Need Advice
Bishoop
together.
Wife files tax returns for years 2005 and 2006 where she is shown as head of
household claiming both children. She prepared the tax returns and had her
husband sign other forms where the status was filing as married and living
together.
This couple were divorced in 2007. The husband filed a return for 2007
($3000 refund) which has been on hold by the IRS. He had a meeting with the
IRS where he found out that his now ex-wife had filed the bogus returns for
2005~06. Therefore there was no filings on record in his name.
He was instructed by the IRS to prepare returns for 2005~06 as married
filing separately. I calculated these returns for him and the result is
$600 owed for 2005 and an over payment of $150 for 2006. Of course interest
and penalties will be calculated by the IRS for $600 amount that was not
paid.
What would be the best way to try and get the amount lost for 2005 from his
ex-wife? Is this something that small claims court could handle? He lives
in Florida.
Paul Thomas, CPA
"Bishoop" <no...@nowhere.none> wrote
<<Snip a great story too often heard>>
> What would be the best way to try and get the amount
> lost for 2005 from his ex-wife? Is this something that
> small claims court could handle?
I'd suggest chalking it up to a lesson learned. If he prevails in court,
he'd still have to collect. So he may be throwing good money after bad in
the form of court costs and lawyers for maybe a little satisfaction.
--
Paul A. Thomas, CPA
Watkinsville, Georgia
Bishoop
"Paul Thomas, CPA" <paultho...@bellsouth.net> wrote in message
news:jULfk.2732$9V5....@bignews6.bellsouth.net...
Probably good advice.
This woman has put the guy through hell. Unfortunately he's too weak to
stand up for himself. Since the divorce his ex-wife was recently arrested
for vehicular homicide while driving drunk. Thank God that didn't happen
while they were still married.
Maybe the wrong place to ask this question. If he were to prevail in "small
claims" court, could/would that court issue a wage garnishment order?
Bishoop
"Paul Thomas, CPA" <paultho...@bellsouth.net> wrote in message
news:jULfk.2732$9V5....@bignews6.bellsouth.net...
>
Another question. While the guy had the interview with the IRS why weren't
they seemingly concerned about the fraudulent filing by his wife. Work
load? Small potatoes?
Paul Thomas, CPA
"Bishoop" <no...@nowhere.none> wrote
> Another question. While the guy had the interview
> with the IRS why weren't they seemingly concerned
> about the fraudulent filing by his wife. Work load? Small potatoes?
I bet they took notes and forwarded it to the appropriate department.
One thing they can't do - and won't do - is let him know what they are doing
about it. Her tax matters are private and protected from disclosure to him.
From the sounds of it, it's best left alone. It sounds like he'll be at the
back of a long line of folks looking to collect.
If he's interested, he should pursue matters through an attorney for custody
of the children.
Steve Foley
>
> "Bishoop" <no...@nowhere.none> wrote
> > Another question. While the guy had the interview
> > with the IRS why weren't they seemingly concerned
> > about the fraudulent filing by his wife. Work load? Small potatoes?
>
>
>
>
> I bet they took notes and forwarded it to the appropriate department.
>
> One thing they can't do - and won't do - is let him know what they are
doing
> about it. Her tax matters are private and protected from disclosure to
him.
What would happen if he filed as head of household? Would that stir the pot
some?
Paul Thomas, CPA
"Steve Foley" <steve...@att.DELETE.net> wrote
> What would happen if he filed as head of household?
If he didn't/doesn't qualify as HOH for those years, HE'LL be the one in
trouble.
> Would that stir the pot some?
Just do what the IRS tells him to do - and/or have him get a qualified tax
professional in his area to advise him through this as well as the next few
years.
Arthur Kamlet
Bishoop <no...@nowhere.none> wrote:
>>> lost for 2005 from his ex-wife? Is this something that
>>> small claims court could handle?
>>
>> I'd suggest chalking it up to a lesson learned. If he prevails in court,
>> he'd still have to collect. So he may be throwing good money after bad in
>> the form of court costs and lawyers for maybe a little satisfaction.
>
>
>This woman has put the guy through hell. Unfortunately he's too weak to
>stand up for himself. Since the divorce his ex-wife was recently arrested
>for vehicular homicide while driving drunk. Thank God that didn't happen
>while they were still married.
>
>Maybe the wrong place to ask this question. If he were to prevail in "small
>claims" court, could/would that court issue a wage garnishment order?
