Divorce Decrees Mean Nothing to the IRS

Dear Mary: I am recently married and my husband owes the IRS $23,000 in back taxes for tax year 2010. He agreed to an installment plan of $320 per month with the IRS.

His divorce decree states that he and his ex-wife are each responsible for paying half of any taxes owed, but she says she cannot pay anything. He has been paying $400 per month, trying to pay his half off faster, but it’s hard on our finances and the interest continues to accrue each month. 

Is it possible for an accountant or tax attorney to deal with the IRS to get the total amount owed reduced? Rhonda

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Dear Rhonda: Here’s what you need to know about divorce decrees: Creditors and the IRS are not bound by them. In fact, they could not care less about what the divorce judge decreed. 

The IRS is going to hold your husband responsible for 100 percent of the taxes owed for  2010. And the IRS will hold the ex-wife 100 percent responsible as well. They don’t care which of them actually pays as long as the taxes get paid. And if it goes to collection and they start filing liens, the last thing the IRS will be concerned about is a divorce decree! 

If the ex-wife doesn’t abide by the decree, the divorce judge will deal with her, not the IRS or other creditors. If your husband pays the taxes in their entirety, he can go after his ex for half based upon the terms of the decree and probably get the court to help him. My advice is for your husband to stop trusting the ex to do anything, let alone pay taxes for which he is legally obligated. The IRS is the last entity he or anyone on earth wants to owe.

That being said, there is a way to get an amount owed reduced and that is through a process known as An Offer in Compromise. You will need to get a tax attorney or CPA who is an “enrolled agent” with the IRS to craft an offer to the IRS. If they accept it your husband must be prepared to write a check for the full amount agreed upon. Since he has been making payments faithfully, his offer is likely to be received positively.

Dear Mary: What is the right thing to do when you honestly cannot afford to put your kids in sports, like Little League baseball, but you know it is such a good thing for them both physically and socially? Bonnie

Dear Bonnie: The right thing is to live within your means and not go into debt. If this is a high priority as you look at your total financial pictures, decide what you will sacrifice to free up the money for childhood enrichment activities. Then consider all reasonable alternatives. Does your Parks and Recreation Dept. offer organized sports? What about the YMCA or a local church?

If your kids really want to play, get them into a serious savings program now so they can help pay the fees next season. 

Question: What advice would you give to Rhonda and Bonnie? 

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16 replies
  1. willie knight says:

    Mary: a point of clarification in your column on divorce and the IRS. Attorney’s and CPA’s are already ‘enrolled agents,’ in that they are able to represent their clients before the IRS. A person who is not an attorney or CPA can take a test, and along with other requirements, to be an enrolled agent and able to represent a client before the IRS. Hopes this helps.

    Reply
  2. DebDia says:

    Kay is correct….Little League requires all kids have the opportunity to play even if they don’t have the money for the fees. I served many years as treasurer and fund raiser for our local little league. The park served an area of town with lots of children that couldn’t afford to pay. That’s why we had car washes, candy sells, cook outs, and ran a concession stand to raise the money for uniforms, umpires, etc. It was a blast. So Bonnie should go to her local Little League and meet with one the board members. They will help get her children enrolled. She will probably have to volunteer and help with fund raisers but she won’t regret it.

    Reply
    • Guest says:

      I wasn’t aware of this. Our boys played LL for many years, and was quite involved myself. I hope Bonnie is reading this!

      Reply
  3. kay says:

    For Little League, I would check into it because, as I recall, the payment to join is voluntary – if you cannot afford it, I believe they will let your son participate anyway.

    Reply
  4. Dorothy Kirchner Meyers says:

    Many city rec departments have “scholarships” available for low income families…there is paperwork involved but if it’s important to you – go for it. Also, before you sign your kids up for all the activities, make sure that it’s something that they want to do, and it’s not something that you are doing to keep up with the Joneses – then have them pick one activity per season – sometimes too much is just as bad as not enough.

    Reply
    • DianaB says:

      I agree. Most all (city, church, school) athletic programs have scholarships available that other like-minded folks help fund just for these situations. Asking the person in charge can likely lead you in the right direction for financial assistance. The one thing I do find irresponsible is the fact that prior year’s uniforms, cleats, etc. do not get reused the next year. It is always a new uniform or whatever that greatly impacts the fees involved. These uniforms should be returned at the end of the season, cleaned and stored for the following season to be rented for a very small fee by another child, including cleats and shin guards if appropriate. I only know of one church in my area who sponsors the Upward Sports soccer program that actually will take cleats and shin guards from one child and use them for another when needed. Look into the scholarship programs. I have had to use them once or twice myself for my grandson.

      Reply
  5. Sandra says:

    Recently heard the IRS is going after …family members…when someone in the family owes taxes! Meaning, if my sister owes taxes and I’m getting a refund, the IRS is withholding MY refund because my sister owes taxes!

    Reply
    • DianaB says:

      Sandra, I do not believe that is even close to be the truth. The only time the feds or state takes the taxpayer’s refund is to apply it to some outstanding debt–taxes due, child support due, etc. by the taxpayer him/herself. But they cannot come after anyone else in the family. That would be ludicrous and no one would owe back taxes because everyone else in the family or country would be paying it off for them, including me for those of my children who owe taxes against any of my refund. Of course, they can impose liens against your property and they certainly do that without you even knowing it. The lien just sits there against your property until you try to sell it and then you are in for a shocker until it is paid out of any proceeds on the sale.

      If that is a rumor you have heard from someone, I would certainly check it out with a tax attorney or CPA. Usually no charge for a consultation.

      Reply
      • RJ says:

        Actually the IRS was going after the direct descendants of people who were overpaid benefits — such as someone who was overpaid social security years ago (1970s) and had died. The IRS was taking tax refunds of the children. There has been an announcement that they will no longer do this.

      • Guest says:

        DianaB … It is not a rumor. This was recently reported in the news and got quite a bit of attention causing a stir. The situation was a bit more complicated, however, than the example Sandra suggested.

      • Sandra says:

        And what about the IRS coming after family members is any more ludicrous than other things they’ve done? No rumor, it was on national news however RJ says a new announcement states the IRS will no longer do this. I wonder if they’ll send the refunds they’ve kept from family members?

  6. EgyptLyn says:

    Mary, I think what Bonnie means is that there isn’t any money left after the main bills are paid. What I got from the question was that she is barely paying the necessities and there just is no more money. I live on a fixed income and I do not get enough to pay all of my basic bills. I cannot work so I flounder every month to try and keep things turned on. I have just the basics and receive a small amount of assistance with my utilities but it still isn’t enough. If it were not for the snap program, I wouldn’t be eating. So I don’t think she is buying lattes and going shopping. At least that’s what I got from her question. Just saying….

    Reply
    • Guest says:

      I read your question to be anything that she does not have the money to pay for her children to participate in Little League.

      Reply
      • Email subscriber says:

        I have no idea what Ms. Hunt is trying to state in the above reply, the sentence as structured is very confusing.

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