This situation: a married couple files joint returns for several years. Y works one job over those years and always had sufficient withholding to cover her share of their taxes. X, however, did not - he worked several different jobs and consistently (and deliberately, and over her protests) underwithheld on his W4 with each new job. As a result, they had federal tax due each year. They didn't pay it and built up a tax liability of 10K or so. They set up a payment plan and payed on it for a few years. Then X and Y divorced. Y continues to work her job and has her refunds confiscated because of their back taxes, which with penalties and interest now amount to nearly 20K. X has stopped paying on the tax debt (even though it's in their divorce decree that he must continue to do so) and doesn't seem to be very concerned about this problem. Y feels like she's paid her fair share of these taxes - she always had sufficient withholding and has even sacrificed 5K in refunds after their divorce (filing as HOH) to service this debt. However, because they had joint accounts and because she signed the forms (in other words, she KNEW he had a history of not paying their taxes) her application to be considered an innocent spouse was rejected. Does she have any options here, other than to appeal the innocent spouse ruling and try again? Will the IRS consider separating their joint tax liabilities into his-and-hers? She is just sick of having to carry a tax burden created by her ex's refusal to have sufficient withholding and by his refusal to actually send the IRS their balance due for those years. What about an Offer in Compromise? Of course it also makes her sick to shell out thousands on an OIC to pay taxes she feels she's already paid and that gets HIM off the hook as well. And X is pretty spotty on paying his child support, too, so even a few thousand dollars for an OIC is out of reach for her right now. Any suggestions - any at all - would be welcome. Disclaimer - I'm dating Y, we're considering marriage in a year or so, and I would hate to have to pay this off myself or have to file as an innocent spouse for the rest of my life. Not to mention the incredible amount of stress this puts on her. So I do have quite an interest in seeing this problem resolved.
-- John D. Goulden