Well, I'm not a lawyer, and most of my small claims court knowledge
comes from Judge Wapner and Judge Judy, plus one summer of work with
the Sherriff's office unit that handled enforcement of court judgements.
In many states all the small claims court judge can do is issue a
written judgement. If the loser in court does not pay the judgement,
the court can then issue an order to list all assets. That can
often be ignored.
So the winner, with judgement and nothing else, can try to discover
some assets held by the loser. And bring that list with a copy of
the order to the sheriff and ask the sherriff to seize that property.
And first pay the sherriff a fee.
Perhaps a motorcycle or a car. There's a fee for trying to do that.
Perhaps an aditional fee for actually doing that.
If the property is recorded, say a car or a house, a judgement
holder may be able to file a lien on that property, which may
be a bar to a later sale. Liens expire so would have to be
renewed if not paid for several years.
And a wage garnishee can be served by the sherriff or in some
jurisdictions, by a disinterested process server.
That's where I used to come in. Once the garnishee notice
is served on the employer, the employer is required to do one of
the following:
a. if the employee no longer works there, return the notice
saying so, and that's that.
b. if the employer doesn't like to handle garnishements, he
can fire the employee unless it violates the law, and go
to a above.
c. If there is already a garnishment in effect, just say so
and return the notice, and does not have to hold it for
when the first garnishment is paid off.
d. the employer can accept the notice and begin garnishing
the employee's salary. State law sets maximum % or amounts.
The sherriff gets the payment and deducts his fee and send it along
to the judgement holder.
--
ArtKamlet at a o l dot c o m Columbus OH K2PZH
Bishoop
"Steve Foley" <steve...@att.DELETE.net> wrote in message
news:QQNfk.449$kf4.174@trnddc03...
The IRS instructed him to file married/separate.
Sam
There you go. That's your answer right there. You don't really need to be a
CPA to understand a simple concept: if the IRS tells you to do something,
you're going to do that, unless you believe that you can fight them in
court, and win. That's what it comes down to: is your client can believe
that he can defend himself if he does something else than what the IRS tells
him to do.
If those instructions were in writing, it's even better. If, it turns out
that, on further review by some higher-level IRS bureaucrat, he should
not've filed married/separate, this paper trail should be good enough to
wave any penalties, and perhaps even the interest, and maybe even whatever
extra he owes.
And, when the IRS sends him the interest+penalty bill for what he owed two
years ago, I think that with your existing paper trail he has a fairly good
chance of having interest+penalty waived (leaving him to pay just the tax
due), if he asks them in a nice tone of voice.
There are really two issues here. One, is getting your client in good
standing with the IRS. They don't really care about anything other than
closing the file on your client with all the forms filed, and all tax bills
paid up. Once that's done, it's one less monkey on his back to worry about,
and he can focus on the second issue of getting his pound of flesh from his
ex. If he wants to do it, he'll have less to worry about if he no longer has
the IRS to worry about, at the same time.
D. Stussy
news:oqOdneDA05IT6OLV...@giganews.com...
> Husband and wife are married have two dependent children and are all
living
>
> What would be the best way to try and get the amount lost for 2005 from
his
> ex-wife? Is this something that small claims court could handle? He
lives
> in Florida.
On what grounds does he have a claim? She filed. He didn't. That's HIS
problem.
Even if he had filed timely, he'd still owe.
The only way that he might not owe is if he were to file a joint return with
his wife. Good luck in getting the ex to agree to amend her return to that.
If such wasn't in the divorce agreement (as is usual with divorce lawyers -
tax LAMERS), he's SOL.
D. Stussy
> Another question. While the guy had the interview with the IRS why
weren't
> they seemingly concerned about the fraudulent filing by his wife. Work
> load? Small potatoes?
Why do you think the wife's return is fraudulent? She had income - she
filed. He hadn't filed, so she claimed the children. They lived in the
same household, so that's not fraud even if she's found not entitled. She's
a custodial parent.
D. Stussy
> "Bishoop" <no...@nowhere.none> wrote
> > Another question. While the guy had the interview
> > with the IRS why weren't they seemingly concerned
> > about the fraudulent filing by his wife. Work load? Small potatoes?
>
> I bet they took notes and forwarded it to the appropriate department.
>
> One thing they can't do - and won't do - is let him know what they are
doing
> about it. Her tax matters are private and protected from disclosure to
him.
