How JustAnswer Works:

  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.

Ask PDtax Your Own Question

PDtax
PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 2036
Experience:  32 years tax experience, including four years at a Big 4 firm.
64119565
Type Your Tax Question Here...
PDtax is online now
A new question is answered every 9 seconds

So new question from the earlier one re the wisdom of Chap13

Resolved Question:

So new question from the earlier one re the wisdom of Chap13 and OIC - as to assets, let's say hypothetically I have assets of 0, but a paycheck bringing in, 100 - 120K, but support payments of 30K (alimony aka indentured servitude)....how uncollectible would I look to the IRS on 50K in back fed taxes....
Submitted: 1 year ago.
Category: Tax
Expert:  PDtax replied 1 year ago.
Welcome to the site. I did not answer your earlier question, but can help with this one. I'm PDtax.

The amount of $ needed for an OIC is based on what IRS considers collection potential. If you don't have many assets, and low, sporadic income, you are a prime candidate for an Offer. Assets are valued based on a discount to fair market value. Income and expenses are looked at, based on national standards, which are in some states exactly the same for Chapter 13 purposes and Offer calculations.

The problem with higher incomes is IRS only allows certain amounts in the calculation. Let's say your rent was $2,700 per month. IRS may only allow $1,400, meaning that $1,300 would be required toward your monthly payment, even if you didn't have money left over at month's end. The tables, available at http://www.irs.gov/Individuals/Collection-Financial-Standards, will show you how to do the math.

Things like alimony are allowed (court-mandated payments).

The cash amount to Offer is, I believe, 40 monthly payments of the monthly amount IRS considers that you can pay.

It is not likely that IRS will deal, since your income is high enough that levies or other collection will likely get cash pretty easily.

Thanks for asking at Just Answer. Please ask any follow up you may have. I'm PDtax.
Expert:  taxexpert89 replied 1 year ago.
Thank you for using Just Answer and it is of great pleasure to assist you with your question today.

I assist individuals with preparing their Offer In Compromises as well as setting up Installment Arrangement Plans and providing any and all resolution services to taxpayers.

Much of what was said earlier is in fact accurate however, it is important to understand that the Internal Revenue Service deals with individuals on a case by case basis. With this being said your circumstance is a major factor in determining whether or not an Offer will be accepted. Despite having a large income and no real assets the Internal Revenue Service will request a complete financial disclosure. Utilize form 433-F to identify exactly what your monthly income is versus your monthly household expenses. Although the Internal Revenue Service has standards for expenses based on the county for which you live an important point to understand is the fact that your actual expenses if greater than the standard will trump the standard granted you have the necessary substantiating documentation to prove these expenditures.

With that being said if you can prove that you have certain living expenses that shows you have a minimal disposable income at the end of each month this will greatly facilitate an offer on your behalf since in truth you do not have a real ability to pay your debt in full.

The question is after all allowable expenses what is your net disposable income?

Other factors that will help in determining if an offer will be accepted will be your age and your health. If we can dig a bit deeper we will be able to determine if the Offer in Compromise is a valid out for you.

1. On average how much funds do you maintain in your bank account? ( This dollar amount will be apart of your offer.)

2. Based on your monthly disposable they will use this amount and multiply it by either 12 or 24 based on how you plan on paying your offer if accepted.

3. Do you have any lines of credits?

4. Do you have any retirement accounts?
Expert:  PDtax replied 1 year ago.
Hi again. PDtax again.

Please advise if you need anything else.
Customer: replied 1 year ago.

My recent ex signed 2 years of tax returns. I am responsible under the divorce agreement for the entire debt. Assuming I can work out an OIC, will the IRS then go after her, putting me into a situation where the local court system goes after me for enforcement etc? I ask because the living expenses do trump the averages IRS posts., but all of this is to no avail of they go after her and the local court gets their feathers in a uproar.

Expert:  taxmanrog replied 1 year ago.

Hi! Welcome back! I am the expert who answered your original question! Glad to see you back here! Thanks for returning!

 

If you signed a tax return, the IRS assesses what they refer to as "Joint and several liability" meaning that you and your spouse are both responsible for 100% of the tax bill. They don't just say that each of you is responsible for half, they try to get all of it from both of you, and until they are satisfied, they continue to pursue. Even if the divorce decree states that you are solely responsible and will pay, the IRS will still try to collect from her.

