Level 3

Question

Unfiled Prior year returns

Forum|Forum|6 years ago
July 7, 2020
9 replies
45 views

I had someone contact me about helping them. They have NOT filed a tax return for at least 11 (eleven) years. Where do I start? Do I file all eleven years at one time? Is all eleven required?

I tried to research but conflicting answers and no definite answer.

Any advise would be very much appreciated.

Thank You!

ProSeries Professional

This topic has been closed for replies.

George4Tacks

Level 15

I would definitely look to seem if filing was required for all years. If they are self employed, I DEFINITELY would file all 11 years. If otherwise required due to income (look at gross, not net) I would start at the oldest and move forward. If there are stock sales, there may be losses to carryforward. The statute of limitations is 3 years, but the clock doesn't start clicking on that until the return is filed. If there is tax due, then it will be due with penalties. If there are refunds, only the last 3 are recoverable, the older ones are lost, but the years now start their 3 year window to be audited. Get some good money from them up front.

Answers are easy. Questions are hard!

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LakeGirlAuthor

Level 3

Thank you so much for your reply.

User_61

Level 7

Retainer. Good luck! 🍀

♫ faint buzzing noise ♪

sjrcpa

Level 15

Yes start with a retainer.

Then get a Power of Attorney Form 2848.

Has IRS been sending notices?

If no, call IRS and ask about the nonfiler situation. Don't give the client name. They may tell you they only want 6 years.

The more I know the more I don’t know.

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LakeGirlAuthor

Level 3

Thank you! There is lots to consider in this one.

BobKamman

Level 15

When all else fails, read the Internal Revenue Manual that IRS employees are required to follow.

4.12.1.3 (10-05-2010)

Enforcement Period

Policy Statement 5-133 (P-5-133), IRM 1.2.14.1.18, Delinquent returns—enforcement of filing requirements, discusses delinquent returns and the enforcement filing requirements. The enforcement period is not to be more than six years. However, the extent to which delinquency procedures will be enforced will depend upon the facts and circumstances of each case, and by reference to factors ensuring evenhanded administration of staffing and other Service resources. Enforcement for longer or shorter periods may be used when consideration has been given to:
1. The taxpayer’s prior history of noncompliance.
2. The existence of income from illegal sources.
3. The effect upon voluntary compliance.
4. The anticipated revenue in relation to the time and effort, required to determine tax due.
5. Any special circumstances existing in the case of a particular taxpayer, class of taxpayer, or industry, or which may be peculiar to the class of tax involved.
4.12.1.3.1 (10-05-2010)
Management Approval
1. Management approval is necessary if the enforcement activity is less than or exceeds the six-year period. Document the case file by:
  1. Outlining the facts of the case; and
  2. Detailing the reasons on Lead Sheet 130, Multi-year and Related Returns Lead Sheet, why enforcement for the longer or shorter period is recommended. (Deviating from P-5-133). If warranted, attach supporting workpapers.
2. Group manager approval is not needed if the nonfiler voluntarily files returns beyond the established enforcement period.

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LakeGirlAuthor

Level 3

This is very good information. Thank you very much!!

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