local taxes and the IRS

[WM]

I don't know if this is an answerable question, but I'll take any info that anyone's got...

Last year, my father-in-law passed away. He was the one who handled all the finances, so my mother-in-law asked us for help in sorting through everything. It turned out to be rather a mess, but it seems that we've gotten everything pretty well settled.

Well, last month my MIL got a letter from her regional income tax agency claiming that no return had been filed with them for 2001. They wanted her to either file a return or fill out a form explaining why she didn't need to file. My FIL's files don't contain any information about this, so we have no idea whether he filed or not, or whether they owed any money.

The regional tax agency letter said that if she doesn't file now, they'll look up the info from the IRS to determine what she owes. Fine. Even if she does owe money, it won't be an outrageous amount.

My concern is that when we sorted through my FIL's papers after he died, we found notices for three different tax liens (against him only, not my MIL) from the IRS. They are more than 10 years old, which I understand is the statute of limitations, so we didn't tell my MIL about them. She would have completely flipped out, and would be paranoid that someone was going to come and take her house away. We filed their federal taxes as usual last year and haven't heard anything more.

My question is, if the regional tax agency contacts the IRS because FIL didn't file his regional tax return, will that trigger something for the IRS that they'd start looking through FIL's file and rediscover the liens?

It seems unlikely, right?

 

[RetireeRobert]

I don't know if this is an answerable question, but I'll take any info that anyone's got...

Last year, my father-in-law passed away. He was the one who handled all the finances, so my mother-in-law asked us for help in sorting through everything. It turned out to be rather a mess, but it seems that we've gotten everything pretty well settled.

Well, last month my MIL got a letter from her regional income tax agency claiming that no return had been filed with them for 2001. They wanted her to either file a return or fill out a form explaining why she didn't need to file. My FIL's files don't contain any information about this, so we have no idea whether he filed or not, or whether they owed any money.

The regional tax agency letter said that if she doesn't file now, they'll look up the info from the IRS to determine what she owes. Fine. Even if she does owe money, it won't be an outrageous amount.

My concern is that when we sorted through my FIL's papers after he died, we found notices for three different tax liens (against him only, not my MIL) from the IRS. They are more than 10 years old, which I understand is the statute of limitations, so we didn't tell my MIL about them. She would have completely flipped out, and would be paranoid that someone was going to come and take her house away. We filed their federal taxes as usual last year and haven't heard anything more.

My question is, if the regional tax agency contacts the IRS because FIL didn't file his regional tax return, will that trigger something for the IRS that they'd start looking through FIL's file and rediscover the liens?

It seems unlikely, right?

Yes, very unlikely. Besides, if the statute of limitations on those 10+ year old liens has passed, then it has passed.

Anyway, an inquiry from the locality about 2001 would be just that---a 2001 inquiry. IRS personnel would have no reason to try and unarchive data from the mid-90's. I do not think 10+ year old data at IRS would be just sitting there easily readable to the IRS person responding to the locality's inquiry. It most likely would take a lot of work to unearth that old data from archives. No reason IRS person would go to that much work, given their current work loads, especially for some other outside entity. And especially if the limitation period is way done with.

 

[frayne]

It is my understanding that there is no statute of limitations when it comes to IRS back tax issues. My advice would be to find a tax professional to make sure it gets resolved asap.

 

[RetireeRobert]

It is my understanding that there is no statute of limitations when it comes to IRS back tax issues. My advice would be to find a tax professional to make sure it gets resolved asap.

The 10+ year old liens against you FIL only----were they recorded against the house or what? Normally, a lien is a lien "on" something. If they are not on record against the house your MIL is living in, then she has nothing to worry about there. Is (was) there other real estate?

Or were they liens against you FIL's (and only his) other assets? If you do inquire of tax pros, I would make it exactly that, an "inquiry" only. "Until" you know more about the nature of the liens, what they are (were) against, how long they are (were) effective, I would not go reminding the IRS of anything after this length of time. Do the liens papers themselves say anything about what they attach to?

 

[RetireeRobert]

From the IRS website info about federal tax liens:

"Usually 10 years after a tax is assessed, a lien releases automatically if we have not filed it again. If we knowingly or negligently do not release a Notice of Federal Tax Lien when it should be released, you may sue the federal government, but not IRS employees, for damages."

So those liens against your FIL you say are 10+ years old. Looks like they are dead due to limitations.

Read more at the IRS website---search for "IRS Tax Liens Statute of Limitations"

 

[WM]

Thanks for the info, that is reassuring. I don't intend to stir anything up by inquiring, and hopefully with what RR found, it's fine anyway.

We didn't actually find the lien paperwork - only FIL's old credit reports which listed them. FIL and MIL always filed jointly, so we are a little puzzled as to what the liens were on. FIL did have his own business for a while (long defunct) so we're guessing that maybe they were somehow against the business.