Discussion:Back Taxes Fed & CA
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Discussion Forum Index --> Tax Questions --> Back Taxes Fed & CA
| 12 August 2009 | |
| Hello pros,
I have a client that is getting notices from IRS & CA on taxes due for 1992 thru 1998 for income that he made but never filed tax returns on. His income was actually less than $20,000 and he thought that wasn't worth the hassle to file for. IRS contacted him in early 2007 and when he ignored them, they garnished his wages and settled with $100/mo out of his pay check to the total of $1,300 while he didn't even know he owed any taxes. After he was laid-off he stopped paying and now they are after him again. California in the mean time, is trying to get his attention by saying that his income was over $44K on each of those years, and admitted that they exaggerated the amount to get his attention (CA is known of doing that), and they really just want him to file his returns. The question is, since he started communicating with them back in 2007 and admitted to his tax liability, did he lose out on the Statute of Limitation with both IRS & CA? Does tax liability ever get too old to be collected by either one of them? I mailed them requests to furnish W-2s & 1099s to compile his tax returns, but do we have to go through that after all these years? Thank you. | |
| 12 August 2009 | |
| What statute of limitations? There is no SOL for requestng an abatement on a return for which the taxes remain uncollected. | |
| 12 August 2009 | |
| John, I have encountered a number of people like your client. They are either fools or a tax protesters for ignoring the IRS and for thinking they doesn't have to file. There is a minimum amount of income each year above which taxpayers are required to file. Whether they owe or not is not the issue. If your client is a fool I would try to educate him. If he's a tax protester I would lean into him with my shoulder and give him a hard shove out of my office and toward a competent defense tax attorney. He could easily become a target for criminal prosecution.
Next, you need to know that Internal Revenue Code Sec. 6502 provides period for collection of a tax of a 10 years after the date of assessment. It is quite possible that in 2007 the IRS created a Substitute for Return (SFR) assessment on 1992-1998. (I just handled a case that involved 1992 & 1996.) If that's what happened the IRS has until 2017 to collect the taxes. Finally, I think you need to collaborate with or refer your client to a tax practitioner who has experience in representing taxpayers with what is commonly known as collection problems. | |
| 12 August 2009 | |
| It is unlikely the person is a tax protester. This is a common occurrence. 99.5 % of people that have unfiled returns are just irresponsible or had some traumatic event in their lives or are just fearful.
It is also highly unlikely (read no way) that SFR's were done in 2007 for the years 1992-1998. It is likely those balances were assessed in the mid 90's thru early 2000's. As such, some SOL's could be expiring and it may be malpractice to submit return unless they eliminate the liabilities altogether. The start is a transcript of account. I do agree that you have no business handling this case. At least get someone over your shoulder who knows what they are doing. | |
| 20 August 2009 | |
| Thank you all for your response. You're all right in your comments, however I completely overlooked the fact that the tax liability is not waived and there is no SOL when the T/P never filed taxes to start with.
Thanks again. | |
| 20 August 2009 | |
| There is no SOL on assessment but if the IRS did a Substitute for Return, the 10 year collection statute still applies. | |
