It's been over a month and I just received a letter setting up a July 9th phone meeting with the Appeals division. Our request for a hearing was approved and no tax lien will be put on us until July 9th if we are able to work out an agreement. A few things have changed. I want to give you a short review. We owe about $18,000 in back taxes (2007 & 2009 ) that were part of an installment agreement which I had that is now null and void because of my individual unpaid tax liability from 2011. It's about a $120,000 problem. I continue to pay the $500 per month from the installment agreement. We are both current on 2013 taxes.
My wife is trying to buy a house. She is on the hook for the $18,000 plus she just filed her Corporate tax return (Sub S) and she hasn't filed her personal return yet. She owes about $20,000 to Fed and $4,000 to the State. She has a preapproval letter for a $450,000 mortgage but she needs to file her personal 2012 return. Her best friend for 35 years past away about 7 months ago at the age of 41 and her husband is going in with her on the house and putting up $100,000 for most of the down payment. Her portion of the down payment is $10,000 plus the $25,000 closing cost. Her friend will be on the deed. They need to give a $25,000 deposit which will come from him. She also needs to be careful that they don't try and put a lien on that $25,000 that will be in escrow. Timing is the issue. The bank will run another credit check in the next 2-4 weeks. She hasn't filed her return yet but will need to do so before the bank goes forward with her on the commitment letter. It needs to be clean. Which means she needs to take $25,000 of her $55,000 and pay off her current (2012) Federal and State tax liability now. The Letter from the Appeals dept is asking for an updated 433-A form from both of us. Her last 433-A form from 30 days ago showed a value of her stock portfolio of $12,000 ( $9,000 came from her grandmother's estate about a year ago). It's now worth $55,000 with $21,000 in cash as I type. I had her in a very good Option investment. Her total liability is $18,000 (which was from our joint returns) plus $20,000 (2012 due). I think I would be in a better situation when I talk to the agent on July 9th if she is totally off the hook and they won't be able to use any of her assets or salary ($125,000) per year as a teacher and her online clothing business that she made $25,000 last year as a basis to pay back what we owe which is mostly all my responsibility actually but she is on the hook.
How do you suggest we move forward? Is it possible to call back the IRS and make a separate deal for her to maybe pay $9,000 (1/2 of the $18,000) now and get her off the hook for the balance, making it only my responsibility?
I know it's complicated but any good suggestions would help. I have showed them that I am insolvent.