Michigan Tax Legal Questions

You should file your return accurately and honestly. The fact that he has filed an inaccurate return should not affect your decision regarding how to file your return. When you do file your return, it would be best to complete and mail a paper return, especially if your ex-husband filed electronically. Paper returns will typically be accepted over electronic returns, and so if they notice a conflict between your return and your ex-husband's return, then it will likely be his return that gets audited. He should not be claiming head of household unless he is single and has a qualifying child that is claimed as a dependent. Based on what you've said, he satisfies neither of those requirements. The fact that he may be audited when you file your return is not of any concern to you; just insure that your return is correct.... Read More

There are a lot of commercials out there which advertise settling tax debts for "pennies on the dollar." Many of them state that these settlements are new offers by the government due to the state of the economy, but this is untrue; the I.R.S.'s offer in compromise (OIC) program has been around for awhile, and this is the option to which they're referring. The I.R.S. released a consumer alert regarding many of these companies that make false promises back in 2004: http://www.irs.gov/uac/Check-Carefully-Before-Applying-for-Offers-in-Compromise An OIC is something that should certainly be looked into, but it is not available for all taxpayers. There are pretty stringent financial criteria that must be met. However, there are other options available with the I.R.S., ranging from full and partial pay installment agreements to currently not collectible status. The Alabama Department of Revenue generally only accepts installment agreements. They do not have an OIC program, nor do they allow currently not collectible status. The Department will also push for these installment agreements to last for only one year, but with a collection information statement, you may be able to negotiate a lower monthly payment with the option to renew the agreement annually until the debt is paid. There are options available to you, but many of them depend upon your particular financial situation. Meeting with a competent accountant or attorney who is familiar with resolving tax debts would be the best advice. If you have any questions, please do not hesitate to contact me. ... Read More

If you are unmarried and you are giving a gift, you are limited to $13,000 per year if you do not want to chip out of your lifetime gift maximum. (For a married couple, this gift doubles). So you can give $13,000 to your daughter, and another $13,000 to your son-in-law. That is $26,000. If they had a kid, you could give another $13,000 to a kid. You see how this works? But in your case, because you want to give $37,000 to your daughter and her husband, that is more than $26,000, so you will need to file a gift tax return. There will be no tax, but that return will essentially chip out from your lifetime maximum. I would give $13K to daughter, $13K to son-in-law and do a gift tax return on the remaining amount. This is the process "by the book," so to speak. You will not owe any tax, but the tax return would essentially tell the IRS that you just chipped out from your lifetime maximum. I hope it makes sense.... Read More

There is a 10-year statute of limitations on the IRS collections, but it runs from the date of assessment. In other words, if the tax return for a given year was never filed, that statute never starts to run. If the return is filed in 2001 for tax year 2000, the 10-year clock begins ticking from the date the return was filed (or the date the return was due, whichever is later). I usually find out the exact statute expiration date for each period by simply calling the IRS, since each tax year will have its own statute expiration date (and again, the clock never even starts if the tax return is not filed, which happens). Depending on your mom's situation, if the tax is attributed to her deceased husband, she might be able to claim "innocent spouse." Alternatively, if she does not have sufficient funds, she may qualify for a "currently not collectible status." Finally (and again, if she qualifies), she may be able to file a successful offer in compromise, thereby settling her IRS debt for a fraction of the total amount owed. This process can be complex, so I do not recommend doing it on her own. There is no harm in her contacting the IRS. The truth is, the IRS can very easily find her Social Security pension she may be receiving and garnish it. The IRS can easily find where she banks and where she works. Anything that is attributed to her Social Security number is within the IRS powers to locate, so it is just a matter of time. All too often, clients come to me when they have an unpleasant wake-up call, such as the IRS just cleaned out a person's bank account, or Social Security pension is being garnished, or a person's employer notifies him/her of a wage levy. Those things get the taxpayers' attention right away. But there are ways to prevent that aggressive collection action from taking place. If you learn anything from this reply, learn this: Doing nothing and hoping that the IRS will just go away or let the 10-year statute run up is not an option. I recommend either addressing the problem head-on on your own by calling the IRS or consulting with a professional who can help.... Read More