Guidance About New Spouse's IRS Issues

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nfs
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Guidance About New Spouse's IRS Issues

Post by nfs » Wed Apr 29, 2015 12:36 pm

I got married in January. Prior to getting married, new spouse and I had many financial discussions and I thought I understood his finances and that we had a plan to resolve our existing debts so we can move forward in our new life with minimal debts as soon as possible. However, what (apparently) neither of us knew is that he was about to get hit with a huge tax bill.

DH was separated in 2012 and divorced in 2013. He has been filing head of household since 2012. Apparently he has also made some errors on his taxes and did not always pay on time (ugh). So, despite paying what to me is a boatload to the IRS each year, we now have close to a $100K bill from the IRS. This is not something we're able to just pay outright - we are both still recovering from our previous divorces and there are kids in college. He has called the IRS numerous times and been working with the. He just sent in OIC (offer in compromise) paperwork. He seems hopeful, while I feel that we need to start preparing for if it gets rejected.

So my question is, how would you proceed?

My current plan is that we need to do the following:
  • Gather all documentation we have for the years in question
  • Get the documentation from the IRS about what penalties/interest have been assessed
  • Find a local CPA who comes with good recommendations who can help us go back through all these years of taxes, help us gameplan on how to move forward
What am I missing? What else would you do?

DH makes great money, but honestly, with some mistakes he's made in the past 4-5 years and kids in college, thing are tight (I work as well). I am so sick of seeing these letters from the IRS. I want all the issues resolved and things done correctly going forward. Paying $9k in penalties any given year is not my idea of a good time and don't even get me started on the interest. That whole idea of going to Italy for a honeymoon in the Fall is now gone and the budget for it is going to the IRS... Honestly, it's a really rough way to start a marriage.

Thanks all :)
Last edited by nfs on Wed Apr 29, 2015 4:04 pm, edited 1 time in total.

navyitaly
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Re: Guideance About New Spouse's IRS Issues

Post by navyitaly » Wed Apr 29, 2015 12:39 pm

Hire a lawyer...make sure they don't refer case to US Attorneys office....let lawyer do his or her job.

nfs
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Re: Guideance About New Spouse's IRS Issues

Post by nfs » Wed Apr 29, 2015 12:43 pm

navyitaly wrote:Hire a lawyer...make sure they don't refer case to US Attorneys office....let lawyer do his or her job.
Hire a lawyer to do what exactly?

navyitaly
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Re: Guideance About New Spouse's IRS Issues

Post by navyitaly » Wed Apr 29, 2015 12:46 pm

Negotiate a fair and reasonable settlement and get a guarantee they aren't going to refer case to US Attorney for any possible charges. I'm no lawyer so I don't know what spouse could be charged with.

The Wizard
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Re: Guideance About New Spouse's IRS Issues

Post by The Wizard » Wed Apr 29, 2015 12:54 pm

I'm thinking a CPA might be better than a lawyer for this problem..
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jared
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Re: Guideance About New Spouse's IRS Issues

Post by jared » Wed Apr 29, 2015 1:17 pm

Consider hiring an attorney, CPA, or EA specializing in IRS representation.

wfrobinette
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Re: Guideance About New Spouse's IRS Issues

Post by wfrobinette » Wed Apr 29, 2015 1:47 pm

jared wrote:Consider hiring an attorney, CPA, or EA specializing in IRS representation.
Get an experienced tax attorney or enrolled agent quickly. CPA may work but might not be experienced enough to negotiate a deal.

Greatness
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Re: Guideance About New Spouse's IRS Issues

Post by Greatness » Wed Apr 29, 2015 1:52 pm

There is something called the innocent spouse statute, which makes you immune to any negative actions that a spouse has done against the U.S. (IRS). I would keep separate accounts right now and not have his name on any of them. If you do, they can lien the account and take those funds. Next, get an experienced CPA to help you through this mess. There's an old saying that you do not mess with the IRS. I concur on all accounts with that statement.

dgdevil
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Re: Guideance About New Spouse's IRS Issues

Post by dgdevil » Wed Apr 29, 2015 2:00 pm

Depending on the tax-year(s) in question, his ex-wife could conceivably be on the hook as well - which might lessen the burden on you/him. Anyway, a criminal tax attorney will be able to put your mind to rest.

nfs
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Re: Guideance About New Spouse's IRS Issues

