Final Notice of Intent to Levy

[David1980]

I think I know the answers already, but hope I'm wrong on this one.

So new client, has a final notice of intent to levy for a 2002 return. The 30 days passed a few months ago.

I believe I'm still missing pieces of this puzzle, they actually did preparer the return for 2002 but never filed it. However their return showed a small refund rather than a balance owed. Indeed, the amount that they owe for 2002 from the intent to levy is insanely high if the numbers on their self prepared return is correct.

So I'll get a transcript of the documents and record of account.

But what's concerning me is the 90 day letter. Supposedly this is the first letter they've received - but there musta been a 30 day/90 day letter. They did move and were non-filers so it's possible those letters went to an old address and they never got them. That or they weren't worried about it until the intent to levy.

So my question ultimately is, is there any point filing the return for 2002? Obviously they're past the statute of limitations for a refund. But will it reduce taxes owed once they've gotten to this point?

[taxdude71]

Yes, file the return. Then call your local field office regarding the levy. They can put a temporary hold on it until everything gets sorted out.

[Black Bart]

I think you've

got a good chance. While I have not filed one after the deadline, I've had a reliable customer tell me that he once sent some old returns off (prepared by another) after it passed and IRS still accepted them in place of the SFRs.

Here's some relevant quotes from an EA Journal article on SFRs: "...the filing of the substitute for return is preceded by an initial letter to the taxpayer requesting that the returns be voluntarily filed. When no response is received, the IRS will then send out two additional notices to the taxpayer consisting of (1) the preliminary notice of assessment and (2) a notice of deficiency. If the IRS does not receive a response to the preliminary notice of assessment, it will prepare a notice of deficiency which is the final notice of the substitute return filing. It gives the taxpayer ninety days to file a petition to U.S. Tax Court to dispute the estimated liability. If a petition is not filed, the IRS will make an assessment and proceed to collect. At any time in this process the taxpayer can file the original return with the IRS to lower the liability. However, abatement and acceptance of processing the return is voluntary with the IRS after it has made an assessment. Although the IRS will, in most cases, accept an original return even after an amount is assessed, if it does not, the taxpayer will have no choice but to pay the liability and file a claim for refund.

So anyhow, it sounds like the odds are in your favor with that "in most cases" statement.

[DaveO]

I prepared returns from 2000 thru 2008 about a year ago and the IRS finally accepted the 2000 and 2001 returns a couple weeks ago. It can take a while but they usually get around to it. The 2002 thru 2008 were accepted right away. The earlier returns were way past final notice of levy and the IRS had levied his disability income for quite a while.

[David1980]

I suspect when we get to the 2008/2009 they'll have refunds that will cover the amount owed for 2002. Sounds like this is going to take a while, so my guess (and what I'll relay to them once I actually find out what documents the IRS has for 2002) is we'll file those get the refunds taken he'll be caught up & then when they eventually do process the 2002 return we file get a refund (but only upto the amount of taxes paid now).

Sound about right?

[DaveO]

That's how it should work. I had a case a few years ago where the IRS had filed SFR's on the guy as MFS with no dependents. He was actually HOH with up to 5 dependents. We filed the old returns to flip the SFR's. On his current returns he had refunds the service kept snapping up for the old SFR's. Finally filed a 1995 return to flip the last SFR and then he got about $10k back all at once.