Hello,
A client of mine in Florida became widowed earlier this year when her husband died in April. His estate had no assets but he owed approximately $28,000 to the IRS in back taxes, penalties and interest. All of this tax debt was incurred on his income while they were married - he didn't file and pay for many years until he retained me to bring him up to date. Once all his returns were filed the IRS applied the refunds from the years still in statute to the tax debt. For the remaining balance, I was able to put the couple into Currently Not Collectible status because their expenses exceeded their income (just her social security and his very small military pension) and both had health issues preventing them from working anymore. They might even have been good candidates for an OIC but they didn't have the money to pay me to handle an OIC for them and the hours it takes.
Anyway, husband has now passed away and so there is no more military pension. The wife survives on social security, pays $100 every month to have Medicare as her health coverage, has no assets and lives with her son-in-law and his wife. The IRS appears to have reopened the case and are requesting a $600+ payment on the debt. The IRS allowable living expenses (even without claiming to pay any rent, as she does not pay) would exceed her income.
If I complete a Form 8857 (request for innocent spouse relief) and send along with a copy of the husband's death certificate, will that be the end of it?
Also, the last time I spoke with the husband, he told me the IRS was levying his wife's social security at a rate of 15% to apply to the debt. If they are still doing this, is there any way to get this removed?
Thanks in advance for any help.
---Chris A Johnson, EA