Post by nfs » Wed Apr 29, 2015 2:07 pm

Greatness wrote:There is something called the innocent spouse statute, which makes you immune to any negative actions that a spouse has done against the U.S. (IRS). I would keep separate accounts right now and not have his name on any of them. If you do, they can lien the account and take those funds. Next, get an experienced CPA to help you through this mess. There's an old saying that you do not mess with the IRS. I concur on all accounts with that statement.
I am jointly on his accounts, but due to some technical problems he encountered, he is not yet on my account which is where my paycheck goes (Whew!). Since we got the notice from the IRS we have not pursued combining finances any further. Of course, we are in a community property state, so who knows what will happen ultimately, but since the liabilities are from before we were married, I believe I should be able to keep my income and assets out of the mix.
dgdevil wrote:Depending on the tax-year(s) in question, his ex-wife could conceivably be on the hook as well - which might lessen the burden on you/him. Anyway, a criminal tax attorney will be able to put your mind to rest.
Yes, good point. Unfortunately, the years in question they filed separately. Also, his ex is sort of an idiot (don't get me started) and hasn't filed any of her taxes since their separation... so all the tax years he has issues due to miscalculations or paying later, she actually will get hit with penalties/interest herself once she does file. I like to think DH isn't quite such a big idiot... but I'm definitely going to be making sure we don't have these issues in the future in our household.

dbltrbl
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Re: Guideance About New Spouse's IRS Issues

Post by dbltrbl » Wed Apr 29, 2015 2:35 pm

There are some tax attorneys who are also enrolled agents. I would get one of those. While you may(new Spouse) not on the hook it is still nice to have this behind you. Get help.

bsteiner
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Re: Guideance About New Spouse's IRS Issues

Post by bsteiner » Wed Apr 29, 2015 2:51 pm

dbltrbl wrote:There are some tax attorneys who are also enrolled agents. I would get one of those. While you may(new Spouse) not on the hook it is still nice to have this behind you. Get help.
An enrolled agent is permitted to practice before the IRS in the same way as a lawyer. Since lawyers are already permitted to practice before the IRS, there's no reason for a lawyer to become an enrolled agent, though it's opssible that a lawyer might have become an enrolled agent before becoming a lawyer.

billern
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Re: Guideance About New Spouse's IRS Issues

Post by billern » Wed Apr 29, 2015 3:05 pm

That is a sizable amount of money so getting professional help would be advisable.

Call me skeptical but, unless your S/O had their head buried in the sand, it seems that they would have been aware of this issue prior to your marriage. It is not a good sign that a $100K tax bill is coming up as a surprise a few months after you were married.

nfs
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Re: Guideance About New Spouse's IRS Issues

Post by nfs » Wed Apr 29, 2015 3:09 pm

billern wrote: Call me skeptical but, unless your S/O had their head buried in the sand, it seems that they would have been aware of this issue prior to your marriage. It is not a good sign that a $100K tax bill is coming up as a surprise a few months after you were married.
I too agree that it shouldn't have come as a complete surprise - he should have realized that if he paid taxes late he would owe a penalty. BUT I honestly believe he didn't really know. The first letter from the IRS was about something calculated improperly which caused him to owe more for one year. That was fine - he talked to the IRS and was in the process of setting up payments when we got the letter stating that in fact the amount was not something like $6K, but really $99K. It's possible I may have lost it just a little bit that day. But, I certainly have learned enough from this that I will be doing everything I can to ensure it doesn't happen in the future.

spectec
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Re: Guidance About New Spouse's IRS Issues

Post by spectec » Wed Apr 29, 2015 4:18 pm

You really do need a tax pro to look at this. Tax attorney, CPA who works with collections, or an Enrolled Agent A who works with collections - your choice. (Personally, I'd be looking for an EA who knows their way around the collections process as the best choice). Knowing how to navigate the collections process is key, and not everyone in the business is good at that.

Divorces create all sorts of tax messes, and sometimes some of the tax isn't even valid. IRS has been known to make all sorts of mistakes when people's addresses are changing and various other issues are at play. But whatever you do, don't fall prey to the advertising by the "pennies on the dollar" crowd you see on late night TV. If your spouse really owes the tax, and if he has a good income, then nobody is going to get it negotiated down. They should be able to get a somewhat reasonable payment plan set up, maybe even get some penalties abated, and get you some stability. But that's about the extent of what they will be able to accomplish. Anyone who says differently doesn't know how the IRS work - if they claim they can do more, they are going to scam you out of more money.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

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TimeRunner
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Re: Guidance About New Spouse's IRS Issues

Post by TimeRunner » Wed Apr 29, 2015 4:40 pm

spectec wrote:...and sometimes some of the tax isn't even valid. IRS has been known to make all sorts of mistakes....
THIS. Is the IRS 100% correct? You really need to know.
"What'd ya expect in an opera, a happy ending?" -Bugs Bunny ...:... One cannot enlighten the unconscious.

