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IRS Currently Not Collectible Status (Form 433-F)

Roseville, CA |

My husband received a notice from IRS - CP504 - Intent to seize your property. He owes taxes for 2008, over $8,000. We got married in 2011, I did not know about this debt of his, but in 2011 we filed married jointly and he immediately got this letter.
He does not work and does not have any income or assets. I work and receive W-2. We had a prenuptial where we agreed to keep all income and debt separate. The only thing we have together right now is one joint account. And also - he was on my taxes in 2011, he didn't make any money in 2011, but I did. Question - can he file for Currently Not Collectible Status? or would it not be possible because his wife works? He does not work, has no assets, and we had a prenup. Thank you.

I am trying to see if - first of all - I am liable for his debt; and secondly - if he can file for Currently Not Collectible Status?

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Attorney answers 5

Posted

You are asking for close consideration, an examined divination on his tax liability. Remember that IRS is big and that everyone there does not know the story and they may levy on your bank account anyway. why? They don't know how much money was in there from 5 years ago nor how much money was recently depositied.. They don't know how much was earned from him, etc.

Since you have a prenup that "where we agreed to keep all income and debt separate." why don't you have separate accounts??? By having a joint account, you facilitate mixing and facilitate IRS's taking. If you show the prenump, IRS will say, "but why are you violating it?"

Curt Harrington Patent & Tax Law Attorney Certified Tax Specialist by the California Board of Legal Specialization PATENTAX.COM This communication is general information and not legal advice, and does not create an attorney-client relationship. This communication should not be relied upon as any type of legal advice. Please note that no attorney-client relationship exists between the sender and the recipient of this message in the absence of either (1) a signed fee contract and (2) remission of an agreed-upon retainer. Absent such an agreement and retainer, I am not engaged by you as an attorney, nor is any other member of my law firm.

Asker

Posted

So, should I just keep my paycheck in a my sole account from now on and use our joint for expenses?

Curtis Lamar Harrington Jr

Curtis Lamar Harrington Jr

Posted

If the "We had a prenuptial where we agreed to keep all income and debt separate." holds, you would not expect IRS to respect an agreement you continue to violate by having a joint account. Either of you can use your separate money for whatever you wish.

Asker

Posted

Thank you. I just wasn't sure if it would be okay to close a joint account, would IRS be okay with that?

Asker

Posted

Also - if we had a prenup, does that also mean we cannot file taxes jointly?

Curtis Lamar Harrington Jr

Curtis Lamar Harrington Jr

Posted

No, but the prenup, according to your statement, means that money coming in becomes your or his separate property; You are still in a partnership of sorts, just that your prenup seems to starve your community estate.

Posted

As the first attorney provided, because you have a joint account, it will be difficult to prove that you kept his monies separate from yours. Where did the $8,000 go that he was supposed to pay? If it went into that account then that will be a red flag to the IRS. As for the currently not collectible status, many times the IRS will require you to list everyone that the indebted taxpayer lives with on the Form. However, that does not mean you will be unable to explain the income listed is not his and therefore he should be placed in non-collectible status. Again, this will bring up the issue of commingling your funds though.

Circular 230 Disclaimer: To ensure compliance with IRS Circular 230, any U.S. federal tax advice provided in this communication is not intended or written to be used, and it cannot be used by the recipient or any other taxpayer (i) for the purpose of avoiding tax penalties that may be imposed on the recipient or any other taxpayer, or (ii) in promoting, marketing or recommending to another party a partnership or other entity, investment plan, arrangement or other transaction addressed herein. Attorney-Client Relationship Disclaimer: This email does not create an attorney-client relationship between sender and any receiver.

Asker

Posted

The $8,000 he owes is from 2008. He never deposited any money into our joint, the only thing that went in there was my paycheck and transfers from my savings, that I have had for years. But I understand your point, there was a reason I had to create a joint with him, I guess the question is - can I start receiving my paycheck on my sole account now? I won't close the joint and will keep paying bills off of it. Another thing - if he tries to get the not collectible status, but my income is on that form, does that mean they will collect it from me? Or should he try and do that? Thank you.

Matthew Jason Staub

Matthew Jason Staub

Posted

It is difficult to give an answer either way. Only upon looking at the 433-F and speaking with an agent with the IRS will you know the best route to take.

Posted

With respect to your husband's unpaid taxes for 2008, since you did not file jointly with him for that year, you are not liable for that tax debt.

That being said, the IRS can, and will, seize joint bank accounts for the unpaid taxes of one owner and will leave it to the other owner to prove how much of it was really theirs and to try and get the money back. Until your husband's back taxes are paid off or are otherwise compromised, you should not have any joint bank accounts with him.

With respect to whether or not your husband can convince the IRS to classify him as currently not collectible, there is no way you could ever post enough information here - and you should not in any event - for anyone to give you any good answer other than: he can ask. Keep in mind that for purposes of determining what his "available monthly income" is, the amount of allowable expenses he can deduct from his monthly income will be reduced by the amount of those taxes that you actually pay. Keep in mind as well that if he has any assets, the IRS will expect him to do his best to obtain funds from those assets to pay his taxes.

You and your husband - mainly your husband - should immediately seek the advice and assistance of a competent tax attorney, accountant, or enrolled agent. That person can tell you where your husband stands with the IRS and whether it's realistic to expect the IRS to classify him as currently not collectible, and if so, that person can assist your husband with completing and filing the appropriate collection information statement and negotiating with the IRS.

Finally, also keep in mind that penalties and interest will continue to accrue on those taxes, even if he is classified as currently not collectible, so it may in fact be better if you could provide him with some money to make at least small monthly payments on his taxes - if he could get a partial pay installment agreement with the IRS with your help it would be better for both of you in the long run.

Good luck.

Posted

You are not liable for your spouse's pre-marital debts.

Perhaps your husband could file for BK to discharge the debt as long as the tax return was filed in a timely manner.

I handled a BK case very similar to the above facts about 2 years ago and the Husband received a discharge even though the spouse made a good wage as a teacher.

BW

Dana Whitney Atchley

Dana Whitney Atchley

Posted

But if the tax is the only debt, is it worth the price of having a bankruptcy on the credit report?

Posted

So long as your prenuptial agreement is enforceable, you have a right to protected your income from collection. The biggest issue that I see for you is that your state's community property laws allow for the entirety of your community property can be collected against for premarital tax debt. See IRM 25.18.4.6

He can certainly submit a request for CNC status, but you will likely have the burden of demonstrating that your prenuptial agreement overrides California's standard community property laws.

Best of Luck.

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