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Statute of limitations for assessing penalties for not filing trust returns (form 104

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    Statute of limitations for assessing penalties for not filing trust returns (form 104

    I have completed a huge estate tax return (not requiring form 706 due to value being under $ 5,250,000.00) but filing an initial estate tax return "form 1041". I had to go back to tax year 2006 to review the estate tax return filed for the deceased spouse who passed on 1/10/2006 and at that time their estate was valued in excess of $ 13,000,000.00 and there was ABC Trust established transferring a huge portion of assets to the B and C Trust ( "Q-Tip). I noticed the SS-4's for each B and C Trusts but I also noticed that there were never any Trust Returns filed for tax years 2016 thru 2014. There was much business real estate rentals involved and as a result I had to basically prepare (Not file) the Trust Tax Returns for tax years 2006 thru 2014 in order to complete my Estate Accounting for the deceased who died on June 5, 2015. I also had to reconstruct the deceased personal income tax returns for 2006 thru 2014 due to a very large amount of "Gross Negligence and borderline Fraud" in order to complete my estate accounting. The deceased underpaid all tax years 2006 thru 2014 in excess of $ 275,000.00 not including penalties and interest that could be assessed. The only personal returns that are withing the three year statute were 2013 and 2014 which I have presented to the beneficiaries for filing timely. Tax years 2006 thru 2012 are outside the three year statute. At this point I am in the process of disengaging my services any further as I have completed an Estate Accounting thru May 31, 2016. I am going to Sign, Date and present to the beneficiaries the Trust Tax Returns for Tax Years 2006 thru 2014 and inform them that they should be filed accordingly. (CAN SOMEONE ADVISE ME IF THERE IS A STATUTE OF LIMITATIONS IF YOU DO NOT FILE A TRUST TAX RETURN AND WHAT IRS CODE SECTIONS STATES THAT LAW.

    A very concerned Tax Practitioner Enrolled Agent

    #2
    Originally posted by 94546 View Post
    I have completed a huge estate tax return (not requiring form 706 due to value being under $ 5,250,000.00) but filing an initial estate tax return "form 1041". I had to go back to tax year 2006 to review the estate tax return filed for the deceased spouse who passed on 1/10/2006 and at that time their estate was valued in excess of $ 13,000,000.00 and there was ABC Trust established transferring a huge portion of assets to the B and C Trust ( "Q-Tip). I noticed the SS-4's for each B and C Trusts but I also noticed that there were never any Trust Returns filed for tax years 2016 thru 2014. There was much business real estate rentals involved and as a result I had to basically prepare (Not file) the Trust Tax Returns for tax years 2006 thru 2014 in order to complete my Estate Accounting for the deceased who died on June 5, 2015. I also had to reconstruct the deceased personal income tax returns for 2006 thru 2014 due to a very large amount of "Gross Negligence and borderline Fraud" in order to complete my estate accounting. The deceased underpaid all tax years 2006 thru 2014 in excess of $ 275,000.00 not including penalties and interest that could be assessed. The only personal returns that are withing the three year statute were 2013 and 2014 which I have presented to the beneficiaries for filing timely. Tax years 2006 thru 2012 are outside the three year statute. At this point I am in the process of disengaging my services any further as I have completed an Estate Accounting thru May 31, 2016. I am going to Sign, Date and present to the beneficiaries the Trust Tax Returns for Tax Years 2006 thru 2014 and inform them that they should be filed accordingly. (CAN SOMEONE ADVISE ME IF THERE IS A STATUTE OF LIMITATIONS IF YOU DO NOT FILE A TRUST TAX RETURN AND WHAT IRS CODE SECTIONS STATES THAT LAW.

    A very concerned Tax Practitioner Enrolled Agent
    IRC 6012 contains the requirements to file a trust return

    IRC 6501 provides that there is NO statute of limitations for a return that was required and never filed.

    Comment


      #3
      As far as I can tell, that Statute specifically says there is NO limitation.

      §6501(c)(3): "In the case of failure to file a return, the tax may be assessed, or a proceeding in court for the collection of such tax may be begun without assessment, at any time."


      Comment


        #4
        In addition to what is posted above, I will add that if there is a "substantial omission" of income, the SOL is extended to six years, from three years (Code §6501(e)(1)(A)), and if there is fraud, the assessment period remains open indefinitely (Code §6501(c)(1) and (2)). The term "substantial omission" is defined in Code §6501(e)(1)(A).

        Added suggestion: In your post you referred, several times, to the "estate tax." Most of those times, however, you were really referring to the "estate income tax." Since there is both an estate tax and an estate income tax, it is a good idea to refer to them using the correct terms to avoid ambiguity.
        Roland Slugg
        "I do what I can."

        Comment


          #5
          3 years is really just for receiving a refund. There is no SOL for an unfiled return; it's due forever.

          Comment

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