AWH_CPA
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Re: Guidance About New Spouse's IRS Issues

Post by AWH_CPA » Wed Apr 29, 2015 6:50 pm

Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.

As a CPA I would go with another CPA. For some reason a lot of people here like to suggest EAs as the better alternative. EAs are perfect for preparing the retired couple's tax return with a 1099 R and a schedule A. A CPA will generally know more about the more intricate tax issues that high income/complex tax payers face.

Judge me if you will for my statement, but I stand by it. The last EA I met didn't know what form 2106 was for. Jaded me on the entire community.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Wed Apr 29, 2015 7:04 pm

AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.

As a CPA I would go with another CPA. For some reason a lot of people here like to suggest EAs as the better alternative. EAs are perfect for preparing the retired couple's tax return with a 1099 R and a schedule A. A CPA will generally know more about the more intricate tax issues that high income/complex tax payers face.

Judge me if you will for my statement, but I stand by it. The last EA I met didn't know what form 2106 was for. Jaded me on the entire community.
I really appreciate your insight. I have only ever used a CPA when I was previously married and my ex-husband had a business - the CPA was in another state and suggested by a business consultant we were working with. I am concerned about making sure we find someone who really is knowledgeable. Are there specific questions you would recommend we ask anyone we consider using?

I have asked my husband to request the IRS to send detailed information about how much is owed in both penalty and interest for each year. The letter we received said we could request the information. The frustrating thing is that they also seem to force you to act quickly... Anyway, I told him that now that he submitted his OIC he'd better get the paperwork anyway. I've also learned from this that his record keeping isn't quite up to my standards. We're working on it though...

spectec
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Re: Guidance About New Spouse's IRS Issues

Post by spectec » Wed Apr 29, 2015 9:01 pm

AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.

As a CPA I would go with another CPA. For some reason a lot of people here like to suggest EAs as the better alternative. EAs are perfect for preparing the retired couple's tax return with a 1099 R and a schedule A. A CPA will generally know more about the more intricate tax issues that high income/complex tax payers face.

Judge me if you will for my statement, but I stand by it. The last EA I met didn't know what form 2106 was for. Jaded me on the entire community.
I'm neither a CPA nor an EA, but I have lots of experience in seeing work by both groups over a period of 40 years. I've seen work by CPA's that wasn't up to basic standards. But that didn't cause me to write off the whole profession. Some CPA's are very competent at tax preparation, while others shouldn't be near a 1040 because their bread and butter is auditing and they do tax work to take up the slack (or else pass it off to an inexperienced or magically competent staffer). Same for EA's. However, when one consults a CPA they don't know where that person's interest & skills really lie, but with an EA they are getting someone whose specialty is tax work and they have been trained in representation. Nevertheless, their competence should be checked out thoroughly.

In this case, the taxpayer specificallly needs someone with collections experience. They are already deep into a collections mattter and it appears to be drawing to a showdown. The amounts due are probably not great enough to justify the cost of a tax attorney, so a CPA or EA is their most likely choice. They are already in way over their head and the last thing they need is a rookie CPA or rookie EA trying to navigate this situation & learning at their expense.
Last edited by spectec on Wed Apr 29, 2015 10:13 pm, edited 1 time in total.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

spectec
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Re: Guidance About New Spouse's IRS Issues

Post by spectec » Wed Apr 29, 2015 9:16 pm

nfs wrote:
AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.

As a CPA I would go with another CPA. For some reason a lot of people here like to suggest EAs as the better alternative. EAs are perfect for preparing the retired couple's tax return with a 1099 R and a schedule A. A CPA will generally know more about the more intricate tax issues that high income/complex tax payers face.

Judge me if you will for my statement, but I stand by it. The last EA I met didn't know what form 2106 was for. Jaded me on the entire community.
I really appreciate your insight. I have only ever used a CPA when I was previously married and my ex-husband had a business - the CPA was in another state and suggested by a business consultant we were working with. I am concerned about making sure we find someone who really is knowledgeable. Are there specific questions you would recommend we ask anyone we consider using?

I have asked my husband to request the IRS to send detailed information about how much is owed in both penalty and interest for each year. The letter we received said we could request the information. The frustrating thing is that they also seem to force you to act quickly... Anyway, I told him that now that he submitted his OIC he'd better get the paperwork anyway. I've also learned from this that his record keeping isn't quite up to my standards. We're working on it though...
At the risk of sounding critical, let me suggest that focusing on the penalty and interest right now is a toal waste of time. This Is a classic case of getting the cart before the horse. First thing you need to to is have a professional pull a transcript and reconstruct where the tax liablity originated. If any of the tax liablity can be obviated, then the associated penalty and interest disappears as well.

