Ramsey advises taxpayer on IRS relief for ex-husband’s embezzlement debt
Dave Ramsey urges a caller with an $8,000 IRS lien to seek professional counsel, noting her ex-husband’s incarceration for embezzlement could strengthen her case for relief.
Financial commentator Dave Ramsey advised a 41-year-old single mother from Greenville, identified as Sarah, on managing an $8,000 IRS tax debt linked to a 2018 joint tax return filed with her ex-husband. The debt originated from a joint filing that Sarah believed had been settled, but the Internal Revenue Service has since issued a notice including a lien. Her ex-husband is currently incarcerated for embezzlement, and any prior payment arrangement he may have had with the tax authority appears to have ceased.
Sarah, who earns approximately $130,000 annually and supports four children, indicated she was unaware the taxes remained unpaid. Ramsey suggested she may qualify for the IRS innocent spouse relief programme, which can relieve taxpayers from additional tax bills on a joint return if one spouse understated taxes without the other’s knowledge. He noted that her ex-husband’s incarceration for financial crimes could strengthen her case, stating that the situation supports her claim of being an innocent spouse.
Ramsey warned against ignoring the IRS due to the rapid escalation of penalties and interest. He recommended that Sarah seek professional advice from a tax attorney, certified public accountant, or enrolled agent to evaluate her eligibility for relief. The IRS considers factors such as financial hardship, abuse, and whether one spouse controlled household finances when determining eligibility. Applicants are also automatically considered for separation of liability relief and equitable relief if other options are unavailable.
If the relief application is denied, Ramsey advised Sarah to prioritise the IRS debt at the top of her repayment strategy, moving it ahead of her existing debt snowball plan. He suggested that she might consider borrowing from a credit union or credit card to pay the debt immediately, as IRS interest accrues quickly. Although divorce settlements do not shield taxpayers from the IRS, they can serve as evidence when applying for relief.
The advice comes amid broader discussions about potential tax changes under a proposed legislative package associated with Donald Trump. Sarah’s case highlights the complexities divorced taxpayers face when joint returns result in unexpected liabilities. Ramsey emphasised that even if a debt belongs to a former spouse, penalties continue to grow until addressed, making professional consultation essential to explore all available options.
