Old Returns

[Snaggletooth]

Taxpayer (now married) did not file for 2004 and 2005. Installed flooring and operated his "business" from the back of his pickup truck. No idea what he made or what he spent. No way to resurrect receipts or collections. You get the idea.

In 2007 he met his wife, and married her in 2009. Wife would not marry until he filed his 2007 and 2008 returns. Filed joint in 2009, with a $2,000 refund.

Received a "CP63" from IRS telling the couple that their $2000 refund was being held up because of his non-filing in 2004 and 2005. CP63 did not indicate that any information returns such as W-2s or 1099s were filed on his SS#.

Taxpayer has matured somewhat after marrying and getting a little older (at least that's what I'm told). Now wants me to help him fix his problem. I don't have a clue.

Does anyone else?

[Uncle]

Suggestion from IRS

Taxpayer (now married) did not file for 2004 and 2005. Installed flooring and operated his "business" from the back of his pickup truck. No idea what he made or what he spent. No way to resurrect receipts or collections. You get the idea.

In 2007 he met his wife, and married her in 2009. Wife would not marry until he filed his 2007 and 2008 returns. Filed joint in 2009, with a $2,000 refund.

Received a "CP63" from IRS telling the couple that their $2000 refund was being held up because of his non-filing in 2004 and 2005. CP63 did not indicate that any information returns such as W-2s or 1099s were filed on his SS#.

Taxpayer has matured somewhat after marrying and getting a little older (at least that's what I'm told). Now wants me to help him fix his problem. I don't have a clue.

Does anyone else?

I have a couple of these on the go at the moment. Clients came to me after talking with the IRS. Agent seems very very cooperative. Agent suggests "estimating" income and expenses "to the best of client's ability" and going with that. Likely the best that can be done, but I want client's signature on receipts and expenses to cma.

[JohnH]

Ron: just a few random thoughts on reconstructing income and expenses:
1) I'd try to get bank statements, if any, just to be sure we had any recorded info which IRS could also easily obtain if the return were audited. Then ask the bank for copies of checks over a certain threshhold, as well as detail on key deposits.
2) any credit card use? Sometimes copies of those statements are a treasure trove of info.
3) ask him to recall any large projects or commercial customers and contact them for any info they can provide. Many of them may be better record keepers than he realizes.
4) have him ask flooring suppliers if they can give him any copies of statements for his purchases from them during that time period. Then estimate gross from those projects
5) sometimes auto safety & emission inspection reports will contain mileage. I probably have the last 3 or 4 years of those in my glove compartment of my car right now. Knowing actual miles driven can aid in estimating business miles.
6) the last time I prepared a return from estimates was a Corp return filed with a collections guy looking for payroll taxes. He had to have a return to finish his paperwork. We attached a statement to the return that simply said the return was a reconstruction based on all the info we could find. Never heard a word on it, but of course IRS was pretty sure there was no blood in this turnip anyhow.

[Lion]

s-Services

And, don't forget to check e-Services in case some items were reported for those years. If you don't already have a POA, you can submit that on e-Services as well. If he doesn't have copies of returns that he did file for the years surrounding the ones you're trying to reconstruct, then pull transcripts for those years, also, to jog his memory.

[Mo Sheets]

I think I had the same client!!!

I had a similar situation about two months ago. Client actually came to me because he received a letter from the IRS about a return that was never filed for 2003. Of course the client had just gotten married this year and "acted surprised" when I asked was this the first correspondence he had received from the IRS....hmmmm...

I had him sign a POA and contacted the IRS on his behalf. They were able to fax me all of the information they had from 1099's they had received. Although he was not able to produce receipts for many expenses, we were able to at least file returns for 2004, 2005, 2007, 2008, and 2009 (no 2006 income????)

If it had not been for the IRS sending me copies of the 1099 information and several W-2's, we would have been lost.

Good luck to you!