kitcarson4[at]yahoo.com (Kit) wrote:

- quote -

The question can't really be answered in advance - the real
answer depends a lot on your friend's situation - his income
level, the withholding (if any) that's occurred, and so
forth.

A general rule of thumb (NOT a statutory limit) is that IRS
wants people to go back 6 years when cleaning up a
non-filing situation.

If your friend is hoping to put together an OIC (offer in
compromise), IRS is supposed to ask for all unfiled returns.

One initial step would be to just prepare the returns,
without worrying initially about filing them, in order for
your friend and any practitioners involved to start to see
the dimensions of the problem they're facing. It's possible
that your friend is actually owed refunds for some of those
unfiled years, or that the tax problem isn't as bad as he
imagines.

In many cases, IRS and state authorities will simply accept
past year returns and process them without a hiccup. It's
common for people to imagine that there's someone in an
office somewhere who personally thinks about them and
whether or not their taxes are filed, and is prepared to
pounce on them like a combination of Matlock and the Grinch
if they're inadvertently awakened. In most cases, that's not
true. In a few cases, it is, but even then it's not so much
a case of waking them up as it is coincidentally starting to
clean up a problem at the same time that IRS has decided to
take action independently.

--
Greg Broiles, J.D., E.A.
gbroiles[at]spamcop.net

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Frederick Jorden wrote:
- quote -

For estates that receive a closing letter, I disagree. The
closing letter binds the the IRS too. (Remember that for
unfiled income tax years, these should be reflected in the
estate as liabilities and receivables....)

As for estates where there is no closing letter (or not even
a required form 706), I make no representation for that
outcome.

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Vida Freeman wrote:
- quote -

Would that include not filing because one's income is under
the threshold where one is required to file? :-)

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Kit wrote:

- quote -

The assessment period of limitations will not start to run
until the day AFTER filing (i.e. the day one actually files
or the due date, whichever is later, is NOT part of the
period), and the 3-year anniversary date of filing (or the
due date, if later) is part of the period. If there is no
filing by the taxpayer, then there is no running period. A
"substitute for return" by the Secretary (or IRS) will not
start this period running.

The collection period of limitations starts on the day AFTER
the assessment is entered (be it a self-assessment from a
return, a post-court assessment, etc.). It continues until
the 10th anniversary of the assessment, inclusive.

Certain events may cause the running of these periods to
pause. When they resume, they have as many days remaining
as there were when they were paused.

- quote -

Better get that bee-suit if he never filed.... :-(

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Kit wrote:

- quote -

You do not need to file the tax years in order. If there are
no refunds expected, I suggest starting with the newest and
working your way back. If there is a refund, start with the
one where you are next going to forfeit the refund.

I recommend seeking EA help. The weight lifted from your
friend will be considerable once he starts, even before he
is all caught up.

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"Kit" <kitcarson4[at]yahoo.com> wrote:

- quote -

The statute does NOT start to run until a return is filed.
SFRs (substitute for returns) prepared by the IRS do NOT
count and do NOT start the running of the statute. Hence,
the statute will remain open for a given year until a return
is filed. This is one of the reasons that when my older,
less affluent clients retire I prepare their returns for
free whenever they have no requirement to file. I want to
make sure the statute starts running. I've had elderly
referrals come in who've gotten notices from the IRS on
returns that were due 6 or 7 years ago that show income that
does NOT belong to the taxpayer. When I ask why they didn't
file they said they were required to so they didn't. Had
they filed, the IRS would have had only three years to raise
the issue.

Your friend needs to see a tax pro to get his situation
assessed. If he has oustanding returns for prior years he
needs to find a way to get back in the system as painlessly
as possible and that can only happen if he gets good advice.

Good luck,
Gene E. Utterback, EA

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It depends on the reason for not filing the earlier returns.
If it ws to avoid paying taxes, then there is no statute of
limitations.

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Kit wrote:

- quote -

If you do not file a year's return the statute never starts
to run. They can go after your estate 200 years from now.

--
Frederick E. Jorden http://Tax-Accounting-Payroll.com
7825 Midlothian Tpk - 207 Richmond, VA 23235-5247
EMAIL knowtax[at]bigfoot.com
(804) 320-6210 FAX (804) 320-6211

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- quote -

The statute of limitations never starts to run if you don't
file.

- quote -

The IRS has no time limitation on when they can assess the
taxes if you don't file.

- quote -

It will never be "safe" if your friend never files.

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Kit wrote:

- quote -

If your friend has never filed for a year, the statute of
limitations has never started for that year and, unless
Congress changes the law, never will - until he files.

- quote -

You friend needs to hire a competent local tax professional to assist him.

Regards,
Bill
~~~~~~~~~~~~~~
http://www.longwood.edu/staff/wpbrown

Opinions expressed by me are not necessarily shared by my employer.

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kitcarson4[at]yahoo.com (Kit) wrote:

- quote -

The 3 year limitation only applies to REFUNDS paid by the
IRS. Beyond that period, all refunds are forfeited. For
taxes owed, there is usually a 7-10 year statute of
limitations, from the date YOU ACTUALLY FILE a return. If
you don't file, the tax debt could go on forever or be
assessed on your estate.

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- quote -

Not at all.

- quote -

If you missed filing your 1914 return, it is still open and
you can still be audited. There are other circumstances
that can extend even the 3 years after you have filed.

- quote -

When you actually file.

- quote -

Perpetual.

- quote -

You have to file them all. It is never safe.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA

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"Kit" <kitcarson4[at]yahoo.com> wrote

- quote -

The statute of limitations to collect the tax begins to run
(for the most part) when the return is filed. No return is
filed? The statute of limitations hasn't yet begun to run.

- quote -

Tell him/her to file away as he/she sees fit. Any
overpayment of taxes (refund) may be held until the
unaccounted for years are filed.

--
Paul A. Thomas, CPA
Athens, Georgia
taxman at negia.net

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"Kit" <kitcarson4[at]yahoo.com> wrote

- quote -

There is NO statute of limitations on Fraud. And not filing
is considered fraud!

Vida Freeman, EA

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OK, this may be a dumb question, but I can't find the answer
on the IRS site (of course, they don't want to make it
easy).

The IRS has 3 years in which to assess taxes, running from
the latter of (a) the due date of the return, or (b) the
actual filing date. My question is -- what if you *never*
filed for a given year. Did the statute of limitations
start to run from the due date, or does it not start to run
until you actually file for that year. If the latter, is
that perpetual until you actually file or is there another
limitation period on the failure to file?

Basically, my friend wants to know if it's safe to start
filing for the current year without stirring a hornets nest
on stuff that is now at least 3 years old, or if he can't
get back into the system until he's prepared to file and
negotiate concerning all prior years.

thanks, kit

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