Non-Filer Collection Program?

[Koss]

Anyone have any experience with this?

I've got a guy who hasn't filed since 2003, and he received letters for 2004 and 2005.

This is not the "friendly reminder" letter. This is a substitute return. The IRS prepared the return for him, using a filing status of MFS. He's self-employed, and there's a significant amount of money involved here. He's got kids, a spouse, and a lot of expenses that were not accounted for in the substitute return.

The letter actually suggests that he file his own return in order to get the benefit of exemptions, deductions, and credits. But he missed the 30-day time period to respond by only a few days. The letters are dated 03/10/08, and he came to see me today.

If we call the IRS on Monday morning, is there any chance they will still accept his returns?

Or will we need to do amended returns? Or is it simply too late? Does he have to file a petition in the Tax Court?

There's a language barrier. The client doesn't speak English well...

[dmj4]

Had this happen

I had the IRS prepare returns for a client a few years ago and we sent a correct return and they did accept it. The prepared his as MFS, too. They do it the way they think will generate the most tax, then it can only get better from there. We did call and tell them we were sending correct tax returns.

In his case he had been audited for one year, owed and then just stopped filing returns.

[Koss]

Time limit?

Did your client file his returns within the 30 day time period stated in the letter?

Or were they filed later than that? If so, how late? Do you remember how long he waited before acting on the letters?

[myerstaxes]

Program Now Automated

The Substitute for return program is now automated in the Service Centers...I remember when I worked for IRS we did them in the district offices...Anyway, sure go ahead and file the correct returns, the IRS will reverse the other postings for the SFRs...I have had clients come to me almost a year after receiving the notices, and I filed the correct returns and all was well...And yes they always use the worst case scenarios to give the taxpayer a wake up call...

[dmj4]

It was much later

The personality trait that made him choose to stop filing was the same one that made him ignore the IRS generated MFS bill until they were threatening a levy.

Donna

[ED SMITH]

I would guess that I do at least 10 sfr'd returns a week, as most of our clients are non-filers. If he is a Sch C it should be mailed to Cincinnatti as that will speed up the process.
You can get the address from the IRS.

Since it can take up to 12 weeks to process the return, he could get collection letters in the meantime. You only have to worry about a CP504, CP523 or LT11 as these are final notices of intent to levy. If this happens, you, preferably, or the client should call the IRS and request a Processing Hold.

[joanmcq]

I had one last year that finally woke up when her employer got the wage levy notice. lost the refund for 2003, but the others went through (1099-Misc, but had kid, so EIC). Call the number on the letter and let them know the returns are coming; they may give you a contact, or there may be one on the letter. You send the returns to the SFR unit, not to the regular service center to expedite the processing and stop any levies in process.

Get a retainer...the retainer check cleared (although I got most in cash), but the check for the $90 or so extra time spent bounced.

[Koss]

SFRs

Thanks to everyone for your input!

[DaveO]

Long ago SFR returns

Had a client in a few years ago that I filed a couple of back years for and the current year. All W-2 wages with withholding near the max. The IRS nabbed his refund for older returns. So the next year I filed a couple more old returns and they took his refund for still older returns. I spoke with an agent at the IRS and explained they filed him as MFS with no dependents when he was HOH with 3 dependents. I asked that they just stop taking his refunds and we would call it even. The agent demanded returns to 1997 when the first SFR was filed. I did the returns some by pencil since I didn't have software that old. I did some of the state returns but lacked information to do them all. TP received over $10,000 in refunds after all the old SFR's were flipped. It never hurts to try.