The Service continues to fall behind on policing the tax rules on alimony, according to Treasury inspectors. IRS is lax about reporting discrepancies between alimony payers who deduct the payments on their returns and recipients who are required to report alimony as income. Inspectors say mismatches totaled over $3.2 billion on 2016 returns. IRS vows to do better, but this isn’t the first time the agency has been chastised on this issue. A 2014 report by Treasury inspectors criticized IRS’s handling of an estimated $2.3 billion in alimony discrepancies. Here’s a case in which IRS examiners followed up on an alimony mismatch. A man deducted payments he made to his ex-wife, but she treated them as tax-free. IRS first audited the ex-husband, allowing his write-off. It then went after the ex-wife. Unfortunately for her, the payments are taxable alimony (Faust, TC Memo. 2019-105). Take note of the changes to the alimony rules under the tax reform law. Alimony paid pursuant to post-2018 divorce or separation agreements isn’t deductible, and ex-spouses aren’t taxed on alimony that they get under post-2018 agreements. Older divorce pacts can be modified to follow the new tax rules if both parties concur and they modify the agreement in 2019 or later to specifically adopt the tax changes. IRS is revising Schedule 1 of the 1040 form to require taxpayers who deduct alimony or report alimony income to fill in the date of the divorce or separation agreement.