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Reasonable belief that the tax would be paid:
Mrs. Beatty states that she did not review the returns
and had no idea of the amount of taxes due, if any.
Since Mrs. Beatty signed the returns without looking at
any of the figures, she had no information to make the
determination as to whether the taxes could be paid or
not. Mrs. Beatty and her attorney mentioned on numer-
ous occasions that she just signed without questioning
because she believed her husband would go to jail if
she didn’t sign. There was no thought given at that
point in time as to whether or not the taxes would be
paid. Therefore, there was no belief that the taxes
would be paid.
Non-requesting spouse’s legal obligation to pay
A stipulation in the property settlement or a decree of
divorce must be evidenced that requires the non elect-
ing spouse to assume responsibility for the unpaid
income taxes for the periods at issue. Since the
parties are still married and living together a marital
agreement such as this does not exist.
Knowledge
She signed the joint tax returns because her husband
was under court order to file returns with both the
State of Maryland and the federal government. He was
charged with willful failure to file tax returns by the
State. In order to receive a reduced sentence, he was
required to file all returns or face a substantial jail
sentence. Mrs. Beatty was not involved in the tax
preparation process. Returns were prepared using
extrapolations and estimates computed by the State of
Maryland. Mr. Beatty had some documentation for busi-
ness expenses but was not very good at keeping the
documentation. When the returns were completed, Mr.
and Mrs. Beatty went to the CPA’s office. She did not
review or question the returns and signed them.
Significant Benefit
Other than usual and customary living expenses there is
no evidence to indicate that you derived a significant
benefit from the failure to report these sources of
income. The Beatty’s did not live extravagantly or
take trips, they didn’t have any investments, life
insurance, savings, or anything else of value to show
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Last modified: November 10, 2007