landscaper sch C hasnt filed his taxes in over 10 years,

[Hollyatrosewoodut]

I have a client who has been operating a landscaping business for well over 10 years. His wife came to me and begged me to take over and help him get square with the IRS/bookkeeping. 

I spoke with the women who does his invoicing(she does not touch his books), looked at his books and they are a mess. He apparently has had employees but has never submitted payroll, 1099's or any other accounting for how much, who or when they came and went. This is nothing to say how aweful his books are. 

I feel like I might be able to stitch together his books for the last two years with reasonable accuracy but I am not a forensic accountant nor a tax lawyer so the deeper I look the more I worry that if I do attempt to file a tax return, I will be opening a pandoras box. I have no doubt that he has tax debt in the 5-6 figures and if I file a return, I may not be able to stop the freight train coming his way. 

I am happy to help but I have a feeling that at this point, it might be too far gone. It seems their marriage is on the line so I am reluctant to tell them nothing can be done but I also dont know how bad it really is. 

What would you advise they do? Should I try to help them sort their books or just pass them off? Should I file an extension or will an extension that comes with no real idea of how much is owed or even if he might try to pay it off just asking the IRS to come'a'calling?

[sjrcpa]

1. This is not the type of thing to deal with on April 4.

2. You can file an extension showing he owes $XXXXX. Will he pay?

3. I hope the wife has been filing MFS returns all these years.

4. If you do take this on after April 15:

 a) You get a bucket of money upfront. When it's used up, you ask for more.

b) He hires a bookkeeper to construct/reconstruct books.

c) Plan on 3 years back taxes to get him in good stead.

5. Has IRS come calling? Have employees filed complaints, workman's comp claims? Does he have a valid business license? Has the state come calling?

Think hard before accepting. It's OK to say no. He probably should get a lawyer involved.

It's also OK to say I'll take a look for $XXX, upfront, and then let you know.

[qbteachmt]

This is the right call: "c) Plan on 3 years back taxes to get him in good stead."

I've done a few of these. One, it did destroy the relationship, but I was upfront about the discovery and its potential impact. The spouse took it as a complete personal affront, since she was the one who had been trying to maintain the records all the years, but had done so with no guidance. Also, I tried to make a referral to a CPA I love and send lots of people to, and they reported to me they had already turned this couple away years ago. There's no shame it it being beyond your interest or ability or outside of your practice. By passing on it, you are not making it worse.

And definitely get paid ahead.

[Hollyatrosewoodut]

I am not aware that the IRS or state, or anyone has come calling. It sounds like the wife washed her hands of this years ago but implied that their marriage was on the line if he didnt square up with the IRS and such. 

If I agreed to do the tax return for three years how much per return would you charge?

I also do bookkeeping but I am not super well versed in payroll or dealing with such extensive back taxes. I certainly feel like I could figure it out but I dont want to open a can of worms for him that I cant help him wrap up? Is the expectation that we prove what can be proved and he just swallow the rest since his records are so incomplete? Once I submit this, if we find he owes tens of thousands, will he just go to someone or the IRS to make an offer in compromise? 

How much would you charge per year for the bookkeeping? I was thinking $1-2000 per year? plus about $4-600 per tax return. Maybe this is too much....I just know its going to be a lot of trouble. 

[sjrcpa]

Also consider - much of the business inflows and outflows may have been conducted in cash. This type of business lends itself to that.

And it also lends itself to "hiring" undocumented workers.

Your proposed fees are probably way too low.

[TaxGuyBill]

---

@Hollyatrosewoodut wrote:

If I agreed to do the tax return for three years how much per return would you charge?

will he just go to someone or the IRS to make an offer in compromise? 

How much would you charge per year for the bookkeeping? I was thinking $1-2000 per year? plus about $4-600 per tax return. Maybe this is too much....I just know its going to be a lot of trouble. 

---

The IRS usually wants six years.

Does his situation seem like he will qualify for an Offer In Compromise?  Personally, I don't think it is overly necessary to do too much bookkeeping to track expenses if the tax will be limited to an Offer In Compromise.  If you are not sure if they will qualify for an Offer In Compromise, that is one reason why you may consider just referring this client to someone that deals with resolution of problems.

I am NOT an accountant or bookkeeper, but I would think it would be reasonable to use an hourly rate for bookkeeping, and working off a retainer (don't EVER do work for a late-filer until you have been paid).  But don't do that during tax season, unless you double or triple your bookkeeping hourly rate.

[qbteachmt]

For me, it would depend on his interest to be involved. If he isn't an active participant in this resolution, I would stay out of it. You might be surprised how much is discoverable. You need him to get bank records and IRS account transcripts, to see what is already documented on his behalf. Probably not much, as noted by others. He likely has Venmo, CashApp, PayPal, too.

[BobKamman]

I don't agree that IRS wants six years.  @sjrcpa is on the right track with wanting three.  But why not start with just one, 2024, and set up compliance starting now?  It can't get any worse.  And income tax is not his only problem, as pointed out.  Workers comp, payroll taxes, hiring practices.  

Your location suggests a cultural attitude about IRS and government that doesn't prevail elsewhere.  15 miles from an IRS Service Center and 15 minutes from the 19th Century.  Ask him how much he expects to collect in Social Security, with no earnings credits, and get a blank stare.  Ask the wife, maybe a glimmer of recognizing the problem.

And the wife?  Would you really condemn her to filing a joint return?