, rather than assuming I am wrong and "your motivies" are not wrong, you are basically just asking --- can we get this, so IRS should not be able to come back on you for frivolous (can they?). Quote Link to comment Share on other sites More sharing options...
mrichman333 Posted February 14, 2015 Author Report Share Posted February 14, 2015 Maybe check with your insurer. At the risk of losing a client who could cost you in more ways than you would like, it doesn't seem to me the best idea to prepare something you don't sign where she could come back with a "You gave it to me so it must be right even if you didn't sign it." As a percentage of your total income, is this client or couple worth this risk and aggravation? A few years ago I went round and round with a long time client who absolutely did not qualify to take her 26 year old son as a dependent. I gave her the correct paper form with CLIENT COPY to review and never heard a peep about filing. I'm sure she went elsewhere. The fee is unpaid but I am relieved to not have to deal with it any longer or signing a return I know was wrong. They are not worth any trouble at all Quote Link to comment Share on other sites More sharing options...
mrichman333 Posted February 14, 2015 Author Report Share Posted February 14, 2015 I think it does qualify for Equitable Relief. http://www.irs.gov/Individuals/Innocent-Spouse-Tax-Relief-Eligibility-Explorer-21 It gets a bit confusing when you read pub. 971 http://www.irs.gov/pub/irs-pdf/p971.pdf It seems to indicate that she would have to not been afar the tax wasn't paid or that she thought the spouse paid the tax. They give an example Example. You and your spouse filed a joint 2011 re-turn. That return showed you owed $10,000. You had $5,000 of your own money and you took out a loan to pay the other $5,000. You gave two checks for $5,000 each to your spouse to pay the $10,000 liability. Without telling you, your spouse took the $5,000 loan and spent it on himself. You and your spouse were divorced in 2012. In addition, you had no knowledge or reason to know at the time you signed the return that the tax would not be paid. These facts indicate to the IRS that it may be unfair to hold you liable for the $5,000 unpaid tax. The IRS will consider these facts, together with all of the other facts and circum-stances, to determine whether to grant you equitable relief from the $5,000 unpaid tax Quote Link to comment Share on other sites More sharing options...
mrichman333 Posted February 14, 2015 Author Report Share Posted February 14, 2015 They are also still married also Quote Link to comment Share on other sites More sharing options...
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