 

However, the IRS does allow "Innocent Spouse Relief" which would allow your spouse to walk away from the debt, leaving it all to you. It allocates all tax, interest and penalties to the other spouse. The way this is handled is that your wife would file asking for the Innocent Spouse Relief by completing a Form 8857. Your wife will file the Form as soon as she knows about the tax liability. In order for the relief to be granted, several conditions must be met. One is that you have been living apart for a year, another is that your spouse did not really know about the understated tax liability or its consequences when she signed the tax return. A final criteria is that holding her responsible for the tax would be unfair given the facts and circumstances.

 

I recently got Innocent Spouse Relief for one of my clients. Her husband had pulled money out of his 401(k) to keep his business running. He did not report it on the joint Form 1040 that they filed. The IRS came back and assessed $25k in additional tax. My client and her spouse are going through a divorce now. We filed innocent spouse relief, and the IRS granted it to her, allocating the entire balance due to her former spouse. So it is possible to win!

 

I hope this has answered your question! If you have any more, please feel free to ask me. If you have found this helpful, please rate me highly! I would appreciate it!

 

Thanks again!

 

Roger

Expert:  PDtax replied 1 year ago.
HI. PDtax here. I wouldn't normally respond to further muddy the responses, but I think your follow up question did not get answered. I will respond, then opt out.

When a divorce decree is issued, it is binding on the parties, but IRS does not have to be bound by that agreement. Your assumption of any tax liability is not binding on IRS, so they can pursue one or both parties to collect.

General advice about innocent spouse relief and the like, in my opinion, does not answer your question regarding the interplay between divorce and joint tax liabilities. If your agreement with your ex-wife states you will be solely responsible for the tax debt, and you settle, IRS can still look to her. The language of your agreement may come in to play, but such an agreement is not binding on IRS. They could look to her, and she could look to you for relief. Think additional court proceedings.

If you are indeed an Offer candidate, you might want to consider a Chapter 13 filing instead of an Offer. Depending on the ages of the taxes, you may be able to pay a portion of the tax debt, and since the bankruptcy court would have the authority to supersede your divorce agreement, you might find that to be a better course of action.

You didn't provide facts to make that call, but I would recommend a consult with a quality bankruptcy attorney, and/or a bankruptcy CPA to assist in the review of your options.

For example, your joint 2009 tax return, if filed April 2010, could be eligible for bankruptcy relief (it's more than three years old).

Because there have been multiple answers to your question, I will opt out. If you want anything more from me, please ask for PDtax in the subject line of a new question, and the other Experts should respect that request.



PDtax, CPA firm owner
Category: Tax
Satisfied Customers: 2036
Experience: 32 years tax experience, including four years at a Big 4 firm.
PDtax and 4 other Tax Specialists are ready to help you
Expert:  taxexpert89 replied 1 year ago.
To answer your question if the Internal Revenue Service accepts the Offer in Compromise on your behalf this will be for the total outstanding obligation which is jointly held. Once the offer is paid in full based on the terms of the agreement you would have cleared all of your arrears. The buck will stop at you once the IRS accepts the offer and it is paid with no further enforcement action against you nor your spouse. Now if you fail to pay the offer and meet your obligation that changes the dynamics completely but, if you can settle at less than what you actually owe most would jump at the opportunity just to get the Internal Revenue Service off their rear. I do hope I was able to adequately respond to your question. Please feel free to request clarity if it is needed.

I appreciate your positive rating to the customer service you received today. Thank You.
Expert:  taxmanrog replied 1 year ago.

I stand by my original advice, two posts up. You said that you wanted to avoid your wife having to take you back to court, or having the local courts involved. The Innocent Spouse Relief would accomplish that. Follow it through just as I stated. I would also pursue the offer in compromise, but you said your concern was with your wife coming after you in court.

 

I hope that I have answered your questions! I thank you for asking for me this morning. My wife had a rough night at chemo last night, so I did not get online until after the other expert had answered. He opted out, so I re-answered you.

