What would you do?

[fliszt]

A client for 10 yrs got married last year. She came to drop off papers for me to file return and then left. When I was sorting thru papers I noticed her new husbands W2 was not in her folder so I called her. She gave phone to new husband who stated we are filing “married filing single”. I mentioned that was “separate”. He said “what’s the difference”. Told him of tax consequence.
He said there were a lot of issues with his divorce and the government seizing things, so “we are filing separate and that’s the way it is”. I said ok. Hmm.
Didn’t get a chance to tell him about innocent spouse relief.
What would you do? Give papers back and tell them to go elsewhere or just do as I’m told??? I'm feeling guilty by doing the return.
Thanks for input.
Larry

[DaveO]

Assuming you are not in a community property state I'd prepare the return. It would seem he has made the decision for them and she is deferring to him.

[Koss]

Filing Status

You can do her return, with a filing status of MFS, without any major ethical problems, as long as you educate her about the other options that are available.

You can start by informing the wife that in order to do her return correctly, you need to review a copy of her husband's return. Depending on the individual facts and circumstances, this may or may not be an accurate statement for this client. But in general, it is true. For example, you need to know whether he itemized, and you need to know whether he is covered by a pension plan in order to determine her maximum IRA deduction. I could probably come up with a few more examples. Technically, these issues may not be applicable to your client, and you might be able to get the information you need without reviewing his return. For example, if you know they don't own a house, it may be reasonable to infer that he did not itemize.

But if you want to push your client to look at some alternatives, and open a dialogue about this, you can politely but firmly insist that you need to see his return in order to do her return properly.

If he already filed, his return can be amended to change the filing status, and then they can use injured spouse process. (Innocent spouse probably is not applicable.)

But if he won't cooperate, you can still do her return as MFS. They have three years to change their mind.

BMK

[Burke]

You will at least need some verification of his SSN as that goes on her MFS return.

[Snaggletooth]

Burton - What??

You can start by informing the wife that in order to do her return correctly, you need to review a copy of her husband's return.

You've got to be kidding!! Burton, I don't disagree with you very often, but you might have just gone off the edge of the plate on this one.

Yes, knowing the income/expense situation of each spouse increases your knowledge, but also increases your scienter. Yes, also determines whether you are required to itemize.

Now you're going to gather all this information, and then claim the wife may be eligible for "innocent spouse relief?" Hear no evil, see no evil, etc. is the best way to keep the wife out of scienter.

[erchess]

Scienter

Ok Snags what is scienter?

[S T]

Definition from Lect Law

https://SCIENTER - Knowingly. Having...an be obtained

Sandy

[Possi]

We don't see it all...

... We do not see the whole picture. This might be a bitter bone of contention in their house, a very private matter.

After briefly explaining that when one itemizes, the other must itemize, I would honor the request and do her return, respectfully... and shut up.

After all, they have to sleep together when the day is over. All I have to do is a tax return... AND....I will have the opportunity to do 2 tax returns instead of one, and win respect, too.

=)

[ChEAr$]

social security number

You will at least need some verification of his SSN as that goes on her MFS return.

Not really you know. You can still prepare a (paper) tax return for anyone married
filing separately and mark SSN block "refused." or "unavailable".

no problem atall.

[fliszt]

Gee, I thank all

of you for the responses. I wish I could think of something funny to say, but I'm just a boring, serious EA that wishes he could retire early. I had planned on it in 2011, but guess I'll just continue like Birdlegs did. So you all will have to put up with me for a few more years. I'm happy you all are out there too!!!!!

[Snaggletooth]

Scienter

Ok Snags what is scienter?

When used in legal circles (and situations such as this one), the general definition of scienter (meaning to be in possession of knowledge) is more restricted.

Sometimes the law puts an additional burden of performance or forebearance if the subject possesses knowledge that something has happened or exists. If the subject has no knowledge of the situation, the law often pardons the subject from obligatory actions he otherwise might have to perform.

A true-life application of the antithesis proverb, "Ignorance is Bliss." In the case of an innocent spouse, it is critical that she (he) know nothing of the issues for which she is claiming to be innocent. If it can be shown she has scienter, then she cannot be held as innocent on a joint return.

[fliszt]

Thanks Snag,

This spouse knows all about her new husband's entanglement. So I guess I really can't do an "innocent spouse relief".
Thanks again.
Larry

[Jesse]

But if you want to push your client to look at some alternatives, and open a dialogue about this, you can politely but firmly insist that you need to see his return in order to do her return properly.

If he already filed, his return can be amended to change the filing status, and then they can use injured spouse process. (Innocent spouse probably is not applicable.)

But if he won't cooperate, you can still do her return as MFS. They have three years to change their mind.

BMK

But "injured spouse" is different than "innocent spouse" so you might still want to take a look at his return to see what might result with MFJ and injured spouse allocation.