VT non resident capital gains prior year non filer

[geezer]

Hope everyone is avoiding stress! I'm stressing out a wee bit about the following fact pattern though it really isn't my problem. I'm just a sensitive new age guy who cares about his clients. I hope someone has some actual experience that is relevant. I believe there is no statute of limitations in VT for non filing liabilities.

I acquired a new client by referral. Since we look at prior returns doing due diligence, I did that for the last three years. Well, three years past the client sold a vacation home in VT. The state statute requires an amount to automatically be withheld at closing for potential tax liability and it is remitted to the VT  Dept. of Rev. of course with taxpayer identifying data.

In this instance, the withheld amount was insufficient to satisfy the actual liability. The client self prepared the Fed 1040 3 years past and did not submit a VT non-resident return believing the withheld amount was the end of it. They have resided in FL for a decade plus.

Does VT DOR normally follow up on these situations of non filing by a non resident? Does VT eventually send out an assessment notice using the gross proceeds from the real estate sale as a "deemed gain" and assess the taxpayer for the deemed underpayment? The real estate gross proceeds was not insignificant.

I know the proper remedy. I want to present the client with all the ramifications. Though in doing so I always keep in mind my updated adage:  "You can lead a horse to knowledge, but you can't make it think."      ~:-)