Sad Story IRS Levy

[S T]

Taxpayer came to me due to an IRS Levy.

The levy came about, due to a separation from his wife. T/P in 2006 was in rehab (bipolar) with drug and alchohol addictions. So T/p did not work all of 2006. Spouse filed 2006 tax return as a joint return, she went exempt on withholding, so money due on return. Spouse signed her name to return and also t/p name to return (supposedly without his knowledge)

My t/p has been released from rehab, is functioning and now is employed. He now has a levy against his wages for the 2006 amount due. He had no income for this return. All spouse's income that generated the income due. Community property state Calif.

Question, is there a form that t/p can sign and forward to the IRS, so that his wages will not be levied/garnished by the IRS.

Would the injured spouse or innocent spouse work in this case. T/p made a few phone calls to IRS, but he was advised NO, he had to pay the tax due.

Sandy

[myerstaxes]

Taxpayer Advocate

I would contact the taxpayer advocate office local in your area...I would think that this is an innocent spouse case, due to the facts and circumstances of the case...In his case he did not know and had no reason to know of the tax liability since his signature was forged and he was in rehab...I would apply for innocent spouse relief, gather all of the docs to prove his separation, illness and that he was away in rehab at the time the return was signed and filed...The advocate should be able to stop the levy while you gather these docs and apply for the Innocent Spouse relief...Good Luck!

The Innocent Spouse program happened to have been one of my program areas when I worked for IRS...This case IMHO appears to fit the requirements (if my memory serves me correctly, it has been several years since I worked that program)

Benita

[geekgirldany]

He may qualify under Relief by separation of liability or Equitable relief. It says in the Tax Book if he does not qualify under Innocent Spouse or Relief By Separation Liability then the person may qualify for Equitable Relief.

I had a case similar several years ago. Husband had business and never did pay SE tax. Joint return. IRS kept sending notices to the ex-wife. I kept on getting knocked from one to another at the IRS. I finally went to Tax Advocate. The person there told me I was correct on the Equitable Relief but a few days later she called back and said that the husband was paying the bill and they were not coming after the wife. So nothing else came of it.

You'll have to do some research on this. I know it took me alot of time. Plus I would plan on working with the TAO. It was pretty hard to get anyone to understand at the Tax Practioner hotline that she could still get Equitable Relief. You will have to show that it was the wife not the husband liability.

[myerstaxes]

Innocent Spouse Pub

Go here and read the pub...http://www.irs.gov/pub/irs-pdf/p971.pdf
there is a section about Community property and the fact that they lived in a Community Property state does not preclude the relief...
Good Luck!

[S T]

Myers and Geek Girl

Thank you both so much for your information. I am Pro Bono on this one as a favor to the family.

So the information you posted will be of great help to them.

Sandy

[JON]

I have never

heard of the IRS-collections getting to a taxpayer in less then a year. If this is the case the additional budget money must be performing miracles. I have never heard of collections getting involved in less than a year from the due date of the return.

[DaveO]

Time is of the essence

Move as quickly as possible. While some cases languish for months before action is taken others move fast. The IRS can issue the NOD pretty quick. If that happens you are on your way to tax court.

I had a client for which we were seeking Innocent Spouse relief. He husband had filed the returns, forging her signature and failed to pay the tax. The IRS issued the NOD in error but refused to rescind it. She went to tax court and won.

As to collection speed the fastest I ever saw was last season. I filed three years at once for a guy who owed quite a bit of tax. I told him to bring in the notices as soon as he got them and we would work out an installment agreement once we knew the totals.

He, being much smarter than me, called the IRS himself when the notices came in. The first question they asked was "Where do you bank?" He told them. The following Monday they had cleaned out every account his name was on including his kids CD's (held jointly). He was, of course, at fault for not taking care of business but the speed amazed me.

Good luck, the insight from Myers is helpful.

[myerstaxes]

Innocent Spouse Cases

As I shake the cobwebs out of this old brain...I remember when I was reviewing district cases as part of my Innocent Spouse program review...There were numerous cases where the spouse was totally clueless as to what the other spouse was up to...As you recall, the more lienient Innocent Spouse rules came about as a result of the Senate hearings about the toughness and cruelty of the IRS...Anyway, I remember one case, the wife had no way of knowing that hubby had liqudated some stocks, insurance and some retirement funds...She found out when he was on his death bed, when he told her to look into his office desk drawer and get the part payment voucher out to pay the IRS (seems as though he had gotten an installment agreement to pay the taxes that were the result of his shennigans)...Well, they had been married some 30 years, he was a highly paid retired official...He died, she was strapped with the bill, and applied for the Innocent Spouse Relief...I recommended to the district that they allow it...As an added note, the husband's liquidation of so many of the funds, left her pretty broke...

Good Luck!!

[S T]

It is Amazing

Jon, I couldn't believe it either, however, I have the IRS notice which clearly states Tax Year 2006. Why and how, I don't know. Also seemed very fast to me for an IRS Levy/Garnishment to be placed.

Thanks to all that have posted on this, so I am turning over information to the Client to proceed further, and hopefully it will assist him.

This information now will assist me in the future, if another client has a similar problem.

Sandy