If your current or ex-spouse owes money to the IRS and you filed a joint return you may need innocent spouse tax relief. Innocent spouses need to know how to fight back against the IRS. This post will give you an example of innocent spouse relief and five resources to help you save yourself.
You know something is wrong with our system when an innocent spouse is saddled with a crushing tax debt created by an ex-husband without her knowledge while white collar criminals associated with our banking crisis live like kings.
Some 50,000 tax payers file for innocent spouse relief each year with the IRS but there are many more victims that either don’t know about their rights or file after the IRS’s two year deadline. But relief may be on the way in the summer of 2011 as the IRS is reviewing innocent spouse relief after pressure from congress.
Here’s an example of tax fraud committed by a husband that injured his innocent wife as reported recently by Laura Saunders in the Wall Street Journal – A New Push to Protect Spouses.
“In 1999, Cathy Marie Lantz’s husband, Indiana dentist Richard Chentnik, earned $112,000—or so she thought when she signed their joint tax return. In 2000, Dr. Chentnik was arrested for Medicare fraud, convicted and imprisoned. In connection with the case, the Internal Revenue Service sent the couple a bill for $900,000 of tax, penalties and interest.
Does Ms. Lantz owe the tax debt her husband incurred? The IRS said yes, the Tax Court said no, and last summer the Seventh Circuit Court of Appeals said yes again, siding with the IRS.
The court’s reasoning: To be absolved of responsibility for the couple’s tax debts, Ms. Lantz would have had to ask the IRS for “innocent spouse” relief within two years of the agency’s sending a levy notice.
According to testimony, she said she didn’t do so because her husband told her he had taken care of the request. Dr. Chentnik did get the IRS form, according to testimony, but didn’t file it before dying in a halfway house in 2004—so the court held Ms. Lantz liable for the entire tax bill. ” – Wall Street Journal
IRS Innocent Spouse Relief Resources
- IRS.gov section on Innocent Spouse Relief » Visit
- File IRS Form 8857 (download here) – You must show the tax was due to your spouse and that you didn’t know of any problem
- My own short and simple overview of your innocent spouse relief options
- Tax articles and Podcasts from Tax Mama on Innocent Spouse Relief » Visit
- For someone who wants to perform deep research you can buy the guide from the American Bar Association intended for practitioner Attorney’s like me that walks through the entire innocent spouse relief process (cost is about $100). A Practitioner’s Guide to Innocent Spouse Relief:
Until next time,
Jeffrey I. Fouts, Tax Attorney
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