Legal Question in Tax Law in Maine

Re: Tax Levy

The IRS may ignore the divorce decree for these purposes and go after all people originally responsible for the tax debt. If you cannot afford to pay, you should also consider and offer in compromise.

Joel Selik

www.taxworkout.com

800-894-2889

Re: Tax Levy

Your situation is unfortunate, but not uncommon. The IRS can enter into a compromise with one spouse (based on that person's "ability to pay") while preserving its rights to collect from the other spouse -- in this case you. However, since the 1998 IRS Restructuring and Reform Act the IRS is pretty much out of the business of seizing houses to satisfy tax debts.

The fact that your ex agreed to pay the taxes in the separation agreement, and that collecting the taxes from you would create a "financial hardship," suggests that you may be eligible for relief as an "innocent spouse" under the third of the three forms of innocent spouse relief now available under section 6015 of the Internal Revenue Code. I must tell you, however, that the IRS is very miserly in its administration of this particular provision, and getting relief requires a clear showing that collecting the tax from you would in fact render you unable to pay your reasonable and necessary living expenses. As Joel Selik suggests, you may also be able to negotiate an offer in compromise based on "doubt as to collectibility" as your ex-husband apparently did.

There are articles on all of these subjects on my website at www.bjhaynes.com. You should review the article "The New Innocent Spouse Rules -- An Update on Equitable Relief," and the article "Negotiating Offers in Compromise." You should also determine whether the IRS collection activity is at the right stage to permit you to request a "collection due process hearing," which will stop all collection activity and enable you to discuss your case with an appeals officer. And even if you have missed the 30 day window for requesting this hearing you can accomplish the same thing by seeking what the IRS calls an "equivalent hearing." Again, there is an article on this on my website -- "Enhanced Opportunities to Appeal Collection Actions." Please let us know if we can be of assistance.