Shelf Life

Becoming the ‘Innocent Spouse’

Tess Vigeland Jul 29, 2011
Shelf Life

Becoming the ‘Innocent Spouse’

Tess Vigeland Jul 29, 2011

Tess Vigeland: From the outside, journalist Carol Ross Joynt had it all. A successful career. A lavish lifestyle. She even won an Emmy for an interview with Charles Manson. And her husband owned a popular bar in Washington D.C.

But after he passed away, she found out he’d kept quite a secret from her. Her memoir is titled “Innocent Spouse.” And I asked her to start with the day she went to her husband’s lawyer, after his death, and they mentioned that the IRS had come calling.

Carol Ross Joynt: I assumed that this would be some sort of formality where they would have me sign here and sign there and go in peace. Soon after I sat down, the lead lawyer pushed a stack of papers in front of me and said that Howard had been under investigation for criminal federal tax fraud, that the criminal part of it had been dropped, but that they still wanted their money. And the case still stood. As his sole heir, you’re the defendant.

Vigeland: And the amount at that point was?

Joynt: They said $3 million! I just about fainted out of my seat. But I said to them, right then, “Well, I had nothing to do with this.” And they said, “Well, because you signed the tax return and you inherited his business.” And one of the lawyers said to me, “There is a code in the tax law called ‘Innocent Spouse.'” And I said, “What’s that?” And she said, it’s a code that protects a spouse if their spouse has committed tax fraud and they weren’t involved.

Vigeland: And the IRS ultimately did grant that to you.

Joynt: Yes, but those first lawyers said to me when I said, “That’s me, let’s go for it,” they said, “You possibly couldn’t get it.” And I said, “Why?” And they said, “Look at you.”

Vigeland: “Look at you, you’re dressed nicely, you couldn’t have know about what your husband was doing?”

Joynt: Yeah, that’s what they were saying.

Vigeland: Then how were you able to prove that you, indeed, did not know anything?

Joynt: It took a year to build my defense. It’s an extensive process, because the IRS does not give away innocent spouse. But these are the things that worked in my favor. I’d had my own career throughout our marriage, I’d never worked a day in my life in any restaurant and certainly not his.

And then there were these other things that compounded that innocence. And it only came up after the first draft of my defense was written and I showed it to my sister-in-law. And she found these little lies that he told me. He told me he’d gone to Harvard, but he’d actually gone to the University of Pennsylvania. A silly little lie, but a lie. He told me that the wife before me had been Spanish royalty. Well, she wasn’t. As my sister-in-law said, “Only in her own head.” These little examples of him not cluing me in made a very strong defense.

Vigeland: Well, you’re right that you’re still paying the price for your husband’s tax fraud. How so?

Joynt: I am! I mean, my career was derailed. And by getting innocent spouse, it meant anything that was in my name or our names was mine. Anything that was in his name, alone, the IRS got. Most of what we had was in his name alone, in the sense of stocks and bonds, some property and his bank account.

Vigeland: Obviously, your story and your situation are unique to you, but as you look back on what happened, is there any advice you can give in a very general way? We don’t all want to just be suspect of our partners…

Joynt: No, no. But I’m hearing so many people — not because that they suspect their partner of committing fraud. They usually write to me to say, “I am just like you were.” You know, “I’m in this marriage…” or “I’m in this relationship and I honestly don’t know just what our financial picture is.” So what I tell people — to quote Ronald Reagan — “Trust but verify.” I was in a very happy marriage and we were very communicative, but I made a huge mistake of not becoming fluent in our personal finances. So, have a discussion every now and then with whoever in the family runs the books. Maybe ask that some kind of file folder be set aside that’s a road map of what should happen in an emergency. And if you’re in a will and you’re being left a spouse’s business, ask a lawyer what your liability is going to be. And always, always, always if the IRS comes knocking, before you answer the door, get a lawyer, even if it’s a pro bono lawyer. I benefited very much from pro bono legal help.

Vigeland: Carol Ross Joynt’s memoir is “Innocent Spouse.” Thank you so much for joining us.

Joynt: Thank you Tess.

Vigeland: By the way, this week the IRS changed part of the innocent spouse rule. It extends the time that spouses have to file for relief from taxes they did not know about.

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