Attorney-at-Law

YOU’RE ON THE WRONG ROAD

In Uncategorized on 07/05/2012 at 16:33

It’s a many-times-told tale for the tax practitioners, but it’s news to Yoron D. Israel, in the eponymous T. C. Memo. 2012-185, filed 7/5/12.

Yoron and Mrs. Yoron parted ways, with Yoron getting the dependents’ exemptions for their three kids in odd-numbered years for the child support he paid–and paid–and paid. But what didn’t Yoron get (no prize for the correct answer)?

A properly completed and signed Form 8332; or a written declaration with the necessary information (wife’s SSAN, agreement not to claim dependents’ exemptions, and specific years to which the foregoing applies), that’s what.

Yoron attaches a copy of the divorce decree to his return for the year at issue, but it’s unsigned by the former Mrs. Yoron, and even though Yoron pursues her through the courts of Massachusetts (his home) and Arizona (whither she flees), he gets nada, as they say in Arizona.

Yoron tells his sad tale at a CDP, because he doesn’t file a petition when he gets the SNOD. He has entered into an installment agreement, but wants to contest his liability.

Judge Cohen could blow Yoron off with a simple “you’re too late to contest your liability, IRS wasn’t arbitrary or capricious, so have a nice day”.

But Judge Cohen is a softie, and anyway “(B)ecause petitioner’s efforts have been consistent and in good faith, we believe he is entitled to an explanation of why those exemptions were disallowed. So far as the record reflects, he has not been given an adequate explanation.”  T. C. Mem. 2012-185, at pp. 4-5.

Of course we know the answer. No Form 8332 or equivalent means no exemption, where taxpayer can’t establish child(ren) lived with taxpayer more than half the year. And Yoron admits they didn’t.

So Judge Cohen gives Yoron the bad news: “As unfair as it may seem to petitioner, the statute, regulations, and numerous cases subsequent to Miller v. Commissioner, 114 T.C. at 187-189, compel the conclusion that his former wife’s failure to execute the required declaration defeats his claim to the exemptions for 2007. See Santana v. Commissioner, T.C. Memo. 2012-49; Nixon v. Commissioner, T.C. Memo. 2011-249; Briscoe v. Commissioner, T.C. Memo. 2011-165; Himes v. Commissioner, T.C. Memo. 2010-97; Gessic v. Commissioner, T.C. Memo. 2010-88; Thomas v. Commissioner, T.C. Memo. 2010-11. T.C. Memo. 2012-185, at p. 8.

I blogposted Nixon, “Kicking Richard Nixon,” 10/5/11, and Briscoe, “Supported Child, Unsupported Exemption” , 7/11/11. And Judge Holmes’ goalline save in Gary L. Scalone and Sandra Vieira Scalone, 2012 T. C. Sum. Op. 40, filed 5/2/12, a Section 7463 “don’t quote me” (see my blogpost “Get the Years Right”, 5/2/12) doesn’t help, because there the wife signed Gary’s decree, and Mrs. Yoron didn’t.

Bottom line–Divorce lawyers, one of these cases is going to result in a professional liability claim if you don’t get duplicate original Forms 8332, filled in and signed by adversary spouse, before you enter the final decree, and make sure your client attaches one to the first return where the client claims the exemptions. Keep the duplicate originals in case IRS loses one. Or if the adversary spouse refuses to provide signed Form 8332, warn your client in writing.

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