Not entirely. As a [potential future] MFS filer, he's entitled to know one
thing: Whether she itemized or took the standard deduction. Why? Because
that information affects his tax filing.
> ...
Bishoop
"D. Stussy" <sp...@bde-arc.ampr.org> wrote in message
news:g5p5ih$n75$1...@snarked.org...
She filed as "head of household".....How could she claim that status?
Bishoop
How pray tell was he to know that his wife "switched" returns and did not
mail the one he signed? Ya, ya *he* could have mailed it. If you're
married, would think your wife would switch returns between signing and
dropping in the mail box?
You're probably right that she is not liable to pay him the "tax due", but
the interest and penalties are another story. On the amount owed certainly
not worth pursuing.
Ernie Klein
"D. Stussy" <sp...@bde-arc.ampr.org> wrote:
Why would that matter in _this_ particular case where the wife filed as
HOH which is not allowed?
If he is the first spouse (now ex-spouse) to file a valid MFS return,
why can't he be the one to choose itemized or standard and force her to
follow his lead? Seems to me that he would have a good argument if he
did so.
--
-Ernie-
Arthur Kamlet
On the one hand, it makes no difference who files first. If they
both file MFS, and one of them itemizes, the other has zero standard
deduction.
On the other hand, te facts discussed here show neither qualify to
file HoH so might consider MFJ; alternate is MFS.
Bishoop
"Arthur Kamlet" <kam...@panix.com> wrote in message
news:g5qr3r$ip4$1...@reader1.panix.com...
The husband was instructed by the IRS to file MFS. I just hope the IRS goes
after his ex-wife for the fraudulent HoH return.
Paul Thomas, CPA
"Bishoop" <no...@nowhere.none> wrote
> The husband was instructed by the IRS to file MFS. I just hope the IRS
> goes after his ex-wife for the
> fraudulent HoH return.
Well, they'll "follow up", but they don't see it as "fraud". I doubt
anyone here thinks it rises to that level given the limited opinions
presented.
It's just a mistake, a filing error if you will. Happens all the time.
It'll get corrected through notices and the like.
Bishoop
Not to belabor the point but I just don't understand how you can refer to
his ex-wife's actions as a "mistake". Good lord man, the woman had the
husband sign one return where the filing category was MFJ and never
submitted it to the IRS. Then she turned around and submitted to the IRS a
return filed with her as HoH.
If that ain't fraud I just might reconsider how I file my returns.
D. Stussy
news:ecklein-347AAF...@news.newsguy.com...
> In article <g5p5me$n7q$1...@snarked.org>,
> "D. Stussy" <sp...@bde-arc.ampr.org> wrote:
> > "Paul Thomas, CPA" <paultho...@bellsouth.net> wrote in message
> > news:%lNfk.2821$bN2....@bignews9.bellsouth.net...
> > > "Bishoop" <no...@nowhere.none> wrote
> > > > Another question. While the guy had the interview
> > > > with the IRS why weren't they seemingly concerned
> > > > about the fraudulent filing by his wife. Work load? Small potatoes?
> > >
> > > I bet they took notes and forwarded it to the appropriate department.
> > >
> > > One thing they can't do - and won't do - is let him know what they are
> > doing
> > > about it. Her tax matters are private and protected from disclosure
to
> > him.
> >
> > Not entirely. As a [potential future] MFS filer, he's entitled to know
one
> > thing: Whether she itemized or took the standard deduction. Why?
Because
> > that information affects his tax filing.
>
> Why would that matter in _this_ particular case where the wife filed as
> HOH which is not allowed?
The choice of a wrong filing status doesn't have a bearing. She still filed
a non-joint return and made a choice with regard to itemized or the standard
deduction. That locks him in. - IRC 63(c)(6). He's required to file the
same way. The only alternative is in IRC 63(e)(3) where one spouse must
obtain the consent [in writing] of the other to change the election.
> If he is the first spouse (now ex-spouse) to file a valid MFS return,
> why can't he be the one to choose itemized or standard and force her to
> follow his lead? Seems to me that he would have a good argument if he
> did so.
