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Filing Missing Tax Returns (2012 and 2013)
Old 01-18-2015, 05:35 PM   #1
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Filing Missing Tax Returns (2012 and 2013)

I took over my father's finances about three months ago as he had got to the point it was evident that he was no longer capable of doing it himself. I found out that he did not file tax returns in 2012 and 2013. I have obtained a CAF number so that I can work with the IRS to clear things up. He probably owes about $5,000-$8,000 per year (not counting any penalties and interest ). Any advice before I give the IRS a call to get the ball rolling?

On a side note, taking over his finances went well. I think he wanted to ask me to do it, but did not want to "burden" me.
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Old 01-18-2015, 05:39 PM   #2
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Any advice before I give the IRS a call to get the ball rolling?
Load up on 'patience pills' - you'll need every ounce you can get your hands on.
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Old 01-18-2015, 11:30 PM   #3
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Before you phone them, find proof your father took out his RMD's (as the penalty is 50% of RMD).
If you have proof then the rest is not so bad.

If you end up proving he didn't do RMD's then you can formulate your excuse as you will be depending upon the good will of the IRS.

Having medical doctor proof your father has Alzheimer or is incompetent would go a lot further than a simple "he must have forgotten"

The IRS will be open to a payment schedule to pay off the back taxes if needed.
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Old 01-18-2015, 11:52 PM   #4
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Also check if he had any witholding done from pension on SS. If he is actually due a refund there is no penalty for filing late (The government is happy to keep the extra money)
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Old 01-19-2015, 07:56 AM   #5
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If the RMDs were missed, it is quite straightforward to apply for a waiver of the additional tax. I've done it maybe a half dozen times for elderly taxpayers and it has always been granted. The key is to explain that the situation has been corrected, the missing distributions taken and procedure in place to ensure that RMDs will be taken on time going forward.
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Old 01-19-2015, 08:38 AM   #6
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My husband had to take over his mom's financial affairs. The IRS would not even talk to him till he provided proof he had legal status to represent her. In this case, he had guardianship papers. I would imagine you'll need a power of attorney or guardianship to fully represent your dad.

Once the IRS accepted the paperwork, it went well. Now all correspondence with them goes to my husband.
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Old 01-19-2015, 10:20 AM   #7
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My husband had to take over his mom's financial affairs. The IRS would not even talk to him till he provided proof he had legal status to represent her. In this case, he had guardianship papers. I would imagine you'll need a power of attorney or guardianship to fully represent your dad.

Once the IRS accepted the paperwork, it went well. Now all correspondence with them goes to my husband.
It may be useful to hire an experienced CPA or enrolled agent to do this. They have better access to IRS. IRS knows we taxpayers will always keep trying, as they can always charge us with a crime or levy huge fines if we fail to comply, no matter how difficult this may be.

Ha
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Old 01-19-2015, 11:00 AM   #8
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It may be useful to hire an experienced CPA or enrolled agent to do this. They have better access to IRS. IRS knows we taxpayers will always keep trying, as they can always charge us with a crime or levy huge fines if we fail to comply, no matter how difficult this may be.

Ha
You are a wise man. I was on hold with the IRS a week ago and I hung up after holding for 4 hours.

All I was trying to do was locate an old EIN. I decided scavenging old electronic records was easier. It was!

At least you caught it two years into it.

How does one "discover" this mishap with elderly folk? I am curious how I would watch out for signs. I don't exactly pay my ole mans taxes and have never been involved in his financial affairs although he insists it's an open book.

I have been preaching to him ever since I joined this forum to get his records in order and talk to an estate attorney which he SAYS he will do this year. I know its not a memory thing with him, it's kind of laziness to some degree. I offered to pay for the services as an xmas gift and he said he could sign up for the lawyer services as a fringe benefit through his employer, which he did. Now he needs to schedule the appointment. I am guessing I will have to do the leg work to get the number he needs to ring to get that ball rolling.

It seems these days if I give my father the number to dial, he loves dialing it and chatting with the people on the other end...and usually resolves his matters quickly and peacefully...but if you don't give him the number to dial...it's another story and it goes weeks without attention. Grandpa is busy I do realize this, he still works 80hrs/week at 63 and for the past few years his excuse was "I don't have time to check all my accounts." Well, after seeing my stock returns the tune has changed to "maybe I should be taking some notes."

I suppose when he can no longer manage his rentals I will need to step in as well. Although I already do help him and for me, its a father - son bonding time where he usually tries to teach me a thing or two lol.

I am just curious if it comes to light in a conversation like "Taxes, ahh heck I haven't paid the IRS in 2 years, they have enough of my money..." or if you just discover a phone call or piece of mail or something from them one day.
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Old 01-19-2015, 07:59 PM   #9
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My husband had to take over his mom's financial affairs. The IRS would not even talk to him till he provided proof he had legal status to represent her. In this case, he had guardianship papers. I would imagine you'll need a power of attorney or guardianship to fully represent your dad.

Once the IRS accepted the paperwork, it went well. Now all correspondence with them goes to my husband.
I have power of attorney, and all paperwork now goes to me.
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Old 01-19-2015, 08:00 PM   #10
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If the RMDs were missed, it is quite straightforward to apply for a waiver of the additional tax. I've done it maybe a half dozen times for elderly taxpayers and it has always been granted. The key is to explain that the situation has been corrected, the missing distributions taken and procedure in place to ensure that RMDs will be taken on time going forward.
He missed at least ones years RMDs, maybe two. This is one of the problems I have to clear up.
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Old 01-19-2015, 08:02 PM   #11
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I am just curious if it comes to light in a conversation like "Taxes, ahh heck I haven't paid the IRS in 2 years, they have enough of my money..." or if you just discover a phone call or piece of mail or something from them one day.
Basically the first. He mentioned that he was not able to pay his taxes because the IRS would not help him. He is deaf and 80% blind, so he sent them a letter asking them to calculates his taxes and send him a bill . They did not accommodate him, so he let it drop .
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Old 01-20-2015, 06:03 AM   #12
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I think you may need help from a tax preparer initially. Straightening out a few years of missteps may take a lot of patience and time...

My involvement with In-laws' taxes and finances has been increasing over the last 10 years. What helped was to record important details yearly. In the beginning I had only their previous year's return, and an incoming stream of documents. Each year I became more familiar with the real picture. Now I can intelligently present a list of their investments, allocations, etc.

Whatever you find, either preserve the record or pick off the important details and record in a spreadsheet.
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Old 01-20-2015, 06:46 AM   #13
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You might consider contacting your Senator along with the IRS Taxpayer Advocate. These are common items for them and they are very experienced in the casework needed to avoid penalties. File the missed returns immediately, take the missing RMDs, then ask them for assistance so that penalties can be forgiven.
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