Once the actual tax liability is established, the next step will be to look at the largest penalty and see if it can be abated, usually by presenting a valid excuse for the circumstances which created the penalty. That might lead into an opportunity to tie that reason to other penalty assessments, or maybe it's a one-shot deal. Interest is satutory and almost never abated (except in very unusual circumstances), so that's the least productive of all the efforts.

If your spouse has already actually submitted the OIC, he may have dug the hole deeper. If he has prepared the OIC but hasn't submitted it yet, he should probablly hold off until you've had a pro do a complete assessment of the situation. You don't want to subnmit an OIC until the tax liability (along with associated P&I) is firmly estbalished and their records show that all delinquent returns have been filed. Otherwise, they will just keep the money you paid with the OIC and deny approval. Then they start levying wages and bank accounts & filing liens. You also need to be careful what you do and don't reveal in an OIC - some things can come back to bite you.

And of course, there are the state taxes which will eventuallly follow, if you're in a state which has an income tax. IRS shares all their information with the states, but there's a time lag. When the state process starts, it beccomes very discouraging. In many cases, IRS is actually easier to deal with than the state.

Bottom line is you need a plan. You need someone who knows how to lay out the plan and to follow through on it. They need to know what they are doing and they won't be cheap. You also need to be prepared to respond to their questions and to obtain docuementation they may require, and to do it alll in a timely manner. Don't expect to just dump all the IRS notices in their lap and tell them to "handle it". Right now you're just putting out fires and dreading every trip to the mail box. You can either get serious about getting a handle on this or continue down your preent path. It's your choice.

You asked about where to begin choosing someone. Since I'm obvioiusly leaning toward using an EA, I'll suggest that you can look at the web site for the National Association of Enrolled Agents and get some recommendations from your geographical area. Then interview a few of them until you find one or two who can communicate, whose prices are reasonable, and who can jump on this quickly. (You may have to settle for 2 out of 3 of those criteria). One good question to ask them is how many OIC's have they prepared in the past couple of years. Based on what you have said already, I doubt an OIC has a chance of approval unless you can establish "doubt as to liability". You'll never get it approved based on "ability to pay" because you've already said he has a good income and my assumptions about your ages. See how quickly the person you speak with sniffs that out and tells you so up front - it might be a good sign that they know a little something about how collections works and they won't be spinning their wheels at your expense while the meter is running.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

epitomist
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Re: Guidance About New Spouse's IRS Issues

Post by epitomist » Thu Apr 30, 2015 7:07 am

AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.
This happened to me. I forgot to add a 1099 to my Schedule D when I switched brokers in late November one year. About two years later I got a notice stating that I owed them $100,000 in taxes because they assumed all the sales that I did were at $0 cost.

When I properly filled out the forms, I ended up owing an additional $500. I paid it plus interest and penalties and everything has been fine since.

AWH_CPA
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Re: Guidance About New Spouse's IRS Issues

Post by AWH_CPA » Thu Apr 30, 2015 11:25 am

epitomist wrote:
AWH_CPA wrote:Have you had a CPA look at the notices to determine if the tax is in fact due? I see notices 3 or 4 times a year where the IRS sends a notice for $100K because the taxpayer for got a 1099 or something. (Usually brokerage accounts). First step is to take it to a CPA with the return in question. Have them look it over and give you their opinion.
This happened to me. I forgot to add a 1099 to my Schedule D when I switched brokers in late November one year. About two years later I got a notice stating that I owed them $100,000 in taxes because they assumed all the sales that I did were at $0 cost.

When I properly filled out the forms, I ended up owing an additional $500. I paid it plus interest and penalties and everything has been fine since.
+1. This is my point.

To the OP: Take a copy of the return that your husband filed that is in question along with the notices that you have received and let them give you guidance as to what else they may need. If the notice is for a 1099 MISC that was issued to your husband for self employment type work, you might also have him start digging up any and all expenses that he could use to offset that income.

Going forward, however, you need to find a CPA that both you and your husband trust. And then tell your husband that you two as a family will no longer be playing the games of late filing, late payment, self preparing etc. It's a little insurance policy to pay the CPA to prepare your taxes and instruct you as to what to do that isn't worth ruining a marriage over.

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Re: Guidance About New Spouse's IRS Issues

Post by dolphinsaremammals » Thu Apr 30, 2015 11:59 am

I hope the people who go nuclear in other threads when I and others suggest married people keep their finances separate or largely separate read this thread.

dgdevil
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Re: Guidance About New Spouse's IRS Issues

Post by dgdevil » Thu Apr 30, 2015 12:06 pm

dolphinsaremammals wrote:I hope the people who go nuclear in other threads when I and others suggest married people keep their finances separate or largely separate read this thread.
Ha! So true. Hopefully OP will be OK. The ex-wife (and her new spouse, if any) are the ones with the problems. Hope they get conjugal visits.

