Inherited IRA; RMD not taken for 3 years

[origun]

Taxpayer (in late 60's) inherited a non-spousal IRA in 2007. Decedent had begun taking RMDs. My client has done nothing with IRA--I just found out about its existence last week. I know the rules using Table I and that she should have started taking distributions in 2008. But she didn't!!

What are her options now? Is it possible to start taking RMDs now (for 2008 and 2010)? Will she have to pay the 50% penalty for those 2 years and then appeal?
She has no recollection concerning receipt of any 5498s.

How does the 5-year rule figure into the scenario? I know that it is relevant for IRAs when decedent is less than 70.5 but not the case for my client.

Thanks!

[origun]

A follow-up on my own question!

After further investigation, a whole new scenario emerges:
Mother had the IRA with daughter as beneficiary. Mother died about 10 years ago. Mother's husband (step-father to beneficiary) never notified the fiduciary so the checks kept coming to the same bank account (formerly joint) and he kept spending the funds; he and his step-daughter didn't get along so she knew nothing about this. Then he died in 2007 and that was when she somehow became aware of the account. Meanwhile account had diminished substantially! I don't know how she is going to deal with the situation but she is going to contact the fiduciary. So...more than a tax problem is involved here.