Generally, if one spouse files MFS even if the other has another filing
status available and uses it, the MFS spouse has no choice but to follow the
lead of the other with respect to standard or itemized. The non-MFS spouse
could be HoH, QW, or even single (the latter two occur when the MFS spouse
died). Why? Because each of these other filing statuses treats that
taxpayer as unmarried and therefore, that spouse is NOT "a married
individual filing a separate return" per IRC 63(c)(6)(A). IRC 63(c)(6)
resolves any deadlock in favor of itemizing.
D. Stussy
> "Paul Thomas, CPA" <paultho...@bellsouth.net> wrote in message
> news:1l7gk.3327$9V5...@bignews6.bellsouth.net...
> > "Bishoop" <no...@nowhere.none> wrote
> >> The husband was instructed by the IRS to file MFS. I just hope the IRS
> >> goes after his ex-wife for the
> >> fraudulent HoH return.
> >
> > Well, they'll "follow up", but they don't see it as "fraud". I doubt
> > anyone here thinks it rises to that level given the limited opinions
> > presented.
> >
> > It's just a mistake, a filing error if you will. Happens all the time.
> > It'll get corrected through notices and the like.
>
> his ex-wife's actions as a "mistake". Good lord man, the woman had the
> husband sign one return where the filing category was MFJ and never
> submitted it to the IRS. Then she turned around and submitted to the IRS
a
> return filed with her as HoH.
>
> If that ain't fraud I just might reconsider how I file my returns.
To have fraud with regard to a filing status choice, one has to show that
the person KNEW that the choice was wrong at the time it was made.
You stated that she had him sign joint returns. However, if she never
signed or filed [mailed] them, there were no joint returns. To prove fraud,
he would have to produce them -- good luck.
D. Stussy
That's simply an error. She's only missing one element - [not] living apart
for last 6 months of the year.
To prove fraud, one has to show that she knew it was wrong at the time she
claimed it.
Condor
> living together.
>
> Wife files tax returns for years 2005 and 2006 where she is shown as head
> of household claiming both children. She prepared the tax returns and had
> her husband sign other forms where the status was filing as married and
> living together.
>
> This couple were divorced in 2007. The husband filed a return for 2007
> ($3000 refund) which has been on hold by the IRS. He had a meeting with
> the IRS where he found out that his now ex-wife had filed the bogus
> returns for 2005~06. Therefore there was no filings on record in his
> name.
>
> He was instructed by the IRS to prepare returns for 2005~06 as married
> filing separately. I calculated these returns for him and the result is
> $600 owed for 2005 and an over payment of $150 for 2006. Of course
> interest and penalties will be calculated by the IRS for $600 amount that
> was not paid.
After reading all the posts in this thread, I've concluded that you got the
best advice from Paul Thomas. The most constructive and forward-looking
course of action for the taxpayer is simply to file his 2005 and 2006 tax
returns then get on with his life. He needs to try to put all the
bitterness, pathos, and estrangement from his ex-spouse behind him but if he
can't bring himself to do that he at least needs to keep it separate from
his tax problems. IRS' job is to administer the tax laws (and lately the
ESP program), not to play Dr. Phil. IRS doesn't care, nor should they care,
about the bad behavior of his "cheatin', stinkin', lyin'" ex-spouse.
This taxpayer should file his 2005 return first, wait about two weeks, then
file the 2006. He'll get a demand letter for the tax, penalty, and interest
due on 2005, which he can ignore. When the 2006 return processes, the
refund will offset to the 2005 balance due. At about the same time, the
freeze holding his 2007 refund will be released. The remaining 2005 balance
will be paid when the 2007 overpayment offsets and the rest will be refunded
to him.
After all of this has taken place, he should write a nonemotional letter to
IRS concisely explaining the circumstances of his 2005 and 2006
delinquencies and ask them to abate, i.e., remove, the failure to file
penalty on 2005. If the abatement is granted, he will receive a refund of
the failure to file penalty that was paid out of his 2006 and 2007 refunds.
If the abatement is granted, the combined failure to pay penalty and
interest on the 2005 balance due will work out to only about 12% a year.
That will leave him clearing well over $2,000 from his 2007 refund and he
will be in compliance with the IRS.
IRS may or may not get around to contacting the other spouse. The odds are
good in my opinion that IRS won't pursue her. Right now IRS has scaled its
compliance activities way back due to the avalance of ESP-related work. By
the time IRS digs itself out from under the hugely time and resource
consuming ESP workload it will be time to gear up for the next filing
season. Getting back to the ex-wife, given her current legal problems
(vehicular homicide, etc.), even if IRS were to pursue her their efforts
would amount to nothing more than good money chasing after bad.
