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.
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.
When all else fails, read the Internal Revenue Manual that IRS employees are required to follow.
Policy Statement 5-133 (P-5-133), IRM 18.104.22.168.18, 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:
22.214.171.124.1 (10-05-2010)Management Approval
The taxpayer’s prior history of noncompliance.
The existence of income from illegal sources.
The effect upon voluntary compliance.
The anticipated revenue in relation to the time and effort, required to determine tax due.
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.
Management approval is necessary if the enforcement activity is less than or exceeds the six-year period. Document the case file by:
Outlining the facts of the case; and
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.
Group manager approval is not needed if the nonfiler voluntarily files returns beyond the established enforcement period.