Overture Films/courtesy Everett Collection
Rick Jacobsen’s wife embezzled nearly $500,000.
After her conviction, the Internal Revenue Service asked him to pay more than $100,000 of taxes due on her theft. Yes, embezzled funds are taxable, and Mr. Jacobsen and his wife had filed joint tax returns.
But Mr. Jacobsen fought back, arguing his own case before a Tax Court judge. He said he didn’t know about the embezzlement and shouldn’t be forced to pay because he was an “innocent spouse.” In an opinion released last month, he won relief from about $150,000 of tax, interest and penalties.
“I’m no angel, but I pay my taxes. I spoke from the heart, and the judge believed me,” says Mr. Jacobsen, who is 54 and currently works at a cheese-processing plant in Plymouth, Wis.
Mr. Jacobsen’s odyssey through the tax system shows the perils of signing a joint return with a tax cheat. It also shows that such Americans can sometimes escape dire tax consequences with a lot of time and effort, even if they can’t afford a lawyer.
Read an expanded version of this story on WSJ.com.