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Re: Guidance About New Spouse's IRS Issues

Post by The Wizard » Thu Apr 30, 2015 12:20 pm

dolphinsaremammals wrote:I hope the people who go nuclear in other threads when I and others suggest married people keep their finances separate or largely separate read this thread.
Hold on.
You can't reasonably be suggesting that most married couples should be filing separate tax returns.
Married Filing Jointly is generally the cost-effective way to go...
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BL
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Re: Guideance About New Spouse's IRS Issues

Post by BL » Thu Apr 30, 2015 12:34 pm

Greatness wrote:There is something called the innocent spouse statute, which makes you immune to any negative actions that a spouse has done against the U.S. (IRS). I would keep separate accounts right now and not have his name on any of them. If you do, they can lien the account and take those funds. Next, get an experienced CPA to help you through this mess. There's an old saying that you do not mess with the IRS. I concur on all accounts with that statement.
I would not pay in enough to get a refund, as they will probably seize that for a start. There is a special form to include when spouse has no connection to the debt owed the IRS.

Did your husband do his own taxes? You do need a specialist to examine his previous taxes and figure out what exactly the problem is and whether he does indeed owe the amount stated, as well as to negotiate with the IRS.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 12:48 pm

dolphinsaremammals wrote:I hope the people who go nuclear in other threads when I and others suggest married people keep their finances separate or largely separate read this thread.
I'm not sure how keeping finances separate would make a difference or what you're trying to get at with your comment. Married filing separately will really hurt. Even married filing jointly will hurt a bit since DH is in a higher tax bracket than I have been, so now we'll be paying a higher percentage on my income. We are also in a community property state (though thank goodness we have no state income tax - go WA), so attempting to keep things separate is not easy to do legally.

Honestly, had we known about this issue before getting married, we probably wouldn't have gotten married on paper until the IRS issue was resolved - we just didn't know it was an issue until later. In fact, we may wind up having to get divorced over it because they're making it very difficult financially to stay married. It's a really screwed up situation that is frustrating me no end.

mptfan
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Re: Guidance About New Spouse's IRS Issues

Post by mptfan » Thu Apr 30, 2015 12:52 pm

nfs wrote:Honestly, had we known about this issue before getting married, we probably wouldn't have gotten married on paper ...
Is there a different way to get married?

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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 12:55 pm

mptfan wrote:
nfs wrote:Honestly, had we known about this issue before getting married, we probably wouldn't have gotten married on paper ...
Is there a different way to get married?
We would have still had a ceremony and celebrated... we would have just legally gotten married later.

I personally believe in getting married if you choose to spend your life with someone. I also believe there are many legal reasons to want to be married to said person. We would like to have a child together and he has children from his previous marriage. For these reasons we have a legal marriage and celebrated with our families. If I knew the legal side of it was going to cause problems, we could have waited on that part - this would have it's own challenges, but might have made things run smoother overall at the start of our life together.

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Re: Guidance About New Spouse's IRS Issues

Post by dgdevil » Thu Apr 30, 2015 12:57 pm

nfs wrote: In fact, we may wind up having to get divorced over it because they're making it very difficult financially to stay married. It's a really screwed up situation that is frustrating me no end.
Nooooo!!! This is the saddest thing I have read on BH. Don't let an IRS computer ruin your life. Enough wise people have told you that it may not be as worse as it seems, and to go find a competent CPA post haste. This, too, shall pass.

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Re: Guidance About New Spouse's IRS Issues

Post by Epsilon Delta » Thu Apr 30, 2015 12:59 pm

dolphinsaremammals wrote:I hope the people who go nuclear in other threads when I and others suggest married people keep their finances separate or largely separate read this thread.
Keeping them separate only helps so far. Worst case it keeps the spouse out of jail, but the innocent spouse rule should do that. However if they stay married the couple still has to come up with the cash. Whether it comes from his, her or their money it's still money that the couple can't spend on something else.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 1:03 pm

dgdevil wrote:
nfs wrote: In fact, we may wind up having to get divorced over it because they're making it very difficult financially to stay married. It's a really screwed up situation that is frustrating me no end.
Nooooo!!! This is the saddest thing I have read on BH. Don't let an IRS computer ruin your life. Enough wise people have told you that it may not be as worse as it seems, and to go find a competent CPA post haste. This, too, shall pass.
We would stay together, we just wouldn't legally be married anymore. It would be like if the legal part of the marriage hadn't happened. I don't want to go there, but this liability isn't mine and was from before our marriage. However, because of our marriage, they will look at our income together and say "yes, see, you can in fact pay this". They want their money, so they're happy to take what I work hard for despite the fact that it pretty much has nothing to do with me. I'm not saying they shouldn't get what they are owed. I am saying that they should get it in a appropriate manner, such as it would have been had it been resolved before our marriage.