Condor
Bishoop
"Condor" <Con...@loosecannon.net> wrote in message
news:ut-dnQd1ZvqTCxzV...@comcast.com...
Thanks for the detailed and informative reply. I will recommend filing the
returns as you suggest and then follow up with the "abatement" letter.
To boot, I'll bet the ex got a stimulus check earlier this year. How
ironic.
Thanks to all that replied.
Bishoop
One more thing.
Is there any particular way to address the "abatement" letter.
Should he use the address where he normally sends his returns?
Thanks again.
Condor
> Should he use the address where he normally sends his returns?
Yes. But wait and send the abatement letter after he receives the 2005
balance due notice. The failure to file penalty on 2005 will be 22.5% of
the tax due. If the balance due is $600, the penalty will be $135. You can
write the abatement letter, but unless you have an IRS power of attorney on
file, the taxpayer will need to sign it.
BNA has a free podcast you may want to listen to titled, "Reasonable Cause
Can Waive Penalties." It's at the link below under Income Tax Podcasts on
the right.
http://www.bnasoftware.com/product/update.aspx?prod=itfs
Condor
Bishoop
Thanks again for the great information. I appreciate it.
Bishoop
Sorry to pester you again.
What is the best way to make payment for 2005? Should he include the $600
with the return? Should he try to calculate penalties and interest and
include that with the return?
Or just wait for the IRS to bill him?
Thanks
Condor
> with the return? Should he try to calculate penalties and interest and
> include that with the return?
>
> Or just wait for the IRS to bill him?
Just get the return filed and don't worry about including any payment with
it. Shortly after the return finishes processing, the 2006 and 2007
overpayments will offset automatically to the 2005 balance due and the
remaining overpayment will refund if he owes no nontax debts such as
delinquent child support or student loans.
Condor
D. Stussy
> ...
> After all of this has taken place, he should write a nonemotional letter
to
> IRS concisely explaining the circumstances of his 2005 and 2006
> delinquencies and ask them to abate, i.e., remove, the failure to file
> penalty on 2005. If the abatement is granted, he will receive a refund of
> the failure to file penalty that was paid out of his 2006 and 2007
refunds.
> If the abatement is granted, the combined failure to pay penalty and
> interest on the 2005 balance due will work out to only about 12% a year.
> That will leave him clearing well over $2,000 from his 2007 refund and he
> will be in compliance with the IRS.
Sorry, but I disagree - there will be no abatement. He needs PROOF to back
his story. He does NOT have a copy of the alleged joint return. I doubt
that the ex-wife will confess. Therefore, on what grounds can he
DEMONSTRATE a cause for abatement?
People can and do say anything they want. Even if said "under oath," such
does not make it true -- perjury convictions do happen.
Condor
> back
> his story. He does NOT have a copy of the alleged joint return. I doubt
> that the ex-wife will confess. Therefore, on what grounds can he
> DEMONSTRATE a cause for abatement?
>
> People can and do say anything they want. Even if said "under oath," such
> does not make it true -- perjury convictions do happen.
IRS uses a software program called the Reasonable Cause Assistant that takes
the taxpayer's testimony at face value. These cases are worked informally
by lower graded IRS employees who are not expected to exercise a great
measure of discretion. Given this and the small amount of money involved,
he should throw his request up against the wall and see if it sticks.
Abatements are granted in the majority of cases that I see like this one if
the letter is well written.
Condor
Bishoop
After this whole mess is cleared up, I'll post the results here.
Thanks to all for the helpful/informative information.
Bishoop
I found this regarding abatement:
http://www.irs.gov/instructions/i843/ch01.html
Should he use this form or just a letter as you previously described?
Condor
>
> http://www.irs.gov/instructions/i843/ch01.html
>
> Should he use this form or just a letter as you previously described?
A plain letter will work.
Condor
Bishoop
Does this look like a reasonable template for the abatement letter?
http://www.irs-audit.net/Penalty_Abatement_Letter_Sample.html
D. Stussy
I'm not saying that he shouldn't try. However, the attitude of the views
expressed by others may be overly optimistic.
Bishoop
Hey, live in hope. 8>)
I'm just trying to help the guy out. I've got lots of time and as far as I
can see the only investment other than time would be a $0.42 stamp.