Slinky1000
Nov 20, 2008, 09:26 AM
A close friend recently confided in me that he hasn't filed any tax returns since 1990. He claims to not have ever been contacted by the IRS, with the exception of last month when the IRS sent a notice asking him to file his 2005 return, apparently triggered by the submission of a 1099 form to the IRS by a client in that year.
He desperately wants to come clean with the IRS and has wanted to do so for a while, but is terrified of taking the first step so has asked for my assistance.
Now, I know enough to know he needs a tax professional for assistance in sorting out this mess. But, what kind of tax professional should he look for? Does he need a Tax Attorney, or are there other professionals that are more appropriate to the task? What would they be called?
How does he find a good one? I don't think he knows (and I certainly don't) know anyone that can provide a personal referral. Is there a professional organization that has member listing by state?
There are many companies online (and I've even seen a TV ad) claiming to be able to fix these types of tax problems and negotiate with the IRS for you. Has anyone used this type of companies? Can they be trusted or is he better off going with a private tax professional? What are the pros/cons of the two? (cost being one of them, I assume).
Is it best to go straight to the IRS first, or contact a tax professional first?
Now, he claims to be able to have enough financial records to be able to complete and submit reasonably accurate tax returns going back a number of years - but certainly not 18 years. I read elsewhere that typically the IRS will only require the past six years (though they could require all 18 years). Is this true that he only needs to worry about the past 6 years of returns, or is this decided on a case by case basis? I don't believe there is really any way for him to submit tax returns from 10+ years ago that have ANY accuracy to them... What is typically done in cases such as these in regards to 10+ old tax returns when no real records exist any longer?
Obviously, with penalties and interest the amount of taxes that will be due simply from the past 6 years (not even considering the previous 12) will be fairly astronomical (not that he's made that much money, some years have been decent, other years scrapers, but even a small amount due will be a lot with penalties and interest). His only asset (aside from a 8 year old vehicle) is an acre and a half of land worth approx $80K (though perhaps less today's market being what it is). As far as he knows, there has been no lien filed on it - once the IRS is contacted will they immediately file a lien on it or do they wait to see if he'll be able to pay whatever amount he ends up owing before going after his assets?
From what I've read elsewhere, as long as he hasn't done anything to hide his income to evade taxes but simply hasn't filed, then the IRS typically isn't interested in pressing criminal charges - simply collecting what they can and then having that person get back on track filing every year. Is there more he should know about insuring this best case scenario and not being charged with anything criminally?
Thanks for reading my long post - any advice you can give is greatly appreciated.
He desperately wants to come clean with the IRS and has wanted to do so for a while, but is terrified of taking the first step so has asked for my assistance.
Now, I know enough to know he needs a tax professional for assistance in sorting out this mess. But, what kind of tax professional should he look for? Does he need a Tax Attorney, or are there other professionals that are more appropriate to the task? What would they be called?
How does he find a good one? I don't think he knows (and I certainly don't) know anyone that can provide a personal referral. Is there a professional organization that has member listing by state?
There are many companies online (and I've even seen a TV ad) claiming to be able to fix these types of tax problems and negotiate with the IRS for you. Has anyone used this type of companies? Can they be trusted or is he better off going with a private tax professional? What are the pros/cons of the two? (cost being one of them, I assume).
Is it best to go straight to the IRS first, or contact a tax professional first?
Now, he claims to be able to have enough financial records to be able to complete and submit reasonably accurate tax returns going back a number of years - but certainly not 18 years. I read elsewhere that typically the IRS will only require the past six years (though they could require all 18 years). Is this true that he only needs to worry about the past 6 years of returns, or is this decided on a case by case basis? I don't believe there is really any way for him to submit tax returns from 10+ years ago that have ANY accuracy to them... What is typically done in cases such as these in regards to 10+ old tax returns when no real records exist any longer?
Obviously, with penalties and interest the amount of taxes that will be due simply from the past 6 years (not even considering the previous 12) will be fairly astronomical (not that he's made that much money, some years have been decent, other years scrapers, but even a small amount due will be a lot with penalties and interest). His only asset (aside from a 8 year old vehicle) is an acre and a half of land worth approx $80K (though perhaps less today's market being what it is). As far as he knows, there has been no lien filed on it - once the IRS is contacted will they immediately file a lien on it or do they wait to see if he'll be able to pay whatever amount he ends up owing before going after his assets?
From what I've read elsewhere, as long as he hasn't done anything to hide his income to evade taxes but simply hasn't filed, then the IRS typically isn't interested in pressing criminal charges - simply collecting what they can and then having that person get back on track filing every year. Is there more he should know about insuring this best case scenario and not being charged with anything criminally?
Thanks for reading my long post - any advice you can give is greatly appreciated.