Discussion:Client hasn't filed tax return in years
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Davewright1010 (talk|edits) said: | 28 February 2007 |
| A potential client has approached me with the fact that he has not filed his Corp C returns since 2003. These returns would show a loss for each year. He beleives it is important to file these returns so he can capture NOL carryforwards but concerned that he will be penalized a late filing fee by the IRS. Any ideas on how to approach this issue ? | |
| 28 February 2007 | |
| 1) NOLs must be carried back first on late filed returns. Then carried forward.
2) Get an estimate of the work involved, give him a quote, and get a retainer. 3) Do oldest year first. | |
Chautauqua (talk|edits) said: | 28 February 2007 |
| The state may have minimum tax, so penalties could arise there. | |
| February 28, 2007 | |
| There's supposed to be one for 1040's too, but never seen it billed. Have you?
And you know what, regardless, he's got to file! He can't make it go away by not filing... | |
| 28 February 2007 | |
| I actually just saw one on a late return last week. She owed 65, plus 8 interest plus 100 penalty. First one I had seen in years. | |
| 1 March 2007 | |
| I have had a client billed for the minimum $100 penalty, believe it or not it was a kid, never filed a tax return before, parents were on extension and didn't realize the kid needed to file. We wrote a letter explaining and they abated the penalty. | |
| 1 March 2007 | |
| Let's see - he wants to file so he does not lose the benefit of the NOLs, but he might not because of penalties. So, internally he's doing a cost-benefit analysis. "If the penalties are too high, I'll continue to not file tax returns."
I'd be careful because any time you request information he might do a cost:benefit analysis before he decides what information to give you. On the other hand, I tend to be a very skeptical person when it comes to non-filers suddenly getting religion. So my bias might be showing and I'm not giving the guy a fair shake. | |
| 1 March 2007 | |
| Have a client in the same situation with a C-Corp. I took care of his personal returns but he said some "guy" advised him to just let the corp die on the vine. After reveiwing his corporate records, he obviously did not run the business like a corporation. I told him they could still come at him personally and the best option was to just file and pay the taxes (around $1000). He decided not to follow my advice saying I was biased as I wanted to get get paid to do the returns.... | |
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