Very Late Return

[Academy Tax]

Client did not file form 1040 for 2000 during which year he was married and lived together with wife, one dependent daughter and received modest compensation as contractor (Form 1099). Client's 2000 Form 1040 would have resulted in small refund had he filed timely even with SE tax. Client divorced in 2003 now receives letter stating 2012 Form 1040 (which I prepared) refund applied to year 2000 past due amount of about $9000.

Client states wherteabouts of exwife unknown and wouldn't sign joint return anyway. Client has marriage license, divorce papers, 1099, exwife's name, dob and ssn. Client mantains local contact and equitable relationship with emancipated daughter and knows her dob/ssn. Similar problems in other years, but client honestly trying to get caught up and make things right.

Form 2848 giving me POA submitted today. I also spoke with IRS (in general terms) about client. I was told IRS does not accept tax returns after 10 years which suggests client is stuck with about $7500 owed for 2000. IRS rep suggested might be able to do more when 2848 is in system and I will try again next week. Any suggestions for how to proceed?

RTRP

[Burke]

I believe the statute of limitations is 10 years for the IRS to capture taxes due. They have 10 years from the date the tax was finalized. Did they do an audit? Check out the history.

[New York Enrolled Agent]

Client did not file form 1040 for 2000 during which year he was married and lived together with wife, one dependent daughter and received modest compensation as contractor (Form 1099). Client's 2000 Form 1040 would have resulted in small refund had he filed timely even with SE tax. Client divorced in 2003 now receives letter stating 2012 Form 1040 (which I prepared) refund applied to year 2000 past due amount of about $9000.


Form 2848 giving me POA submitted today. I also spoke with IRS (in general terms) about client. I was told IRS does not accept tax returns after 10 years which suggests client is stuck with about $7500 owed for 2000. IRS rep suggested might be able to do more when 2848 is in system and I will try again next week. Any suggestions for how to proceed?

Based on what you write, it appears the IRS did a substitute for return for the client for tax year 2000. An assessment was made (the date is crucial for the 10 year collection statute) and your taxpayer still owes $7,500 on the assessment.

You state the client would have received a refund if filed (are you talking about MFJ - I'm not clear on that?). In any case, you can probably file an audit reconsideration. It is never too late to file a return for the year - the IRS should accept the return and reduce the outstanding liability for 2000.

You can look at IRS publication 3598 for an overview of AR or look in the IRM at §4.13.

[taxea]

Ask 10 different IRS employees you get ten different answers. I would file the return knowing that the refund will not be sent but at least the return is correct. I would also send a signed copy of the return to the address on the letter with a statement that the return was filed and a copy of the certified mail form.

[DaveinTexas]

Hilarious!

I've never heard of the 10 year rule regarding the IRS not accepting an original return.

I second NYEA's post. I will add that I would recommend you calling the IRS (again) and asking them what the CSED is on this return. If the return is from 2000, I am guessing the IRS did the SFR in say, 2003 or 2004 (just a wild guess).

The collection statute may be close to expiring, in which case filing an original return may be more trouble than it is worth; especially if the refund stems on the client filing jointly with his ex wife (messy).

[Academy Tax]

Very Late Returns

Thanks to everyone who responded! The plot is somewhat thicker than originally described; client believed he was employee, but never received W-2 or 1099. As employee he was not required to file, but employer apparently filed 1099. Rather that fight employer at this point I recomended filing as contractor particularly since 2 of the 3 years in question result in refund even as contractor.

After several telephone calls to IRS and filing 2848 (which is still not in the system after 2 weeks) I prepared cover letter for client explaining situation, filing status, etc and 200 Form 1040 (without ex-wife signature) but otherwise MFJ as would have been filed with CP49 Notice (copy), 1040/C-EZ and SE and mailed to office issuing CP49. In process of preparing same package for other 2 years. i'll take a close look at Pub 3598, thanks for the steer.

[DaveinTexas]

You might have 2 issues

1) If the return is MFJ without both signatures, the return will be rejected.
2) The return was filed by the IRS (SFR) which means you normally have to send the return to the ASFR Unit which could be in Holtsville, NY or Fresno, CA. This return, if not rejected for reason 1, will probably not be processed or forwarded to the proper processing unit.

AND, if the CSED on this return is close to expiration, filing the original return re-opens the statute (10 years from the new assessment). So, in the end, it may be a good thing if the return is not accepted for processing.

Call the IRS and ask them for the CSED. If an SFR was filed a few years after the due date, it could be that the CSED is very close to expiration. I have a client with a CSED of Oct 15, 2015 for a 2002 tax return (SFR); the balance due is over $200,000. Just sitting and waiting; meanwhile this client is in CNC status with no assets. Get the CSED!!!

[New York Enrolled Agent]

2) The return was filed by the IRS (SFR)

AND, if the CSED on this return is close to expiration, filing the original return re-opens the statute (10 years from the new assessment). So, in the end, it may be a good thing if the return is not accepted for processing.

Dave - I'm going to disagree a bit here. If the taxpayer's original return shows less tax than the amount assessed under the SFR, then the statute (CSED) does not get extended. Take a look at IRS ILM 200421002.

[DaveinTexas]

Very good information sir

Dave - I'm going to disagree a bit here. If the taxpayer's original return shows less tax than the amount assessed under the SFR, then the statute (CSED) does not get extended. Take a look at IRS ILM 200421002.

Much appreciated, and I should've known this as I remember reading this article at one point: http://www.captxea.org/files/CPE2012...imitations.pdf

My mind is slipping, thank you for respectfully setting me straight.