Federal Income Tax Question


S

Suzie-Q

I'm in central Texas, although I doubt that will make a difference.

A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.

The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.

I realize that she may not be telling me the whole story. Assuming that
she is, here are my questions:

Can the IRS actually keep this money? Or probably a better question
is, HOW can the IRS keep her money/

Does anyone have any suggestions besides "get a lawyer and fight it"?

Thanks in advance.
--
8^)~~~ Sue (remove the x to e-mail)
~~~~~~
"I reserve the absolute right to be smarter
today than I was yesterday." -Adlai Stevenson

http://www.suzanne-eckhardt.com/
http://www.intergnat.com/malebashing/
http://www.intergnat.com/pussygames/
 
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P

Paul Thomas, CPA

Suzie-Q said:
I'm in central Texas, although I doubt that will make a difference.

A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.

The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.

I realize that she may not be telling me the whole story. Assuming that
she is, here are my questions:

Can the IRS actually keep this money? Or probably a better question
is, HOW can the IRS keep her money/

The IRS (and the states with an income tax) can, and often do, make off-sets
for other unpaid debts. First dibs goes to back taxes to that entity, then
there is some order after that. I suppose VA loan debt is on down the line.
If her name is on the note, she is still liable for that debt. She should
have made the ex refinance the house loan about 12 years ago.

It may be that she needs to talk to an attorney, but in the mean time, have
her reduce her withholdings so there isn't any refund (but a small balance
due) in the future year(s).

It's also possible that filing as an "innocent spuouse" would be in order.
Have her talk to a local CPA or EA about the issue. That would be the only
possibility on the tax off-set.

Does anyone have any suggestions besides "get a lawyer and fight it"?

Sorry, but the IRS isn't going to give her the money back that easily. The
attorney is to give her all the legal options (against the ex) available.
 
T

Timothy

Suzie-Q said:
I'm in central Texas, although I doubt that will make a difference.

A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.

The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.
Publication 17 says, yes, the IRS can keep your refund if you owe
certain debts, such as back taxes, payments to the federal government,
and child support. I am not exactly sure what you mean by not paying
"the taxes on a VA-financed home." This probably means that the
property taxes were not paid, which could effect your federal tax
refund, even though property taxes as a state rather than federal
matter. But another obvious possibility is that the payments on the
house loan are in arrears.

The next question is, does she (allegedly) owe the money? It is
possible that she might owe the debt from 12 years ago: the divorce
agreement probably only gave the husband the responsibility for all
taxes and all mortgage payments AFTER the divorce. I doubt that it
retroactively wiped out the wife's responsibility for existing tax
debts.

But a more likely scenario is that the records somewhere are outdated
and still show her as the co-owner of the house, which was true 12
years ago but not anymore.

$5000 is a ridiculously large refund, by the way. An individual refund
should NOT be so large: the tax payments during the course of the year
are obviously much higher than they oughta be.
 
E

effi

Suzie-Q said:
I'm in central Texas, although I doubt that will make a difference.

A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.

The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.

I realize that she may not be telling me the whole story. Assuming that
she is, here are my questions:

Can the IRS actually keep this money? Or probably a better question
is, HOW can the IRS keep her money/

Does anyone have any suggestions besides "get a lawyer and fight it"?

Thanks in advance.
--
8^)~~~ Sue (remove the x to e-mail)
~~~~~~
"I reserve the absolute right to be smarter
today than I was yesterday." -Adlai Stevenson

http://www.suzanne-eckhardt.com/
http://www.intergnat.com/malebashing/
http://www.intergnat.com/pussygames/

Can the IRS actually keep this money?
yes, they did

Or probably a better questio is, HOW can the IRS keep her money/
seems they based collecting it on a joint liability from a prior tax year,
as you mention

Does anyone have any suggestions besides "get a lawyer and fight it"?
she may be able to invoke the taxpayer advocate in her district
http://www.irs.gov/advocate/article/0,,id=97402,00.html
more details
http://www.irs.gov/pub/irs-pdf/p1546.pdf
(will load very slow on a dialup connection)
and get relief that way, assuming she is correct and doesn't owe the debt

if the issue is more complex than she can comprehend and discuss with the
irs (not uncommon given the extreme complexity of tax law, which changes
sometimes daily), she may want to consider hiring a professional, like a
cpa, attorney, etc. to assist her with her issues
 
J

John A. Weeks III

Suzie-Q said:
The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.
Often times, in a divorce, one party will "give" the house
to the other party by doing a "quit claim deed". While the
quit claim deed does indeed give all the assets that one party
owns to the other party, it does not relive the first party of
any responsibility if the other party fails to pay the loan.

For example A and B get a divorce. B gets the house. A signs
a quit claim deed. A now has no rights to ownership of the
house. But if B fails to make the loan payments, A is still
on the hook to cover those payments.

The only way out of this is to do a loan refinance. The problem
is that during divorce, many couples simply cannot afford to do
that after legal fees and related costs.

More than likely, this person does owe that money. They would
need to get a real estate and tax attorney to sort it out.

-john-
 
M

Missy

Suzie-Q said:
I'm in central Texas, although I doubt that will make a difference.

A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.

The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.

I realize that she may not be telling me the whole story. Assuming that
she is, here are my questions:

Can the IRS actually keep this money? Or probably a better question
is, HOW can the IRS keep her money/

Does anyone have any suggestions besides "get a lawyer and fight it"?
You betcha they can keep it and will. If you owe any federal agency or
child support
or other agencies, the IRS is entitled to keep the money and pay the
agency. And
they will keep on keeping the refunds until the debt is paid in full.

Missy Doyle
 
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Paul Cassel

Suzie-Q wrote:

[IRS seized money owed by ex due to default on VA mortgage]
I realize that she may not be telling me the whole story. Assuming that
she is, here are my questions:

Can the IRS actually keep this money? Or probably a better question
is, HOW can the IRS keep her money/
Obviously the IRS can keep the money and will unless you create a
compelling legal case that it can't. Here, if your buddy was still on
the mortgage, she is responsible for payments because mortgage is a
special kind of loan.

What you need to find out is the entire story. Did the ex refi the house
leaving her off or what exactly did occur then? At the very least, your
buddy can go to the IRS, seek out an agent, and show her divorce papers
in an attempt to set the record straight. There are procedures for
filing a protest, but you DO NEED a good legal opinion about the status
of your friend.

IF you don't want to accept the post-conference IRS opinion, then you do
need some sort of professional opinion such as an accountant. You need
an advocate who is informed or the IRS will run right over you.

This is worth the money as for all you know, the ex owes MORE than $5k
so the IRS may continue to ding your buddy or even file a lien against
her now that they've found her.

-paul
ianal
 
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Phil Marti

Suzie-Q said:
A friend of mine was supposed to have gotten a $5,000 tax refund. Instead
she got a letter from the IRS saying they were keeping the money because
her ex-husband had not paid the taxes on a VA-financed home they owned
together.
This makes no sense. Real estate taxes are not collected through offset of
income tax refunds. More likely is a defualt on a loan that VA had to make
good, and VA wants its money back.
The couple was divorced 12 years ago, and the court gave the husband the
house as well as the responsibility for payments and taxes. Even though
my friend has provided this info to the IRS, they are keeping the money.
The IRS isn't keeping the money, the Federal Government, through the
Financial Management Service, is keeping it to pay a Federal debt owed by
your friend. Note that the government wasn't a party in the divorce
proceedings, where it was decided to dump all the liability on the ex. Thus
they're not bound by it.
 

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