Statute of Limitations

[PFL]

I have a client who was taken back to court recently because her ex-husband claims he should have had their child on his tax returns as a dependent from 2010 forward. He won the case, and now claims he will re-file the returns starting with 2010 and claim the daughter; theoretically to get a refund for each of the years involved. The client is pretty upset, and worried that the IRS will now come after her for the years she claimed the daughter. She is very honest, and to her knowledge had been complying with the original decree all along. It appears the ex has run out of money, and by using the daughter, he thinks he may be able to make a buck. She claimed the daughter from 2010 to 2013, then the daughter moved in with her father in a different state in 2014, so my client no longer claimed her. I mentioned to my client that I have had NO luck with the IRS in receiving refunds after the statute of limitation has run it's course (none of my cases met the "special exceptions" in IRC 6511, and apparently neither does this one). Since 2010, 2011, & 2012 are outside of the statute of limitations, my feeling is that even if he amends his returns, the IRS will not send him a refund. If 2013's amendment is completed in time, I can see him receiving a refund, and my client ultimately receiving a letter from the IRS; either saying two people have claimed the daughter, or "prove to us how you were able to claim her". 2014 through 2016 are not a factor, as my client knew the daughter could not be claimed as a dependent. I would really like feedback on what scenarios any of you think might play out? My experience with court orders and such, is that the IRS views them as possibly helpful in determining a resolution, but they are not too interested in enforcing state based laws. The ex-husband has a thousand dollars for each year on his mind (CTC), and that was used as the basis for pretty much all of his argument. Thanks!

[DaveO]

As you note the IRS has little interest in the findings of the state. If the child lived with her she is the custodial parent and he must have a signed Form 8332 in order to claim the child. Absent that he will not prevail regardless of the SOL.

[Burke]

Agreed. She was entitled to the exemption since child lived with her. IRS will not come after her for any monies and they will not issue refunds to husband. Federal tax law trumps state law. Best hubbie can hope for is that judge orders wife to pay money to hubbie, and if I were she, I would fight that. The IRS is out of it.

[Roland Slugg]

If the child lived with her she is the custodial parent and he must have a signed Form 8332 in order to claim the child.

That is true if the divorce decree was entered after 2008. If it was entered before 2009, the non-custodial parent can get the exemption by attaching certain pages from the divorce decree. The OP doesn't say when the divorce was final. It refers to the years 2010 onward, but the divorce may have taken place before that and the H was allowed to claim the child as a dependent on his returns prior to 2010. Probably not the case but worth checking.

Also, even if the divorce decree was entered in 2009 or later, if it contains a clause requiring the W to sign F-8332, and she did not do so, she may be on the hook to reimburse her ex for the taxes he would have saved ... including the CTC ... in each of the years he was entitled to claim the child.

While reading the OP, I couldn't help but wonder: If the H has no money, how much is the child's dependent exemption and CTC really worth to him? I also concur that the ONLY year that is open to him now is 2013 ... and only for a little less than three more months.

[taxea]

The husband can say what he wants to say...what does the divorce decree say? And...IRS rule trumps divorce decree. He needed the 8332 to file the child and at this date he will not get a refund distributed either way.

[Kram BergGold]

Divorce Decree

There is a problem using a divorce decree. It must contain all the info on Form 8332. Usually the missing info are the SS numbers.
There have been a few court cases about this.

[PFL]

Statute of Limitations

Thanks to all of you who responded. I will be talking with the client later this week, and feel much better about some of the information I will pass.