DifferentSpin wrote:

- quote -

There actually is a "4)", having to do with the statute
mitigation provisions under secs 1311-1314. The rules
include double income exclusions, enabling otherwise barred
years to be opened up to prevent an item escaping taxation
due to which year the item should have been included.

F--

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aren't there three different categories of understatement
which define how far back irs can go?

1) non fraudulent understatement less than 25% (3yrs back)
2) non fraudulent understatement greater than 25% (6yrs back)
3) fraudulent understatement (forever)

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- quote -

However, voluntary contributions to the U.S. gov't are
always possible but t/p must so designate and it becomes a
contribution deduction. So in a case where a t/p desires by
reason of conscience or avid citizenship to fix an old
problem, one needs to just send a check payable to the
Bureau of Public Debt as described in 1040 instructions. It
won't be assessed (computer actually rejects it), so the
1040X isn't necessary.

F--

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- quote -

Assessing an original return which is "LATE".,When a
taxpayer is not in full compliance, especially those
situations where six or more recent years of unfiled returns
are due, The Taxpayer is encouraged to file those returns.
They do get assessed, and if the funds are sent with the
return, the funds are posted to the taxyear module. What
went wrong after, attempting to get into full compliance is
subject to possible processing errors, reconsiderations to
Substitute For Return assessments, other keypunch errors, or
missing information making the return not processable.

The above situations are --not-- the same as:

AMENDING (self initiated changes) or AUDITING (service
initiated changes) a return filed -ontime-, or after three
years past the time it was filed. The SOL rules.

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Joel Berry, CPA wrote:
- quote -

I have seen that before, about a decade ago.

What was funny about the situation I saw it in is that I was
a sub-contractor for an attorney representing a client, and
the client was required to file the returns as part of his
PLEA BARGAIN (i.e. there was a criminal tax element to it,
thus overriding the SOL), and the IRS STILL returned it,
despite the agreement with the local U.S. Attorney's office
requiring the filing.

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- quote -

I had one like that about 7 years ago. Same thing - did the
X, send the check, got it all back.

Helen, EA in PA
Member of The Tax Gang
President, PA Society of Enrolled Agents
Campaigning for NAEA Board of Directors - Looking for YOUR vote

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"Joel Berry, CPA" <joelDELETE[at]sugarlandcpas.com> wrote:
- quote -

Exactly what I was saying. The statute says that the IRS
can assess additional taxes within three years of the filing
of a return. Accordingly, IRS CANNOT assess a tax after
this period has elapsed. Even if you send in the return,
they cannot legally assess the tax. With no tax assessed,
they have nothing to collect.

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"Gene E. Utterback, EA" <eagent[at]alliancetax.com> wrote:
- quote -

I recently filed a balance due amended return for which the
statute of limitations had expired. (This was done at the
client's request. I told him the SOL had expired.) IRS
returned the amended return and refunded the payment,
telling us that we were too late to amend the return. That
was a first for me in over twenty years of practice.

Joel Berry, CPA
Sugar Land, Texas

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"Gene E. Utterback, EA" <eagent[at]alliancetax.com> wrote:
- quote -

Well, your experience is different than mine. True, I've
not had a return over three years old with enough omitted
income to come under the rule that extends the statute from
3 to 6 years. But, I have had IRS return client's checks
for lesser amounts over three years old.

My point was that IRS had to raise the fraud issue - whether
affirmative or prima facie.

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"L K Williams" <lanny[at]loxinfo.co.th> wrote:

<snipped
- quote -

I think you misunderstand the rules.

The IRS does NOT have to claim or prove fraud to extend the
statute from 3 to 6 years, they only have to prove a
substantial understatement of income. The burden of proof
does shift to the IRS when the IRS wants to go back more
than 3 years but this only applies when the IRS is after you
not when you are coming clean with the IRS.

There is nothing that I'm aware of that precludes the IRS
from assessing and collecting taxes on a voluntarily filed
return no matter how old or late it may be. I have filed
returns for clients that were more than 10 years late and
the IRS has always cashed the checks.

Gene E. Utterback, EA

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"llama" <fake[at]do_not.use> wrote:

- quote -

You should file amended returns to correct the error. You
do not say, however, in which year or years you made the
error. If the error occurred before 2000, IRS can only
assess and collect the tax if they claim fraud. They can do
this if you omitted 25% or more of the income that should
have been reported on the return.

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llama <fake[at]do_not.use> writes:

- quote -

Unless it was your intent to evade taxes, you really should
not need an attorney. Competent professional help is
available at many levels. File amended returns and make
arrangements to pay the tax in installments. Whether or not
you will qualify for an OIC relies on many factors. The
possibility exists, depending on the facts and
circumstances.

"Jack" - John H. Fisher - TaxService[at]aol.com
Philadelphia, Pa - Atlantic City, NJ - West Wildwood, NJ
My Newsgroups & Boards at: http://members.aol.com/TaxService/index.html

Where Ignorance is bliss, 'tis folly to be wise!=

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A few years ago, when I first started working for myself I
was a sole proprieter. I did all my own taxes and
accounting. I was going over my records lately for another
reason and discovered that I made a fairly significant error
in underreporting my income. I want to take care of this
and do the right thing both ethically as well as
IRS-officially. What should be my next step? The main
issue is that even not counting penalties and interest, I do
not have the funds to pay the amount I still owe so I need
to at the very least go on an installment plan. Would an
offer-in-compromise be a possibility? I'm not sure, but I
think I'd owe around $12K in taxes, penalty and interest.

thanks,
patrick

(i am now set up as an S-corp with all my payroll/corporate/
personal taxes up to date and in order)

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