A Client came to me when she was married and had me prepare their tax return for 201X. Her spouse was self-employed, and because no estimated tax payments had been made, they owed the IRS more than $22,000.00.
A couple of years later, the couple divorced. The ex-spouse made sure the IRS could not find him by not having an address or anything else in his name. Sometimes my client didn't even know where he was living or how to get ahold of him.
Because they lived in a community property state when the return was filed and had filed Married Filing Jointly, the IRS came after my client for the tax debt. At the time, she was going to school, working very little because of her class schedule, and raising her children as a single mother. The IRS kept all of her refunds and even levied her bank account. This went on for years, and she never let me know what was happening.
Eventually, my client finished school, her children grew up, and she was working full-time. She was very tired of having her refunds taken by the IRS while her ex-spouse was not paying anything toward the debt. She FINALLY told me what was going on.
I quickly had her sign Form 2848 so I could speak with the IRS on her behalf. What I found out was that the IRS's 10-year collection statute was set to expire in just two months. At that point, the remaining balance was $12,647.75.
The IRS wanted my client to set up a payment plan. I told the agent I needed to speak with my client first because this call was simply to gather information.
If a payment plan had been established, the collection statute would have been suspended. My client would have continued making payments even after the original 10-year collection date passed. Meanwhile, her ex-spouse still would not have had to pay anything.
I explained all of this to my client. She decided to let the statute run its course and take her chances that the IRS would not place another levy on her bank account before the collection period expired.
Fortunately, the 10-year collection date came and went without any additional levies being issued.
Today, my client no longer has to worry about the IRS collecting this debt, and she is finally able to move forward.
This case is a good reminder that just because the IRS says you owe a debt does not mean the best solution is always a payment plan. Sometimes the most important thing you can do is find out exactly where you stand before making a decision.
If you have an IRS problem that needs to be addressed, feel free to contact me
Comments(16)