Edited to add: I'm not saying that I won't contribute to getting this paid off, but if by some chance they are willing to accept an OIC to resolve this, incorporating my income and my assets is basically going to make us pay the full amount. It should really be based on my husband alone. The fact that DH recently changed jobs and now makes less than he did in the past (was a contractor) is making it more challenging... IRS seems to think he's making the old amount of money. If he was, then we could pay more easily... but that isn't the case.
Last edited by nfs on Thu Apr 30, 2015 1:09 pm, edited 1 time in total.

niceguy7376
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Re: Guidance About New Spouse's IRS Issues

Post by niceguy7376 » Thu Apr 30, 2015 1:07 pm

nfs wrote:In fact, we may wind up having to get divorced over it because they're making it very difficult financially to stay married.
I am sorry if I dont know much about the tax issues with IRS.

Are you thinking that you wouldnt need to face the IRS letters and the current situation and the extra pressure if you were not legally married but still interested in this person as your partner?

Are the IRS penalties only in monetary terms or does this involve any behind the bars time? If it is financial, and your current husband is supposed to pay, what would change from your perspective if you were married or not married? You still want to share your life with him even if you were not legally married but he needs to pay 100k as penalty, right?

CAMEL
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Re: Guidance About New Spouse's IRS Issues

Post by CAMEL » Thu Apr 30, 2015 1:08 pm

Who knows what other things you may not have discovered about your spouse!

It is time to hire a private investigator and think three times before getting married again, especially in a community property state.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 1:10 pm

niceguy7376 wrote:
nfs wrote:In fact, we may wind up having to get divorced over it because they're making it very difficult financially to stay married.
I am sorry if I dont know much about the tax issues with IRS.

Are you thinking that you wouldnt need to face the IRS letters and the current situation and the extra pressure if you were not legally married but still interested in this person as your partner?

Are the IRS penalties only in monetary terms or does this involve any behind the bars time? If it is financial, and your current husband is supposed to pay, what would change from your perspective if you were married or not married? You still want to share your life with him even if you were not legally married but he needs to pay 100k as penalty, right?
See above. It's in relation to potentially getting an OIC or at least a payment plan that is doable. It has nothing to do with my willingness to help pay. It has to do with keeping my income and assets out of the IRS's calculations. If we hadn't gotten married just a few months ago they wouldn't look at me at all. And it's just monetary. Nothing was done with any intent to defraud the IRS or not pay... the penalties and interest are all from honest mistakes. We intend to clean up the issue as quickly as we can.

Honestly, I'm just really annoyed with the situation. Ignore my commentary. I'm sure we'll get it resolved it is just very very frustrating. We just already were cleaning up some debts and this makes it feel like our finances are blasted back to the stone-age (or before? because his got pretty blasted after his divorce anyway...).

saladdin
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Re: Guideance About New Spouse's IRS Issues

Post by saladdin » Thu Apr 30, 2015 5:40 pm

nfs wrote:
Greatness wrote:There is something called the innocent spouse statute, which makes you immune to any negative actions that a spouse has done against the U.S. (IRS). I would keep separate accounts right now and not have his name on any of them. If you do, they can lien the account and take those funds. Next, get an experienced CPA to help you through this mess. There's an old saying that you do not mess with the IRS. I concur on all accounts with that statement.
I am jointly on his accounts, but due to some technical problems he encountered, he is not yet on my account which is where my paycheck goes (Whew!). Since we got the notice from the IRS we have not pursued combining finances any further. Of course, we are in a community property state, so who knows what will happen ultimately, but since the liabilities are from before we were married, I believe I should be able to keep my income and assets out of the mix.
dgdevil wrote:Depending on the tax-year(s) in question, his ex-wife could conceivably be on the hook as well - which might lessen the burden on you/him. Anyway, a criminal tax attorney will be able to put your mind to rest.
Yes, good point. Unfortunately, the years in question they filed separately. Also, his ex is sort of an idiot (don't get me started) and hasn't filed any of her taxes since their separation... so all the tax years he has issues due to miscalculations or paying later, she actually will get hit with penalties/interest herself once she does file. I like to think DH isn't quite such a big idiot... but I'm definitely going to be making sure we don't have these issues in the future in our household.
I suggest easing up on calling someone an idiot that can't defend herself. Besides, you're the one that married a man who owes 100k to the IRS due to his intentional actions. There are way more issues here than money.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 5:59 pm

saladdin wrote:Besides, you're the one that married a man who owes 100k to the IRS due to his intentional actions. There are way more issues here than money.
Thank you for your very helpful guidance. My DH did not intentionally run up a huge bill with the IRS. He thought he had paid everything. Apparently he hadn't.

