So if I have 2 clients – now divorced, filing an Innocent Spouse for one spouse and filing a Currently not Collectible for the other which is on Social Security Disability, can I do this for each? Do I need a 7216?
I asked this at the conference, but I think a little further explanation is needed. This case has to do with a disability insurance paid to Spouse that once Spouse received the back pay from Social Security was to be repaid.
But it was not and the 1099-C was not received for the 2017 tax return per TP & Spouse, but was information in regards to this 1099-C was later on a letter from IRS for the 2017 TY. So, the innocent spouse filing is due to this unknown income at the time of filing, which I prepared. The TP & Spouse has divorced since the filing of the 2017 return. The IRS agent that I spoke to in regards to this situation recommended the filings of the Innocent Spouse for TP and Currently not Collectible for Spouse. I am in a very rural area and these people make less than $35k per year and not sure of how much another office will charge them. I am not charging them to assist them in this. My question is this, ethically can I assist? I do suppose they could take care of this themselves, at least the part of the currently not collectible. And if ethically I cannot, please tell me if it’s because I can’t represent each or is it because I prepared the return?
Tammy, its a tricky question because the innocent spouse claim, usually, throws the other spouse under the bus. If however they both agree to the same story and are okay waiving the potential conflict I might do it but get that waiver in writing, signed by both.