Discussion:Returns not filed since 1996

Today I had a lady referred to me by another come in my office and after a loooooong story she and husband have not filed since 1995.

She has her w-2's with the exception of 97 and 02 and nothing of his. My first thought was he has worked as a "sub contractor" but she said he only did that a few months in 06 before he went to jail for 15 yrs. He has been in jail since March 06.

My first thought is we should file her MFS and not touch anything of his, my second problem is I do not have any software for before 2000 and not real sure how to handle this.

I did encounter something like this back in the early 90's and we sent the client to a local tax attorney and he had us prepare all returns and the negotiated from there however that guy owned property and had quite a bit of stock in the company he worked for. This lady has virtually no assets??

She does have a few letters from SCDOR and I am going to call them ask what years they need, or do I need to go back to 96. The SCDOR letters start for year 2000.

Naturally my first instinct is to send her to someone else but I know she can not afford much and the returns are just W-2 income.

I am open for suggestions on this

THANKS

FYI, keep the old programs.

IRS will only enforce up to 6 years delinquency. In the case of someone with no money, there's no point in filing returns before that, to which IRS would agree (in considering an exception to the 6 years).

If TP(H) is in jail for 13 more years, or a few less on behavior, and he has no assets which IRS would want, I don't see any jeopardy to MFJ. Ostensibly at least. If it lowers the tax to nothing or barred refunds, filing them is both harmless and not a priority for IRS either, under these circumstances. They have not sent any notices yet, have they?

skasselea, sorry to offend you but i have not seen this addressed on here in a while. If it offended you why do you read and reply???

Call IRS at 800-829-1040 and it can provide you an information returns transcript with all the W-2's and 1099's you have received for the last six years.

If you have a refund due, the return must be filed within three years of the original due date or the statute of limitations for claiming the refund expires. For now, this means returns for 2004 and later.

Similarly, if you have self-employment income, it must be reported within three years of the original due date or the statute of limitations for having your Social Security account credited expires but you will still owe the self-employment tax.

I suspect that if the client owes anything, the amount will be low or IRS would have been in contact before now.

I'm not going to wade into the question of filing joint or separate.

Never thought about that many people running into a non filer for that many years.

I have a very small practice over 30+ years. Three years ago I had a friend come in that had not file for 8 years. This is the kicker, the guy worked as a high ranking official for a federal agency, on W2 income. IRS never bothered to check and see why he stopped filing. Of course we filed all returns accurately, and caught up. He now files annually, and paid all prior taxes due on an installment agreement.

Last week, I had an associate come in, she had been filing separately since 2001, husband works for a federal agency, and just would not file. In Dec/07 he gto one of those letters, and we are now catching them up.

It weird in a way. However, one could say the IRS is lax in letting these go, you could also say the IRS has enough power to collect, that the time differential can at times work in their favor.

Either way, this site is loaded with knowledgeable and helpful tax practitioners who are happy to discuss and assist. I started looking at this site last month, and am very impressed.

That is certainly not within IRS policy or procedures. It can appear that way in a given case, but due to inventory v. staffing. There's simply no policy rationale to doing things that way.

Of course without these clients who ignore the govt, we would have a boring life...hehehe

I VOTE FOR BORING!!!

I go to the main memu, if I see something I am interested in I look at it. How hard would have been for one of us to let RamFan know we had just discussed this? Comeon! Sometimes a new question generates a thread that I know I learn from. Some of you 45+ years experience guys want to throw out assessments (love to be a fly on the wall at the IRS when they hear about that one), and know what the IRM says but long ago forgot what the IRC Code says. I'm flexible, open, knowledegeable, and actualy think we all had to start somewhere. The IRS is bound by law, the IRC. The IRS, when you can get a person involved, is usually very professional, at least by Federal standards which seem to be better than some on this forum. I'll continue to search, post, reply, as I see fit. Hope all of you do the same.

If you prepare the delinquent six years of returns, what is -- mechanically -- the best or proper way to actually file these returns?

1) Send them all together in one packet to IRS service center? 2) Send each year separately to IRS service center? 3) Make contact with a Revenue Officer in the local IRS office and work on filing with them? 4) Contact local TAS office and work with them (though there is no collection effort being made against TP)? 5) Other?

I have transcripts for 2001-2006 years, and there are no W-2s but there are various 1099s for int and div, but no SFRs. The individual has received the "Please file returns" notices but has not been working with anyone at the IRS at this point.

Curious what others have done...

1) New people who don't know that you CAN search for common questions and topics (the fast elephants).

2) People who have tried one search, but give up because their vocabulary is exhausted during tax season. They need help with synonyms (escrow, deposit, earnest money) (S-Corp, S Corp, S Corporation) (payroll, compensation, salary, wages) in order to find what they need.

3) People who think that their situation/question is so unique that no one will have thought of it yet (maybe 8 or 12 posts a week qualify, but how do you know until you do a search?).

4) People who value their own time above all of the expert volunteers' time. Why search when someone will surely come along and answer?

I will admit that I am not so quick to tell people to do a search this year as I was last year, because I now realize that there are different reasons for them not to have searched.

And, OR Taxman, I use the IRS address that is demanding the returns, mailed certified return receipt. You are usually working with those that have proven to drag there feet, they will likely continue to do that to you. The statutory notice letters start arriving on a predicatable schedule. The IRS wants the returns, or they are going to SFR.

But again, small town and from my home town I doubt I would go to this extent

Consolidation of ASFR Audit Reconsiderations All ASFR reconsiderations will be worked in the:

Brookhaven Campus, (ASFR unit) if the case is a SB/SE case (1040 return containing a Schedule C, E, F or Form 2106)

Brookhaven Campus (ASFR unit) if the case is an International case

Fresno Campus (ASFR unit) if a W & I case (1040 return without schedule C, E, F, or Form 2106)

For Returns with Wages and Schedule B income only, send returns to:

Fresno Campus ASFR Unit Stop 81404 P.O. Box 24015 Fresno, CA 93779

For Returns with additional Schedules or Forms (ie..Sched C, E, F, or 2106), send returns to:

Brookhaven Campus ASFR Unit P.O. Box 9013 Stop 654 Holtsville, NY 11742-9013

Say you do this and the client comes into some money next year. And he has some significant income and comes onto the IRS radar. The prior years are still open as SOL has not started on them since returns were not filed. Now the IRS comes back and assesses for the open years.

Now client is unhappy because the prior years could have been filed and included in an OIC (assuming you can get an OIC accepted).

It just seems like leaving unfinished details to me.

Comments? Am I worrying too much?

forgive the liability for prior unfiled years. Statutorily, those year are still open and they can still be assessed.

If you argued before the tax court that " we did not file because the IRM says.... " the judge would not hear of it. It is not a defense. The IRM does not even have the authority of a Revenue Ruling.

And on the OIC, my meaning was exactly as TxSrv notes: if you had an OIC accepted as part of filing prior years, you COULD have added earlier years and had those compromised also. But you just did not because you rely on IRS policy to not pursue taxes on unfiled returns more than five years old.

Whatever the circumstances may be, farfetched or not, the Service could assess those prior years as they are still open.

http://www.irs.gov/pub/foia/ig/spder/p-5-133.pdf

earlier years at some later date?

I would at least mention that to client and present that in writing also. If after the facts are presented, client wants to rely on IRS Policy....that is fine with me. I would not make that decision for the client.

you would not even bring it up with the client.

Thanks for the explanation.