So your spouse has left you holding the bag for an enormous tax burden, what do you do?
For those of you new to this blog, this post is continuation of a series about innocent spouse relief which is a provision of the US Income Tax Code that provides for relief from a shared tax burden. It was my misfortune to have to apply for this relief and so I’m sharing the sad truths I discovered as well as tips on how to survive.
Let’s recap what’s been covered:
- Fresh from the Trash Bin – the tax man tells you your tit’s in the ringer and there’s no way out but you have no idea why. You’ve been a dutiful wife and done as your husband asked.
- Five Deadly Sins in the Eyes of the Taxman – according to the IRS, you shouldn’t have been a dutiful wife in the first place.
- Three Easy Pieces – the three requirements for even filing for innocent spouse relief.
In desperation you may be tempted as I was to try the following first:
1.) Divorce your husband hoping that the tax man will clear you.
This does not work, friends. But it will make you feel better and, if you are like I was, a stay-at-home mom who had to go back to work at minimum wage jobs, it will make you look more pathetic to the IRS which is a good thing. The more pathetic and stupid you look, the better your chances.
2.) Beg for mercy from the taxman.
Ha! If you’re lucky, your case will be assigned to a kind-hearted agent willing to help you file for innocent spouse relief. Keep in mind, tax collectors receive their bonuses and promotions based on how much money they bring in and not on their compassionate treatment of taxpayers.
As luck would have it, the IRS agent who heard my case, helped me file for relief. However, the state of California made it clear that I’d better hire a lawyer if I didn’t want to have my house seized and my income attached.
If you think a tax attorney will plead for complete relief from an unfair tax burden, forget it. They will urge you to work out a settlement. They will tell you it’s not wise to fight because, you see, in the court of tax law you are guilty and must prove your innocence. But they will help you to understand the requirements for innocent spouse. Trust me, unless you’re a lawyer, reading provisions from the tax code will drive you insane.
I’m sure you’re wondering what the actual process for requesting innocent spouse relief is. Here goes:
- First you complete a form (8857) that lists your assets, your income, and debts.
- Next you get three of your long time neighbors to write letters attesting to your meager and miserable lifestyle during the year in question. (Good luck to you on that one. Most people are very squeamish about getting involved with the tax man in any way, shape or manner)
- Last you provide proof – as much as you can get ahold of – that your spouse hid information about finances from you. I had twenty-six letters from my divorce attorney. I called them “The Exhibits A-Z.”
Finally bundle up the whole shebang and sent it to the taxman. Then wait for their response.
If the answer comes thusly:
It is clear that appellant has failed to meet her burden of overcoming rebuttable correctness of respondent’s determination.
This is taxman speak for “your appeal has been rejected.”
Do not despair, as I did, it need not be the end.
Next – The court of last resort...