Warn the ex's girlfriend about his IRS tax debt

To Her Credit columnist Sally Herigstad
Sally Herigstad is a certified public accountant and the author of "Help! I Can't Pay My Bills: Surviving a Financial Crisis" (St. Martin's Press, 2006). She writes "To Her Credit," a weekly reader Q&A column about issues involving women, credit and debt, for CreditCards.com, and also wrote for MSN Money, Interest.com and Bankrate.com, and has guested on Martha Stewart Radio and other programs.

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Question Dear Sally,
My ex is dating a very nice woman with marriage intentions. We are all in our 50s. I know I must advise her of our back tax lien and that he simply will not pay taxes. He was self-employed for many years to avoid wage garnishments and during that time, he did not keep up with income or self-employment taxes.

I recently asked him if he had told her yet about the taxes, and he said no. His girlfriend shares a successful business with her sister, which they inherited from their father. She is single with three adult children, and I do not want my ex to jeopardize her and her family’s financial situation. I know ultimately that if she really wants to marry him she will, but I just want to make her aware before it’s too late and she’s in too deep to change her mind. I would love nothing more than for both of them to be happy, but she has to know that he simply will not and has not paid taxes.

She also needs to know the possible implications of marrying him before we resolve our tax lien. He has never been willing to use an Offer in Compromise with me to settle with the Internal Revenue Service, because they told him that once we settle, he has to remain compliant as a taxpayer or the settlement would be off. I know he will not do that, and he has never been willing to move forward with me on that (an Offer in Compromise.) I would like to do that before they marry, however, she’s going to have to pay for that as well!!! I’m looking for some guidance. – Mary


Dear Mary,
Ordinarily, it’s best to let the girlfriends of ex-spouses find out for themselves what they’re getting into. I would make an exception if the new spouse or her children may be in danger, or possibly in this case where she doesn’t know about his refusal to pay taxes. The fact that you are jointly responsible for at least some of these taxes helps make it your business, as well.

If she marries him, his back taxes from before their marriage will not become hers. However, the shadow of the IRS will be over their finances forever, unless he changes his attitude and finds a way to resolve his problems. The IRS can be quite a reasonable creditor when people get just a little bit behind on taxes. However, the IRS is not a creditor you want to ignore or put off. They have powers that other creditors can only dream of. They can empty a bank account without notice, for example.

Refusing to pay taxes is a very bad sign for a potential mate. If you warn the new girlfriend what she is getting into, and she still wants to get married, she could minimize the potential damage by keeping all bank accounts and assets separate and filing separate income tax returns. However, a marriage is a bit like a boat. All the holes in the boat may be on one side, but you’re still both going to get wet.

More importantly than warning your ex’s new girlfriend, you need to take care of your own tax situation. You need the services of a tax lawyer, CPA, or other tax expert who routinely works with IRS resolution cases. You have a lot at stake, and you need professional help.

A tax professional may be able to help you get out from under these back taxes under one of three provisions. The first one is Innocent Spouse Relief, which relieves you from responsibility if your former spouse under certain conditions. The second provision is called Separation of Liability Relief, which allocates responsibility between you and your ex. You have two years from the date the IRS first tried to collect tax to request Innocent Spouse Relief or Separation of Liability Relief.

If you don’t qualify for one of these provisions, the Equitable Relief provision may help.

There’s only so much you can do to help the new girlfriend. I recommend that you tell her no more than she really needs to know – just enough so you feel you did your duty. After that, it’s up to her. Spend the rest of your energy getting yourself out of tax trouble and rebuilding your finances – and your own future.

See related: Injured Spouse Allocation tax form can shield spouse from debt, How to protect your credit when your spouse starts a business

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Updated: 01-23-2018