Before I get to the big issue I need to include some background info. My wife and.her ex husband have 2 children, and they share equal custody and visitation. Therefore each of them have custody for both children 50% of the year. So, the way they claim dependents is that she claims the daughter and he claims the son. This is written into their divorce decree(which the IRS does not recognize because it was issued by the state of Kentucky). So, 2011 was their first year divorced and there was some miscommunication and they both claimed the same child. His return was accepted because he got his finished first. Hers was denied. She completed an amended return with the correct child as dependent. It was later that she found out that her identity was stolen, and someone had collected her tax refund. So her case went to the identity theft division of the IRS where it sat for 7 months, and no one looked at it. Finally whenever they released it it was pulled for an audit. Also her 2012 return is being held till her 2011 taxes have been resolved. So, the IRS is holding around $10,000 of her money. She has been fighting this for almost 2 year's, she has faxed around 300 pages of paperwork to the IRS, she has been working with a taxpayer advocate for several months and it is getting nowhere. No w they have ruled on her case that she was entitled to a $400 tax refund for 2011 a nd now they want to review 2012. They say she can't claim the girl as a dependent because she doesn't have proof that the girl lived with her for more than 6 months. She has statements from the school principal, the daycare, and the landlord that say the girl lived with her. She has a calender with the days the girl was at her house(190 days in 2011), along with everything else the IRS has asked for. Then when she does send it to them they reject it. I just want to know how to prove it to them that she is a dependent, and that my wife can claim her and the head of household(we weren't married at the time). This has almost become a full time job dealing with this mess. Should we get an attorney or is this just a hopeless cause?