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You are here: Experts > Business > Corporate Law > Tax Law (Questions About Taxes) > fed tax, soc sec, pension, back taxes
Expert: Glenn D Schnabel
Date: 5/13/2008
Subject: fed tax, soc sec, pension, back taxes
Question
QUESTION: Hi,
I have a few little questions. I just found out that my mother-in-law's husband's income is made up of social security and pension. He has not filed fed income tax for years. Also, I believe that he owes back-taxes.
What are the ramifications of this for him, and also my mother-in-law if he should die before her? She files every year, but not jointly.
Thank you for your time.
ANSWER: My answers are as follows:
1. Ramifications to your mother-in-law. If she files married filing separately then she is not liable for his unpaid taxes.
If he should die before her, then his estate would be liable for any unpaid taxes.
2. Ramifications for your mother-in-laws husband would that that he would be liable for any unpaid taxes, penalties and interest. Any years not filed, the IRS would consider as a non-filer and they may later compute his taxes and send him a bill for the years not filed. Liens would be filed against any assets he owns, such as his principal residence, bank accounts etc..
If he dies, the estate would be responsible for clearing up any unpaid taxes. This may involve a lien on assets of the estate to pay for these taxes.
Overall, I would suggest that he files and gets on record with the taxes he owes before the IRS files for him. He may have a pension with withholdings taken out to cover the pension and miss out on any over-payments, refunds due him. There is a three year statute on collecting refunds, the due date of the return plus extensions filed.
So, for example, he may have lost any refunds from 2004 and prior.
I would suggest if you need further consultation, you can always get in contact with me.
Hope this is useful.
---------- FOLLOW-UP ----------
QUESTION: Thank you so much for your time.
Follow-up questions: If virtually everything is in my mother-in-law's name (e.g., home) and he has very little money in savings, what is likely to happen as the estate will have to cover any due taxes?
He has a pension and social security - sould money be taken from his receipt of those?
Basically, he has a very limited number of things in his name. We are just trying to determine if my mother-in-law is going to be responsible in any way for his choices.
Thank you again!
Answer
If all the time your mother-in-law filed married filing separately, then
I feel that the IRS has nothing they can go after and will have to write off any unpaid taxes. It sounds like he will not owe any estate taxes since the value of his estate will be under the requirements.
They will try to attach anything that he has in his name. He maybe able to plead hardship and make an offer in compromise.
The real question should be would it make his life easier and your mother in laws life easier if he just came clean and settled up?
Just my thoughts on the matter.
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