My chronicle of how the IRS and Tax Court affect taxpayers' daily lives.

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Saturday, January 23, 2010

Ex-Spouse is assesed Trust Fund Recovery Penalty

Jeane L. Dintelman, v. United States of America, U.S. District Court, E.D. Arkansas, 2010-1 U.S.T.C.  (Jan. 7, 2010)

A husband and wife incorporated an entity which listed the wife as the President of the company (with the thought that a woman-owned business would be eligible for more contracts), even though she had lmiited responsibilities and duties in the business.  Subsequently the couple split up, even though the wife remained as an employee of the company. 

The finances, handled by the ex-husband, were in shambles, and the company failed to pay their employment taxes.  The IRS has the ability to pierce the corporate veil and assess these taxes to an individual taxpayer if they are deemeed to be a "responsible party."  The ex-wife, who was not involved in the mangagement of the company until its struggles became obvious to her, was still deemed a responsibile party by the courts. 

Aaron's Take:  If you are taking the title of President or CEO of a company, you best be involved intimately in all the activities of the business.  Love and Business are two distinct and separate activities, and you should never sign something just because your spouse tells you to.  My wife sure doesn't!  She even reviews our tax returns, even though she knows I'm "the expert!"

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Aaron Blau, E.A. is the Vice President of the Central Arizona Chapter of Enrolled Agents and a member of the Government Relations Committee of the National Association of Enrolled Agents. The opinions and ideas expressed here are in no way representative of the official position of the National Association of Enrolled Agents, Arizona Society of Enrolled Agents or the Central Arizona Chapter of Enrolled Agents.

For official comments, please e-mail NAEA Director of Communications at or Arizona Society president

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