2003 tax assessment

[DixieEA]

Help, This morning taxpayer walks into office with 3 notices from IRS. Taxpayer did not
file 2003. Taxpayer ignored IRS notice to file return. On 10-03-2005 the IRS
constructs tax liability based on taxpayers income received form payers,one
exemption and MFS filing filing status. This creates a tax libility of $3825.
Taxpayer ignored this notice and now is in the collection process. Can an
admendment to the IRS calculated tax be done at this late date? If so the
taxpayer would owe a lot less because in 2003 taxpayer lived with wife and
had 2 dependent children. I would be grateful for any help.


Thanks, DixieEA

[Brian EA]

Did taxpayer's wife filed a return? If so he can amend this return and include himelf on the return. If both did not file a return then he can file the 2003 return and include his letter in the envelope when he mails the return.

If he would be hetting a refund when filing with his wife , he has until April 17th to do so

brian

[DixieEA]

Brian, wife did not file a return in 2003. Are you sure we can file the return now at this
late date since he did not respond to the original notices and the tax is in the
collection process?

Thanks, DixieEA

[Acownt4it]

I have found

it best to get a POA signed and call the number on the letter.
They will let you know what you need to do to clear the matter up.

I had a similar situation and they had me fax a signed tax return to their office and they processed it right away. The issue was cleared up in 6 weeks.

[DaveO]

I will echo the advice given by Acown4it

I filed original returns back to 1997 recently for a client. The IRS had filed subsitute returns for most years. They had filed him as MFS no dependents. He was in fact, HOH will up to 4 dependents. It took about 6 months for the smoke to clear but it all went through exactly as filed.

[New York Enrolled Agent]

Dixie

You can not amend a return that was never filed. Based on your post, it appears the IRS filed a substitute return (SFR) under §6020(b). After the SFR & the 90 day period for a petition to the Tax Court, the IRS assessed the tax and your taxpayer is now in collection. What you need to do is prepare the correct 2003 return, mail it to the CORRECT office (not the normal processing center) and request an audit reconsideration. Audit reconsideration is discussed in the IRM at §4.13. When you submit the return, cite the IRM and request the audit recon. It will take a good deal of time but almost always the IRS will do it. In the meantime, contact ACS (where I assume your collection activity is coming from). They will put a hold on collection and may tell you to submit the return to a specific place.

You do need the POA - Good luck.

[jerome]

Make sure you get a retainer for some of your fee up front before you lift a finger.

There is a reason why this person ignored IRS all these years. Don't assume you are any different.

[DixieEA]

Thanks for respones

New York EA, you are correct, the taxpayer received the SFR notice in Oct of 2005.
Could you tell me what IRM means? I have little experience with this type of
situation.
Thanks again, DixieEA

[New York Enrolled Agent]

IRM = Internal Revenue Manual (the IRS's own rulebook)

Go to the IRS site: www.irs.gov

Click on tax professionals, then on the left side of the next screen click on administrative manuals, then click on IRM. Click on Part 4 and then scroll down to 4.13. Hopefully, it will help.

[jainen]

a single stamp

>>get a retainer for some of your fee up front<<

How much would your fee be? The whole tax bill is something under four grand. In the best case scenario he will still have a substantial liability. Audits and collections are time-consuming (i.e., expensive) areas of practice, and as always there is no guarantee of even partial success.

After paying you for six months of phone calls and certified mail, he might end up with the same five-year payment plan he can get today with a single stamp.

[DixieEA]

Thanks NYEA

I thought that was what IRM meant, but was not sure. Jainen, I agree with you and I
have not accepted taxpayers case at this point, considering to accept for the experience
and to aide a fellow taxpayer. Taxpayer had young child with cancer during this period
and was claiming 9 allowances on W-4 form to obtain extra money for medical bills.

[jerome]

How much would your fee be? The whole tax bill is something under four grand. In the best case scenario he will still have a substantial liability. Audits and collections are time-consuming (i.e., expensive) areas of practice, and as always there is no guarantee of even partial success.

Start with $300. Explain you charge strictly by the hour for this type of service. Once the $300 is used up, stop all services and tell client to kick in some more dough.

It’s like sticking quarters in a parking meter. You pay for your right to park in advance, and if you happen to leave before the meter runs out, tough.

[Brian EA]

. Taxpayer had young child with cancer during this period
and was claiming 9 allowances on W-4 form to obtain extra money for medical bills.[/QUOTE]

If this is correct I will go all the way to help this tax payer and charge him enough to make me feel that I have done something to help my fellow human being.Be a People Person today.

thanks
brian

[jerome]

If this is correct I will go all the way to help this tax payer and charge him enough to make me feel that I have done something to help my fellow human being.Be a People Person today.

Having to pay medical bills because your kid has cancer is certainly a good excuse for not being able to pay other bills. It is no excuse for not filing a tax return.

Claiming 9 exemptions on a W-4 and refusing to file a return is stealing money from the government. If your kid has cancer, does that justify robbing a bank to pay his medical bills? Stealing groceries from a grocery store?

If we as a society are sympathetic to the plight of poor people who get struck with tragedy and think they are justified in not filing a tax return, why don't we have a tax forgiveness clause for tragedies? An exemption from tax when a family member comes down with cancer? Why don't you offer free tax services to those who give you sob stories of why they couldn't pay their taxes or file a return?

We give tax exemptions to people killed in a combat zone. Why not for when the kid gets cancer?