Signing tax return with ex-spouse

Louisiana

As part of a settlement offer from my ex-spouse I have agreed to sign the tax return for 1999. At present he owes thousand on it since I refused to sign it. If I do sign it, he'll only owe $500 and he has agreed to pay this.

I have not yet seen the return but I don't believe he included income of 50K he received in the form of fraudulent payments of a salary to our son from his corporation that was unknown to our son and for which he recently received a W-2. My ex forged his signature and took the money. Further, my ex had at least 50K
in other income that he didn't report in the form of corporate perks and cash he took from the corporation (He owned 80% of this and was the president, CPA/Boss).

If I sign this tax return, how can I protect myself from the IRS coming back and holding me liable. I have already gone to the Criminal Division to report his tax fraud and evasion for the years he owned the corporation and they have not acted.

I really don't care if the IRS choses not to do anything, I just want to ensure that I don't become part of a crime.

CAn I just sign it and put a phrase like "signed as part of settlement agreement" or "not responsible for amounts claimed"?

Are do I just sign it and then file for "Equitable Relief".

I'm afraid that if I refuse to sign he'll withdraw the settlement offer and I am in financial need.

PLEASE ANSWER SOON. I HAVE TO SIGN BY FRIDAY AND TODAY IS WEDNESDAY.

MY ATTORNEY, A FRIEND, IS NOT A TAX ATTORNEY AND COULDN'T ANSWER THE QUESTION.

Thank you!!!

If your divorce decree was finalized any time during 1999 then legally you cannot file a joint return with your ex. Assuming that's not the case, there is something called "Innocent Spouse".
Form 8857 and Pub 971 at [url]www.irs.gov[/url] contain the details.

This may seem naive, but could you just take the settlement offer from your spouse less $500 or maybe even $750, without having to sign the return? Then you never have to think about it again.

We were together all of 1999. Its not a matter of the $500.00.
Its a matter of liability. If I sign the return, even under duress in order to get a settlement that I can hardly live without (I'm living with my 81 year old mother at this point and attending school), does that make me liable for the taxes that he owes on unreported income.

The problem is that I am aware that he did not report the income.
He is a CPA and committed tax fraud and evasion amoung other things and my CPA found it in 2000.

I reported it to the IRS. They did nothing. So, now to get any
money my ex wants to put me equally liable with him to the criminal charges (I guess, since my signature seems to accomplish this).

How can I get my settlement and still not commit a crime??????
How do I protect myself?

Two ideas, both of which definitely need an attorney's advice.

1. Sign the joint return and also complete form 8857 to apply for Equitable Relief. This form is sent separately from the return and will include a statement explaining your situation. There is no guarantee the IRS will accept this.

2. File your own return for 1999 as Married Filing Separately (MFS).
This will satisfy your filing requirements. Not sure if that will help get your settlement, but at least you'll be in the clear with the IRS. This will force your ex to file MFS also. You usually have a higher tax liability filing MFS.

I REALLY DON'T CARE IF THE IRS CHOSES NOT TO DO ANYTHING, I JUST WANT TO ENSURE THAT I DON'T BECOME PART OF A CRIME. … I'M AFRAID THAT IF I REFUSE TO SIGN HE'LL WITHDRAW THE SETTLEMENT OFFER AND I AM IN FINANCIAL NEED.

The following statement is what you swear to when you sign the return:

“Under penalties of perjury, I declare that I have examined this return and accompanying schedules and statements, and to the best of my knowledge and belief, they are true, correct, and complete.”

To put it clearer, in your situation, it would be perjury to sign his return because of what you know. I know this does not help you with your settlement negotiations, but it is the case.

What you need is a good family law attorney to represent you against him in the settlement.

[abezon]

DO NOT sign the return!!

"Innocent spouse" only applies to a spouse who did not know about other income and who had no reason to know about the unreported income. You obviously know about it -- you told the IRS! The tax court cases go both ways on whether duress is an innocent spouse defense. It has been allowed when an abused spouse who was living with the tax evader signed the return out of fear of physical harm. Since none of these conditions apply to you (you're no longer a spouse or living with him or fearful of assault), I doubt you would win an innocent spouse claim.

Financial distress is not duress. You only recourse is to go to court and explain to the judge that if you sign the return, you'll be liable for tax evasion. Take proof that the return he wants you to sign is fraudulent.

By the way, report the SOB to the state CPA licensing board for tax evasion & unethical behavior.

louisiana

Can I protect myself by writing a certified letter to the IRS stating that I am signing the tax return but that I do not believe that it is correct.

I would do this PRIOR to the signing so that when they receive it they would have already received notice that I DO NOT AGREE with it.

At least I would be going through with my agreement to sign the return and my ex could then be forced to follow through with the alimony payments since I did what I agreed to do.

Also, if a contract requires that someone do something they know to be illegal, can that part of the contract be voided and the other sections enforced? Is our agreement legal if after I review the tax return and discover that it is fraudulent, I refuse to sign.

Can he then say he doesn' t have to pay me? Can I win in court to force him to adhere to the other legal parts of the agreement?

Thank you all for your help. I'm so confused by all this.

I would definitely follow abezon's advice.

[abezon]

If you sign it, you're liable. Period.