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Back taxes: his and hers

Across years 2001-05, my then-husband ran up a $118,000 tax debt which, because we are now divorced, is still with us separately ("joint and several liability" rule). But we don't each owe $118K. I took bankruptcy last year and got the oldest back taxes discharged because of their age. I still owe $58K. My ex still owes the full $118K because he did not take bankruptcy -- but plans to file (he just announced) in late April of this year. With his filing he will succeed in discharging all $118K of back taxes he owes because they all will be old enough for discharge by delaying the filing date to late April. Here then are my questions.

In the final divorce decree, my ex promised to pay all back taxes (plus penalty/interest) that we incurred while married. (The final decree happened in August 2008.) Now, five months later, he has not applied any money to the retirement of back taxes. In fact, he has announced (as stated above) that he plans to file Ch. 7 and get all his back taxes discharged because of their antiquity. But what about mine?

Does the fact that he promised in the final decree to pay all back taxes incurred while we were married still hold? With the late-April filing that he intends, he will free himself from all back taxes linked to his name. But, as I understand things, I will still owe the $58K that was left over from my 2008 mid-divorce filing. Is the obligation that he set for himself in the final decree to pay all our back taxes enforcable? Post-April, will I be able to go after him for the back taxes that are still charged to me?

Or (worst possibility) will he be able to name the $58,000 obligation that is supposedly his to pay as just another debt he wants discharged in his petition? In other words, can he use his Ch. 7 petition to void the promise he made in our divorce decree? I'm hoping the answers to these questions will not crush me. But I'm braced.

Thanks for your help.

Reply to
woodrow
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"woodrow" wrote

For starters, the IRS is not bound in any manner to the agreement you two wrote up as part of your divorce. So while you might be able to enforce the terms of the divorce agreement against him, you can't enforce the terms of your divorce agreement against the IRS.

They will likely continue to try to extract payment from whom ever is still responsible on the debt. Even if one of you has had that debt discharged in bankruptcy, the other is still liable.

I'd suggest waiting till you hear form the IRS on the matter and then take it to a CPA or EA that deals in collection issues with the IRS. There's no point in reminding them of this right now. And there's no telling what will transpire come April.

It's possible to avoid paying this if something like "innocent spouse" applies to your situation. But, someone would have to have a lot more details of the facts surrounding those years to make that determination. If necessary an attorney might also be in order.

Reply to
Paul Thomas, CPA

If his bankruptcy attorney has two licks of sense, which is about three more than yours seems to have had, he'll try.

Yours isn't a tax law question, but a bankrutpcy law question. I have no idea whether it would be worth your while to seek further legal counsel on this.

Reply to
Phil Marti

You or your attorney should monitor his bankruptcy filing to ensure that all of his assets are listed in his schedules. The IRS can collect from exempt or abandoned assets even though his liabilities are discharged.

Reply to
paultry

Did you file joint tax returns? Did the additional 118k (or was it

236k) of tax arise from additional income that were not in the original returns from 2001-2005 that you signed, and if so, were you aware of this additional income? You may read or google about "innocent spouse". Here's the official IRS link:

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Reply to
removeps-groups

Thanks for replies. I will say first that "innocent spouse" definitely applies. In fact, I have a docket number and the case is set for November. (The U.S. Tax Court comes through Oklahoma very infrequently.) I'm not real confident I'll win there.

I have a grievance filed with the state bar association against the BK attorney who failed to advise me that back taxes of a certain age automatically fall off with a properly-timed BK filing. If he had advised me to wait just 54 days before my last year's filing, I'd have had an extra $37,500 fall off the overall liability (leaving me owing only $12,500). But he did not so advise me. In fact, he didn't even know the rules on this. One attorney I talked to said I should sue the man for legal malpractice. I'm looking into this.

In the meantime, I may just need to suck up and file Ch. 13. If I get some kind of break because my ex makes an error in his April Ch. 7 filing or if I can somehow enforce the "I'll pay the back taxes" promise he made in the final divorce decree, I may be able to avoid doing all the heavy lifting myself. A big legal-malpractice settlement would go a long way too.

Thanks again for your counsel. I'm a 54-year-old dental hygienist. Do you know how many teeth you have to scrape to pull together $58,000? I'll grit it out.

Reply to
woodrow

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