I am really just interested in suggestions on how to most effectively resolve the situation, as I think that many people on this site have more experience with tax matters than I do. My personal taxes have always been rather straightforward, and when they weren't, they were done by a CPA and appear to have been done properly. Having issues with the IRS is new to me. Choosing a CPA or EA is new to me. If anyone has some insight into any of these things, I truly do appreciate it. And I promise I will keep my opinions of DH's ex to myself so that I don't bring on more comments like saladdin's.
  • DH is in the process of getting copies of information the tax returns in question as well as information about the penalties and interest for those years from the IRS.
  • I've picked out an EA to have a consultation with and plan to hunt down another EA or CPA as well so we can find someone we are comfortable working with.
  • Regardless of the outcome of the current IRS situation, next year we will have a tax professional doing our taxes (funny since next year should be relatively straight forward since DH is no longer a contractor).

Jill07
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Re: Guidance About New Spouse's IRS Issues

Post by Jill07 » Thu Apr 30, 2015 6:01 pm

Your husband should be the one posting here asking for help on how to clean up his mess. You should protect your assets.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 6:06 pm

Jill07 wrote:Your husband should be the one posting here asking for help on how to clean up his mess. You should protect your assets.
He's been busy on the phone with the IRS. :wink: Seriously, the wait times are awful and some days when he calls the system tells him they aren't discussing the topic he needs today and he needs to call back another day. It's incredible. This is definitely holding up the process for him- he has very little privacy available at his work for phone calls (particularly ones where he doesn't know if he'll be on hold for an hour before he can speak with someone), so he tends to make the calls on days he's able to work from home, but that's only a few days a week.

I've talked to him about my concerns about protecting my assets. It's something we are working on.

Also, I have shared with him the information from this posting (of course).

dolphinsaremammals
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Re: Guidance About New Spouse's IRS Issues

Post by dolphinsaremammals » Thu Apr 30, 2015 6:16 pm

Did the IRS notice(s) contain any contact info for the IRS other than their general phone number?

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 6:28 pm

dolphinsaremammals wrote:Did the IRS notice(s) contain any contact info for the IRS other than their general phone number?
Good question - of the 2 documents on his desk, it looks like the both have different numbers. I don't think he's been calling their general phone number, but that's a good thing to ask.

When this whole situation first started and he owed an amount that we could pay (6K or so), he told them he'd pay by May 1st. Then he got the "big bill" maybe 2 weeks after that - since then it seems like the IRS doesn't seem to have the correct notes on things - they said their notes say he'll pay the full amount by May 1st, but the full amount they're talking about now is 100K. While it's totally possible that is the amount owed, it's remarkable that the folks he talks to at the IRS don't all seem to see the complete picture. It certainly makes it challenging for him to get a complete picture and a straight response from whoever he speaks with.

spectec
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Re: Guidance About New Spouse's IRS Issues

Post by spectec » Thu Apr 30, 2015 6:43 pm

Maybe the picture is incomplete because he is being as obtuse with IRS as he is being with you. This is not a matter to be resolved on the telephone, and certianly not on a part-time hit-or-miss process based on when it's convenient for him to call them. By now surely you have come to understand that.
Last edited by spectec on Thu Apr 30, 2015 6:44 pm, edited 1 time in total.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

jared
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Re: Guidance About New Spouse's IRS Issues

Post by jared » Thu Apr 30, 2015 6:44 pm

At this point, I can't imagine any additional helpful information coming out of this thread. spectec and AWH_CPA have already given you all of the advice you need. Stop contacting the IRS and completing your own paperwork. A professional should be able to get all of the necessary transcripts for the years in question within a couple of days and advise you appropriately.

donall
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Re: Guidance About New Spouse's IRS Issues

Post by donall » Thu Apr 30, 2015 8:11 pm

Just read this article in the NYTimes and thought it very relevant to your situation:
http://www.nytimes.com/2015/04/30/opini ... ref=topics

It seems that your husband is not alone.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 8:24 pm

donall wrote:Just read this article in the NYTimes and thought it very relevant to your situation:
http://www.nytimes.com/2015/04/30/opini ... ref=topics

It seems that your husband is not alone.
Yes! I think one of the frustrating things about this whole thing is how rapidly things are changing. 1 notice from the IRS is incredibly different from the next and we aren't given information or time to catch up.

