IRS has trouble disclosing taxes owed by ex-spouses

The Internal Revenue Service hasn’t provided the training to enough employees on how to deal with requests from divorced and separated spouses about efforts to collect delinquent taxes owed on their joint tax returns, according to a new report.

The report, from the Treasury Inspector General for Tax Administration, noted that the Taxpayer Bill of Rights added a section to the tax code giving joint filer taxpayers who are no longer married or live in the same home the right to request information on the IRS’s efforts to collect delinquent taxes on liabilities from their joint tax returns. If the IRS doesn’t give its employees enough guidance or training on how to handle such requests, taxpayer rights could be violated.

The report pointed out that IRS information systems don’t separately record or monitor joint filer requests, and there’s no legal requirement for the IRS to do so. The report doesn’t recommend the IRS create a separate tracking system, but TIGTA said improvements could be made.

TIGTA reported on a similar problem last year, and in response the IRS said it was updating the Internal Revenue Manual to provide the collection activity information that employees can disclose to a former spouse about a jointly filed return. In addition, the IRS is now providing updated training to its Automated Collection System employees.

TIGTA interviewed employees from three of the ACS call sites and found that only one of them had received the training that was supposed to have started to fix the problems cited in last year’s report. Even among those employees who did receive the training, there was some confusion. The staff at the office who had already received the updated training told TIGTA they could provide some information to former spouses, but they weren’t sure what information could be disclosed when a “mirrored account” had been established.

The purpose of a mirrored account is to separate a joint account into two accounts so the accounts of the jointly liable taxpayers can reflect differences that may be unique to one of the spouses. Some of the IRS representatives interviewed by TIGTA incorrectly said they couldn’t share information about the other joint filer’s mirrored account since it’s a separate account.

The Internal Revenue Manual provides examples of collection statuses that can be disclosed, the report pointed out. However, it doesn’t limit the disclosure to these collection statuses; therefore, there may be confusion about what can be shared with an ex-spouse.

TIGTA recommended the IRS update the Internal Revenue Manual to provide Automated Collection System employees with more details, along with examples of collection activity and mirrored account information that can be disclosed to a spouse who has been assessed joint tax when the spouse asks for information, either orally or in writing.

The IRS agreed with TIGTA’s recommendation and said it would revise the manual with more guidance and examples of collection activity and mirrored account information that can be disclosed to a spouse who has been assessed a joint tax when he or she requests information orally or in writing.

“We recognize that taxpayers who are divorced or separated but are still jointly liable for a tax debt can be in a difficult position, and we are committed to providing them the information the statute allows in order to help them to resolve their tax liabilities,” wrote Mary Beth Murphy, commissioner of the IRS’s Small Business/Self-Employed Division, in response to the new report.