 

If you have found my answer helpful, please rate me highly! As before, I would greatly appreciate it! And good luck with your divorce!

 

Roger

JustAnswer in the News:

 
 
 
Ask-a-doc Web sites: If you've got a quick question, you can try to get an answer from sites that say they have various specialists on hand to give quick answers... Justanswer.com.
JustAnswer.com...has seen a spike since October in legal questions from readers about layoffs, unemployment and severance.
Web sites like justanswer.com/legal
...leave nothing to chance.
Traffic on JustAnswer rose 14 percent...and had nearly 400,000 page views in 30 days...inquiries related to stress, high blood pressure, drinking and heart pain jumped 33 percent.
Tory Johnson, GMA Workplace Contributor, discusses work-from-home jobs, such as JustAnswer in which verified Experts answer people’s questions.
I will tell you that...the things you have to go through to be an Expert are quite rigorous.
 
 
 

What Customers are Saying:

 
 
 
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
< Last | Next >
  • I really was impressed with the prompt response. Your expert was not only a tax expert, but a people expert!!! Her genuine and caring attitude came across in her response... T.G.W Matteson, IL
  • I WON!!! I just wanted you to know that your original answer gave me the courage and confidence to go into yesterday's audit ready to fight. Bonnie Chesnee, SC
  • Great service. Answered my complex tax question in detail and provided a lot of additional useful information for my specific situation. John Minneapolis, MN
  • Excellent information, very quick reply. The experts really take the time to address your questions, it is well worth the fee, for the peace of mind they can provide you with. Orville Hesperia, California
  • Wonderful service, prompt, efficient, and accurate. Couldn't have asked for more. I cannot thank you enough for your help. Mary C. Freshfield, Liverpool, UK
  • This expert is wonderful. They truly know what they are talking about, and they actually care about you. They really helped put my nerves at ease. Thank you so much!!!! Alex Los Angeles, CA
  • Thank you for all your help. It is nice to know that this service is here for people like myself, who need answers fast and are not sure who to consult. GP Hesperia, CA
 
 
 

Meet The Experts:

 
 
 
  • Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
< Last | Next >
  • http://ww2.justanswer.com/uploads/KU/KUMI95/2013-9-30_195031_kumar.64x64.jpg Wallstreet Esq.'s Avatar

    Wallstreet Esq.

    Tax Attorney

    Satisfied Customers:

    570
    10 years experience
  • http://ww2.justanswer.com/uploads/CU/Cuttinggirl/2011-10-29_03719_wcrop2.64x64.jpg Wendy Reed's Avatar

    Wendy Reed

    Enrolled Agent

    Satisfied Customers:

    3052
    15+ years tax preparation and tax advice.
  • http://ww2.justanswer.com/uploads/CATax/2009-08-04_204548_Mark.jpg Mark D's Avatar

    Mark D

    Enrolled Agent

    Satisfied Customers:

    985
    MBA, EA, Specializing in Business and Individual Tax Returns and Issues
  • http://ww2.justanswer.com/uploads/IN/insearchoftheanswer/2013-8-16_0233_attorney.64x64.jpg Richard's Avatar

    Richard

    Tax Attorney

    Satisfied Customers:

    3229
    29 years of experience as a tax, real estate, and business attorney.
  • http://ww2.justanswer.com/uploads/MY/MyVirtualCPA/2012-7-5_44024_cookmegan1.64x64.jpg Megan C's Avatar

    Megan C

    Certified Public Accountant (CPA)

    Satisfied Customers:

    6121
    Licensed CPA, CFE, CMA who teaches accounting courses at Master's Level
  • http://ww2.justanswer.com/uploads/JG/jgordosea/2012-6-7_43138_GordosVeritas.64x64.jpg jgordosea's Avatar

    jgordosea

    Enrolled Agent

    Satisfied Customers:

    2783
    I've prepared all types of taxes since 1987.
  • http://ww2.justanswer.com/uploads/OZ/ozaukeecpa/2012-6-7_193219_Picture1croppedandshrunk.64x64.jpg MequonCPA's Avatar

    MequonCPA

    Certified Public Accountant (CPA)

    Satisfied Customers:

    2231
    CPA, Over 30 yrs experience w/individuals and small businesses. Masters in Tax.