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Taxes And Marriage

By Bernard J. Gartland - Email Editor

Date : June 30, 2009

Dear Valued Reader,

Over the years I’ve built up some relationships with accounting firms. As a result of this relationship building, I recently received a phone call from a beautiful young lady who worked at one of the firms, who wanted to talk off the record.

So, back in March she closed on her house and subsequently filed her tax return asking for her $8,000 check. And then she waited,…

And waited,…

And waited.

For some strange reason the IRS didn’t give her the $8,000 she was banking on paying everyone back with. And then she got a little love letter from the IRS, it said that because her ex-husband had not paid all the taxes on his business when they were married, the IRS was going to be nice enough to keep the $8,000 check to apply against the tax liability.

Now let’s stop and reflect on why you should care about the above situation? How many of you are in a second, or maybe even a third marriage? Do you believe that your ex-spouse(s) did everything right come tax time? How about business relationships? How many of you were involved in partnerships that ultimately split up? Did you know that you could be liable for some of the taxes generated by your partner? While some of you may think you haven’t been in a partnership, something as simple as working with someone else on flipping a house can in fact create a partnership with potentially devastating tax results. Alternatively, what if you had a business that didn’t make it? In your mind, you stopped the business and the tax liabilities stopped; in the IRS’s mind, they might think you are still liable for some taxes.

Let’s get back to the young lady and her solution. Needless to say, she was in absolute tears when she heard the bad news about the IRS keeping “her” $8,000 rebate. Sure, she could, and did, file for innocent spouse relief, but that is a procedure that is going to take close to a year to go through and seems like a crap shoot for many “innocent” spouses.

What she should have done in the first place is to pull her “IRS Blueprint” before she banked on getting the tax credit back.

What is an “IRS Blueprint”? Just as credit reporting companies keep exact details of someone’s credit history, the IRS keeps pretty thorough records on each and every taxpayer as well. These records have all sorts of powerful information such as:

1) is the IRS planning on auditing you?

2) has the IRS filed a return on your behalf?

3) does the IRS think you owe them money ?

4) has the IRS conducted a criminal investigation in your taxes?

5) has the IRS filed a “secret” lien against your assets?

6) better yet, has the IRS “written off” you debt and given up on trying to collect it?

Let’s change the facts a little from the previous example. Let’s say the young lady decided to get remarried. She and her new husband live in wedded bliss, until the IRS starts levying their assets. When they immediately call the IRS to try and determine what is going on, the find out the following horrific news: Their assets are being levied due to the ex-husbands delinquent taxes.

Sound far fetched? It’s not. I see dozens of this exact same situation each and every year. Not only is it devastating from a financial viewpoint, but it wreaks havoc on a new and fragile relationship.

Let me give you another quick example. Back when people made money in real estate, it was all the rage for “flippers” to defer their gains via 1031 exchanges. The only problem is that they typically didn’t qualify for the tax deferred treatment and so upon audit, they are going to owe a lot in taxes. Wouldn’t you like to be proactive and be aware of the IRS’s strategy before they even contact you?

What if you entered into a business relationship with this person? Are your assets protected or are they pretty much up for grabs?

The bottom line is you need to know what the IRS knows about you, or anyone you are about to have significant financial dealings with.

In effect, the IRS Blueprint lets you see exactly what cards the IRS has to play against you.

If you have any questions, please contact info@trustmakers.com.

Until next time,

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