Tax Questions...Think I got taken to the cleaners

North Carolina Divorce Law Divorce and Separation Answers
1

Our separation agreement states “parties will file married filing a joint return for Federal and State income taxes, or whichever status provides the best advantage to both parties.”

Bottom Line:

MFJ:

Federal - Pay $1754.00
State - Refund $300.00

MFS:

Me:
Federal - Pay $5300.00
State - Pay $3770.00

Her:

Federal - REfund - $882.00
State - $0.00

Obviously there is NO “advantage to both parties.”

In March I sent her a letter and a check for 60% of Federal taxes due (MFJ) and stated she could keep the State refund. I also stated “accept this check and go ahead and file electronically then forward me copies.” The memo on the check stated “60% of 2008 Federal taxes due”

She cashed the check. Therefore I assumed (as did my attorney) she accepted the agreement.

Today I receive a letter from her advising me she filed separately and that I had until the 15th of October to do the same. She stated that she filed an extension in my name and sent the amount of the check to my IRS account.

Questions:

  1. Did she accept a legal binding offer by accepting the check? (I made an offer and INHO she accepted by cashing the check)
  2. Is there possible tax fraud involved by her submitting an extension in my name without my consent?
  3. What actions/recourse do I have if any?

I have an appointment with my attorney on Thursday but woyull appreciate any advise/information that anyone can offer.

Thanks

PS…she’s the one that found a new boyfriend and left, but now wants me to file for divorce…go figure…The year was up on Oct 4th. I’ll be filing ASAP

2

The most advantageous option is to file jointly as the loss to you is far more in any of the other options. Your spouse has violated the Separation Agreement and should be held liable in a breach of contract action, but her “acceptance” of the check did not constitute and agreement. I would seek advice from the IRS on the issue of the extension, that does not smell right to me either.

3

THANK YOU ERIN…I will sleep better until my appointment Thursday. I’ll also get an appointment with the IRS.

I know this is a divorce forum, but it would seem to me that there was an “implied agreement” to my letter and offer when she accepted/cashed the check.

4

No, many people believe if they write in certain terms on the memo field they can create an agreement of some sort but that is not the case.

5

Erin,
It’s not the memo field that I’m considering, It’s the letter that accompanied the check stating. “I am enclosing a check for 60% of the federal taxes due.You may keep the entire state refund. I believe this is fair and equitable.” Accept this check and go ahead and file electronically. Let’s get this over with"

Wasn’t cashing this check “acceptance” of that offer?

6

In my opinion no.

7

OK, thanks again…

but for now with research and some advice, I’m looking at breach of contract and possible tax fraud.