We just got a certified letter in the mail that is addressed to my husband and his ex-wife. Now, this sent a shiver up my spine for 2 reasons. 1) It was from the IRS, and 2) we had finally succeeded in pretty much getting the ex out of our lives. She didn’t have our address or phone number. She hadn’t called us in over a year. We were joyous.
Anyway, the letter states that they are being audited for 2001. Apparently his ex cashed in her 401k that year and never put it on their tax return. The amount owed is not huge, a little more than $600, and we can afford to pay it all if we have to. However, if there is any way to hold the ex responsible for her half then of course we would like to do so.
Here’s the tricky part. My husband called the number on the letter and spoke to some guy at the IRS. This guy says that these are our options.
[li] Both parties sign stating that they agree with the IRS’s findings and they will pay the amount due. In 90 days, the IRS sends a bill for half to each party.[/li][li] Both parties sign stating that they disagree with the IRS’s findings and then they re-file with new information that proves they don’t have to pay. The IRS evaluates the newly filed claim and decides whether or not they have to pay.[/li][li] Neither party signs, we just wait 90 days. The IRS issues a bill to both parties for the full amount.[/li][li] Neither party signs, but someone sends the full amount due to the IRS. In 90 days the IRS re-evaluates the case and sees that it was paid in full they close the audit. However, if BOTH parties pay the full amount, a refund check will be issued in both their names.[/li][/ul]
Now this guy that my husband spoke to at the IRS did not seem like the sharpest tool in the box. He didn’t know what would happen if my husband signed and sent a check for half without her signature, but I’m guessing they would just send a bill to both parties for the remainder and we’d end up paying it anyhow. The guy also claimed not to know how the interest was accrued. I don’t want to wait 90 days and have it wind up being another hundred bucks or more.
We already know that his ex-wife’s financial situation is crap. She has horrible credit and probably doesn’t care if the IRS makes it worse. She knows that we have spent the last year and a half cleaning up our credit and trying to get out of debt. I’m pretty sure she’s aware that we can afford to pay the full amount.
So my husband calls her and she of course refuses to sign anything. She claims that she already paid the taxes on that 401k when she cashed it in and doesn’t owe the IRS anything. In fact, she says the IRS owes her a $1000 refund!. She wants to re-file the paperwork herself. Of course, my husband refuses to sign anything she puts together. He tries to explain to her that what she probably paid that year were penalties to the investment company and taxes are a different thing. She rants and raves and calls him a freak and an idiot. :rolleyes: He tries to compromise. He says they can re-file, but they will use a CPA or tax service to do the paperwork and share the cost of that as well. She refuses and rants some more. He hangs up having resolved nothing and now she has our phone number, as well as our address (which the IRS kindly provided to her on her copy of the letter.) Related rant coming soon to a Pit near you.
So, my questions to the teeming millions (especially anyone who knows about taxes):
[li] Is there ANY way that we can make her responsible for her half with out her signature?[/li][li] Should we just suck it up and pay the full amount?[/li][li] Can a CPA help us without the ex-wife’s cooperation? I tried calling around, and the fee is somewhere around $130 an hour for this kind of thing. I don’t think it’s worth it to pay that fee on top of the full amount, but I might pay it if I knew he could make the ex responsible for her amount.[/li][li] Does anyone know how the interest works on this? There is a sheet with the letter that shows how the interest was charged on the original amount, and it makes absolutely no sense to me…so it may be hopeless to try to explain it, but you could always try. :D[/li][li] Any general advice anyone has would be welcome.[/li][/ul]
I’m not sure if this would have been better suited for GQ or not, but since I am seeking opinions as well, I thought I’d put it here in IMHO. If a mod wants to move it, please do so!
Oh, I’ve already told my husband he’s a :wally for filing jointly with her that year and letting her do the paperwork. He agrees.