Uncovering Your Spouse's Hidden Assets

by Julian Block, attorney and former IRS investigator

Divorces can be expensive, from fees for attorneys or expert witnesses to appraisals of homes, businesses or other assets. And the costs soar when couples take to the courts.

Consider what happens when wives need private investigators to track down assets concealed by future ex-husbands. Fees incurred can aggregate many thousands of dollars.

I particularly recall a prolonged dispute in which the wife shelled out $15,000 just for having a detective tail her philandering husband to a safe deposit box that had been leased by him in someone else's name and used to hold nearly half a million in currency. That proved to be money well spent; her discovery of the concealed funds prompted him to agree to an acceptable settlement, rather than risk court testimony about whether the currency's source was unreported income earned off the books -- information that surely would have interested the IRS.

Fortunately, there is a no- or low-cost source of information for wives going through litigated divorces, though, in my experience as an attorney and investigator, most of them are clueless about being able to glean a good part of what they need from their jointly filed tax returns. For example, Form 1040's Schedule B asks for the names of mutual funds, banks and other sources of dividends and interest; Schedule D mandates disclosure of sales of fund shares, individual stocks and other assets.

A typical scenario is a client's disclosure that she foolishly signed a blank 1040 when tax time rolled around each April. This was also the last time she saw or thought about her joint returns. When she became aware of the need for information about her husband's finances, he refused to give her retained copies of returns.

However, securing copies is one chore that she readily can handle without help from an attorney or anyone else. If the couple paid someone to complete their returns, the easiest way to get copies is to contact the preparer. The law, in most cases, requires a paid preparer to keep copies of returns for at least three years after the filing due date -- for instance, at least until April 2004 in the case of a return for tax year 2000, with a filing due date, for most persons, of April 16 (the 15th fell on a Sunday), 2001.

Going the preparer route can save both time and money, notes the IRS, as it imposes a charge of $23.00 for each return requested. And what if there was no preparer or the returns cannot be obtained from that person? All the wife has to do is ask the IRS for copies. She is entitled to them even if all the jointly reported income was her husband's.

The IRS requires a bit of easy-to-complete paperwork when it is asked to provide copies of 1040s and all attachments, including W-2 forms that disclose salaries and contributions to 401(k)s or other kinds of retirement plans.The wife simply signs and submits IRS Form 4506 (Request for Copy or Transcript of Tax Form). To ease her burden, it need not be signed by her husband.

Has the wife moved? Then she should send Form 4506 to the IRS Service Center where the returns were filed, not to the Service Center for her current address. She needs to use a separate Form 4506 for each Service Center from which she is requesting a copy. Allow at least 60 days for delivery of copies.

The IRS makes the form available through several channels. Easiest way is to dial a toll-free number: (800) TAX-FORM (829-3676); figure on 10 working days for delivery. Fastest ways are: (1) from a fax machine, dial (703) 368-9694 or (2) download a copy from the agency's Web site at http:www.irs.gov.

Julian Block is an attorney and former IRS investigator who has been cited by the New York Times as "a leading tax professional" and by the Wall Street Journal as an "accomplished writer on taxes." His “Year-Round Tax Savings” shows how to save truly big money on taxes – legally – and explains the steps you should take to reduce taxes for this year and even gain a head start for future years. To order the publication, send $9.95 for a printed copy or $8.95 for an e-mail version to
J. Block
3 Washington Sq.
#1-G, Larchmont, NY 10538

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