I spoke with DH this evening and explained how much this is really stressing me out. $100k is a lot of money. Even if we manage to get some of it reduced, it will still be a lot of money - especially seeing as we still believed he paid his full tax bills these years. He said he's going to call the EA I found and will ask around to some co-workers about who they use to do their taxes as well (folks who might have similar types of employment/tax situations). It makes me feel much better knowing this will be happening soon. I suppose I could say I feel better that others are experiencing a similar situation with the IRS, but honestly, that would be like saying losing a home in a foreclosure during the housing crisis would have been easier since many others were going through the same thing.

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Re: Guidance About New Spouse's IRS Issues

Post by TimeRunner » Thu Apr 30, 2015 8:35 pm

My 2 cents: Tell your husband to put down the phone and the two of you get a professional to review everything before further contact with the IRS. Then follow that pro's advice.

That will get you way down the road.

Choose to not carry the emotional baggage that comes with this. Use the situation to strengthen your marriage by working together.

OK, that's my two cents. Good luck! :beer
"What'd ya expect in an opera, a happy ending?" -Bugs Bunny ...:... One cannot enlighten the unconscious.

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Thu Apr 30, 2015 8:51 pm

TimeRunner wrote: Choose to not carry the emotional baggage that comes with this. Use the situation to strengthen your marriage by working together.
Yes! Thank you. We have laughed about it and said that we're getting just about everything thrown at us in year 1, so as long as we can make it through this first year, we should be solid! I am thankful that I am married to a good man and that he works hard for us and will do everything he can to get this resolved. There are so many worse things that can happen in life. This may cause changes for us, but we will in no way be at a point where have trouble with food clothing and shelter. We might have to sell the house. We will certainly have to cut back more than we already have on other things... but we will be ok. Not what I envisioned our first year like together, but we'll make it.

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Re: Guidance About New Spouse's IRS Issues

Post by spectec » Fri May 01, 2015 7:53 am

Since you're getting philosophical about the situation, here's some food for thought. I've often had this conversation with people over the yerars regarding "sudden" tax debts.

Once the proper tax debt has been established to everyone's satisfaction, it really isn't a new debt, in the sense that a sudden medical emergency, home repair, or auto accident is a "NEW" financial burden. Fact is, that tax debt existed from the moment the taxable event occurred, and the taxpayer derived some financial benefit from the earnings which created the tax debt. I'm not even suggesting that the amount of the tax was fair or justifiable, but it exists under the same rules played by everyone who pays their taxes on time.

What they did with the unpaid tax money is a separate issue related to spending habits. Maybe they bought a new boat, or paid a divorce lawyer, or paid college tuition, or paid off a settlment to an ex spouse. They did this with money that they would have otherwise borrowed or taken from savings. The point is that the taxpayer took money which was supposed to be used to pay their taxes and they spent it somewhere else. They essentially borowed from the taxpayers to fund something they wanted or needed.

The cost of borrowing this money from the taxpayers is the interest and penalties which must be paid on the borrowed money. Sometimes this cost of borrowing is quite steep, especially when one incurs late filing penalties of up to 25% of the unpaid tax. Otherwise, the combined interest and failure to pay penalties will average about 9 or 10% APR. Not exactly prime rates, but neither does it approach charge card rates - it isn't a bad rate for an unsecured loan. The fact that interest and penalties are not deductible isn't relevant, since interest on consumer debt isn't tax deductible either. It's all just a cost of borrowinig money to obtain some sort of alternative gratification.

None of the above changes the fact that you presumably didn't benefit from any of the mis-spent tax money. It doesn't change the fact that you weren't aware of the debt and it's now a big surprise to you. But I can guarantee you that once the validity of the initial tax debt is etablished, it's a fact that somebody realized some benefit (tangible or intangible), from whatever use was made of the unpaid taxes. Everything else is just a cost of obtaining that benefit.
Don't gamble; take all your savings and buy some good stock and hold it till it goes up, then sell it. If it don't go up, don't buy it. - Will Rogers

nfs
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Re: Guidance About New Spouse's IRS Issues

Post by nfs » Wed Jun 06, 2018 4:42 pm

Just wanted to post an update since we've made it through to the other side. We wound up paying off the IRS to the tune of around $150k via a home refinance (home appreciated significantly over the course of 2 years). Thankfully, with everything else we've done during that time, we've more than doubled our net worth since getting married about 3.5 years ago... despite the tax hit!

Whew! Glad to have that behind us.

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Re: Guidance About New Spouse's IRS Issues

Post by jalbert » Wed Jun 06, 2018 4:56 pm

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