Error on 2012 Return

[ToledoEd]

Have a new client that filed a return in 2012, but did not include a missing W-2. The missing W-2 was from company that went under and probably did not issue them and the client does have his last paycheck stub and was waiting on the W-2 , and his last paycheck. He received neither and was wanting to amend the return now because he thought he had 5 years to fix it. As of today he still has nothing from the former employer, except a promise that he wil get the cash for his last paycheck. The W-2 is approximately 10% of income.

Can we amend the return since it was timely filed in 2013 and the 3 year ran out in 2016?

IRS is apparently not aware of the situation and has not contacted client yet.

Will they bother as it is more than 3 years ago?

Thanks for your time considering this.

[taxea]

the client knew of the income and should have done a sub W-2. Now if it increases his tax and lowers his refund he will have to pay the tax. The IRS has 3 years to assess a tax but 6 years to audit. the client can either file an amended now or wait for a CP2000 and pay more in penalty and interest. Were it me, I would report the company for failure to distribute the W-2

[ToledoEd]

The company that went under probably has not filed with the IRS either, and is not my problem. I know what he should have done, but as stated new client.

Where does it state that the IRS has 6 years to audit? So I can show my client.

[spanel]

The company that went under probably has not filed with the IRS either, and is not my problem. I know what he should have done, but as stated new client.

If the missing w2 increases the refund its to late as you have 3 years. 14,15,16.

If the missing w2 decreases refund, most likely the employer didnt file them as he would have received a cp2000 approx 18 months after filing. Advise the client file a 1040x and pay the amount due.

Chris

[Burke]

If this man can still get in touch with the former employer, I would advise him to do so immediately regarding the unpaid salary and missing W-2. He can tell the employer that he will be reported to the IRS for failure to furnish timely W-2's. And you can bet there are unpaid trust fund (withholding/FICA) taxes involved here as well. Then have the client do it. The company may have gone under, but someone is personally liable for these two things.

[New York Enrolled Agent]

Have a new client that filed a return in 2012, but did not include a missing W-2. The missing W-2 was from company that went under and probably did not issue them and the client does have his last paycheck stub and was waiting on the W-2 , and his last paycheck. He received neither and was wanting to amend the return now because he thought he had 5 years to fix it. As of today he still has nothing from the former employer, except a promise that he wil get the cash for his last paycheck. The W-2 is approximately 10% of income.

Can we amend the return since it was timely filed in 2013 and the 3 year ran out in 2016?

IRS is apparently not aware of the situation and has not contacted client yet.

Will they bother as it is more than 3 years ago?

Thanks for your time considering this.

Since it appears the amount of gross income not reported does not exceed 25% of what was reported on the original return, the year is CLOSED. There is no 6-year statute to audit such a mistake.

The general 3-year statute for assessment found in IRC §6501 goes for both the IRS and the taxpayer. If you amend under the facts you post, the IRS will return any check the taxpayer may send and will deny any possible refund. A mistake was made - it was discovered after the statutory assessment period as it has ended. Just tell the taxpayer to move on.

[Gretel]

I agree as far as the IRS goes but what about SS earnings. Do they also have a limit of accepting information? However, for 10% of income it might not be worse the hassle.

[ToledoEd]

Thank you for response, my reading was that the 3 year rule applied to both Taxpayer and IRS but was not sure. I did come across the 25% reference so I was hoping that he would not have to file. Client is in 30s and is not worried about Social Security lifetime earnings amount. Change in AGI would be approximately 25,700 to 28,600 and there was withholding so the increase in tax is not much, but did not want the hassles. (Client has divorced in the last year and an amended return would require contact with ex and her cooperation)

[Roland Slugg]

IRS has 6 years to audit? Threaten to report the employer? What about social security? File an amended return?

Good grief, folks, the error happened in 2012 ... a CLOSED year ... and the unreported income was about $2,900.

As NYEA concluded above: Move on!

[Burke]

... and the unreported income was about $2,900.

Note that this information was not provided until the last post. It might have affected some of the responses had it been provided in the beginning.....

[FEDUKE404]

Say farewell to 2012 returns and move on

IRS has 6 years to audit? Threaten to report the employer? What about social security? File an amended return?

Good grief, folks, the error happened in 2012 ... a CLOSED year ... and the unreported income was about $2,900.

As NYEA concluded above: Move on!

Exactly. 2012 is a done deed, absent "fraud" concerns which appear not to be an issue.

The fact that the client "knew about" the extra W2, but failed to take appropriate action, is the major problem. There are (were) ways to resolve that problem for missing W2s.

So, either the IRS got to pocket some extra money or the client lost some. Either way. . ."it's too late, baby."

FE

[taxea]

Thank you for response, my reading was that the 3 year rule applied to both Taxpayer and IRS but was not sure. I did come across the 25% reference so I was hoping that he would not have to file. Client is in 30s and is not worried about Social Security lifetime earnings amount. Change in AGI would be approximately 25,700 to 28,600 and there was withholding so the increase in tax is not much, but did not want the hassles. (Client has divorced in the last year and an amended return would require contact with ex and her cooperation)

He should report the income so it transfers to SS

[JohnH]

If a $3,000 difference for someone in his 30's earning $28K will ultimately have any effect on his Social Security Benefits whatsoever, then he has bigger problems on his hands. His next 36 years are going to be pretty lean insofar as income is concerned and his retirement is going to be a disaster.

Common sense says let it go.
That's why we have the SOL.