From: Littleton, CO
Dear TaxMama,
I am very distraught right now. My fiance is in debt to the IRS about $40,000.
He racked up this debt in his 20s, before meeting me.
Now he is 38 and makes a decent living, but not enough to pay back $40K in
it's entirety. He is now paying regularly for current years, but still owes
debt from past years.
He filed an Offer in Comprimise, and we just found out that it was denied.
I've heard that the IRS will come after MY assets (I own a home and have
saved quite a bit of money for my retirement) if we get married.
I cannot seem to find any consistent information on this topic. If we get
married and he starts making consistent payments to the IRS, will they ever
have a reason to come after me?
If he (heaven forbid) dies, will they come after me to finish the payments?
If the house stays in my name, can they put a lien against it?
Please Help!
I'm so sad to think that after 8 years of "dating," I may not be able to
marry the man I love.
Karen
Oh Karen,
What does your mother say about all this? Didn't she tell you that you could
love a rich man as easily as a poor man? (Oh, sorry, that's my mother.)
Don't worry. You can get married.
I wish you would have helped him address this a couple of years ago, before
you're just about ready to tie the knot, but...it's never too late.
First of all, find out if any of that debt has expired.
(read the material on TaxMama.com about statute of limitations - just
do a search )
A great deal of it may no longer be collectible by IRS.
So, that was step one.
Step two. Find out how much he really still owes. Some of it has expired
or is about to. He may not owe the whole $40,000 anymore.
Step three - knowing this will help you decide what to do next.
a) If he only owes a few thousand dollars, help him pay it off. It's cheaper
than all the hassles and headaches of attorneys etc.
b) If he owes a lot - run, don't walk, to the nearest good marital and tax
attorney. Write a solid prenuptial agreement, separating your property and
assets from his liabilities.
You'll still be able to file joint tax returns - but make sure that your
withholding is only enough to cover your total combined tax liability - and
not enough to generate refunds. Otherwise, you'll have to go through the trouble
of getting your share of the refunds back with the innocent spouse forms every
year.
Whatever you do, don't put his name on any of your assets until this is
resolved. Then, no one can put a lien on your home, or your savings.
But, really, if I were you, I'd meet with a good attorney to make sure that
your pre-marital agreement spells out that he waives all interest in all your
assets that might accrue to him while being married to you for the next X
number of years - until ALL the IRS statutes of limitations expire.
I don't know what CO's rules are on accruing an interest in community assets,
but make sure that he doesn't automatically pick up a little share of your
home each year of your marriage, while he helps pay for the mortgage. Always
use your own checks to make the mortgage payments.
The good news?
Worst case, this cloud will hang over your marriage for a few years - then,
he'll either pay it all off or the debt will expire at the end of his ten
year span. And you can forget it ever happened.
Best Wishes,
Eva Rosenberg, MBA, EA
