Non-Filers

[Christian]

A couple with whom I worked with for years in my regular job came to me this year after their long time taxman passed on. I asked the wife to bring in their last year's return (2013) and their info for 2014 so I could match items. You may only imagine my astonishment when she set down and passed me a 2009 tax return ! They have not filed a return since then ! In a word they now need to file five years of unfilled returns. I asked about letters from the Service and was told she had not received one lately ! Further, she seems in no hurry to bring me info for the 2010 filling. Where is the IRS in all of this ? How is it a couple who are both gainfully employed not get a visit or some punitive action from the Service ? Have any of you experienced anything like this in your practice ? I once had a client who always owed money each year despite my efforts to change his ways. His wife showed up the next year after he died and informed me she got a letter from the Service he owed over $30,000 in tax from prior YEARS ! Along with the farm loss fiasco I wrote of earlier I am beginning to suspect that the Service is simply overwhelmed in not addressing these easily seen deficiencies.

[Lee B]

I have had both past and current clients with a number of unfiled years for both personal and business tax returns

who have never received any letters from the IRS. In my state it's more likely that they will receive a letter from the

state Dept of Revenue, if at all.

[JJStephens]

I get one of these every two or three years. Just a few days ago, my own daughter informed me they had not filed in '05 & '06. The only reason they decided to file now is that the IRS finally contacted them a couple months ago and then they got a letter last week saying they were going to go after hubby's paycheck to recover the $30k they say is owed. When I did the returns we found their actual balance due is 'only' around $14k. The IRS' computations did not include any withholding or dependent allowances.

[SFA]

I don't judge. I am happy for the work, and know that usually the client is relieved to get back on track--even if they owe money. The IRS or other collection agencies are just part of the process. We represent our clients when needed and help where we can to reduce penalties. It's what we do.

[joanmcq]

If the calcs show the person is getting a refund, the IRS doesn't bother to send letters.  Why would they?

[SFA]

If the calcs show the person is getting a refund, the IRS doesn't bother to send letters.  Why would they?

​I think you are right Joan. That is my observation as well.

[RitaB]

I have had three returns ready for a "taxpayer" to pick up and mail for three years now.  He received 1099-Misc forms all three years and owes for all three years.  We've all seen those un-mailed red copies of 1099-Misc forms in the issuers' paperwork, but I think IRS gets most of them.  It is dumbfounding to me that so many of these go undetected or un-skeered.  Don't know which it is or it's some combination of both.

[Christian]

I agree with all of y'all's comments. Still, it is obvious to me that the Service is letting a lot of things slip through the cracks. I suppose this is to be expected in light of the tons of information they receive each year. With the advent of the ACA the info dump will only become greater and with the Republicans hopping mad over the scandals involving their support groups the Service will likely not be getting any large budget increases for quite awhile.  

[mcb39]

I don't judge. I am happy for the work, and know that usually the client is relieved to get back on track--even if they owe money. The IRS or other collection agencies are just part of the process. We represent our clients when needed and help where we can to reduce penalties. It's what we do.

​I agree with this post.  I had a client who just dropped out of sight for three years.  The IRS did contact him with transcripts for those years and he came to me to "fix" it, which, of course, I did.  It was a chance for me to make some extra money and for him to learn a lesson.  He saved thousands over the IRS assessment and was happy to pay up much less than he thought he owed.

[michaelmars]

If the calcs show the person is getting a refund, the IRS doesn't bother to send letters.  Why would they?

​I don't agree with this, what if the client started their own business and made gazillion dollars?  the irs doesn't assume they have all the info and not ask for a return.  If they did, then every client we have with only w-2 and 1099 income wouldn't need to file a return and a bill or refund would magically appear sometime around 4/15 each year.

[Gail in Virginia]

​I don't agree with this, what if the client started their own business and made gazillion dollars?  the irs doesn't assume they have all the info and not ask for a return.  If they did, then every client we have with only w-2 and 1099 income wouldn't need to file a return and a bill or refund would magically appear sometime around 4/15 each year.

​Actually, I think that is the ultimate goal - to have everything reported to the IRS, no deductions allowed because we have gone to a fair tax system, and the IRS will just bill you if the withholding doesn't match what you owe.  I am not holding my breath for that to happen, but that is what some people are hoping for.

[easytax]

IRS  -- NEVER forgets !!!!  Case in point (several decades old):

 

1984 IRS came to workplace (past life for me where I had numerous "tax" clients as we worked together). A supervisor had over the past several years convinced 5-7 of my clients NOT to file taxes as he had been doing (old adage ---illegal taxation -- do not need to, etc.). IRS shows up, takes individuals off duty to come and "chat" with them at administrative offices (on site) where they asked what was going on, etc..   Called me off post and basically we discussed "what the supervisor was doing" and did they really believe it or just scamming.

Bottom line, easily "scared" my clients that had not filed for a few years --- "back into the fold" and they filed back and continued to file future, etc.. IRS, left supervisor NOT FILING but with not instigating others to "not file" either for another 8-10 years. Then supervisor retired --- pension, etc. --- guess who took major chunk out of supervisor's pension --- IRS; one lump sum which included what THEY (IRS) said should have been paid with all penalties' and fees you could imagine.

Took the IRS close to twenty years  BUT they REMEMBERED --- and made a lot of dollars with those penalties and fees --- why hurry --- they can get it later in cases like this --- especially if they know there is possibility of pension or such to get when it opens up.

 

[kcjenkins]

In my experience over 35+ years, they do not usually go after non-filers who's only income is W-2's, as long as the w/h is enough to cover the tax that would be on a 1040 with status single, no dependents.  Not that those folks often skip filing.  But you would think that with computers they would not miss many.