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Gary Bode, CPA is a Master's Degreed, nation wide accountant offering tax and business services. Member of AICPA and NCACPA. Our virtual office provides excellent service to long distance and international clients. Call (910) 399-2705 for a free phone consult.

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Gary,

I would like to thank you for your time in helping me with this issue of tackling the exclusion of my 1099-C income from this years taxes. The Form 982 that the IRS makes you file is very confusing and makes you want to beat you into submission however with your guidance I was able to quickly and easily get through it and on top of that exclude 100% of the cancellation. I will suggest your site and assistance to anyone and everyone.

Sincerely,

Keith, CPA from CT

Keith

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Back Tax Return CPA offers tips about unfiled tax returns

Back tax CPA back tax return CPA

I’ve tried to offer some back tax return tips I’ve learned over the years. Mostly common sense. If you’re uncomfortable preparing your own back tax returns, consider calling (910) 399-2705 for a free consult. Our virtual means we can help you regardless of location.

Back tax CPAs know there’s no typical back tax return Client. Most of my Clients just seem like regular Folks, they just didn’t file their tax returns. Sometimes  an IRS notice prods them into reporting compliance and then they call me. Back tax return cases sometimes generate a refund, making the Client’s procrastination seem strange.

I’ll try to show how I approach unfiled tax returns and present some tips I’ve learned over the years. Of course we prepare all types of back tax returns, but I’ll concentrate on the IRS 1040. The IRS doesn’t  cover unfiled returns in the Form 1040 instructions, but this post covers some of what’s missing.

Hi, I’m Gary Bode, a back tax return CPA. Our virtual office means we can serve you whatever your location. So if you don’t have a local back tax CPA, or just like what you read, consideration for a free consult at (910) 399-2705.

IRS timelines on unfiled taxes

You only have three years for your back tax return to generate a refund. After that you lose the refund. Most CPAs and Revenue Agents have stories about large refunds being lost by just a couple of days. The largest I’ve seen? $16,000 +/- for being one day beyond three years. Ouch.

The IRS grants additional time upon request. At least to CPAs. They seem happy to have a professional work the case.

Don’t squander valuable time with procrastination. Some clients ignore IRS Notices until the IRS threatens a lien or intends to levy.

Advantages of back tax cases

Well, our fees are generally cheaper per tax year with back tax cases compared to producing timely, annual Form 1040(s). Most taxpayers have the same issues over the years.

Take time to prepare accurate back tax returns. Do your homework and remember you’ll probably have the same tax issues every year.

Compare the unfiled tax returns against each other. The IRS probably compares your back tax returns against Folks they perceive as similar to you. But they could also look at your preceding and succeeding tax returns. Sometimes I’ll run a spreadsheet to look for inconsistencies between the unfiled tax returns.

File all back tax returns together

Even back tax return CPAs modify Form 1040s as they proceed through the tax years. You don’t want to mail a 2009 tax return only to realize there were issues with it you discovered while preparing 2011.

Treat the back tax returns as one project.

You can amend a back tax return. But it’s easier to get it right. Probably avoids some IRS red flags too.

Get proof of Delivery

Use certified post. Call the IRS in a few weeks to insure they’ve logged in your back tax returns.

Presenting back tax returns in person to the local IRS office is absolute proof you’ve filed.

IRS Substitute returns

If you don’t file Form 1040 on time, eventually the IRS prepares a substitute tax for you.

Don’t let the IRS prepare your tax returns. They don’t factor in legitimate deductions and tax credits until you present an accurate back tax return.

Preparing an accurate back tax return almost always lowers the IRS demand.

Don’t shoot yourself in the foot

Don’t provoke an IRS employee. I’ve only had a few instances where I thought the IRS Agent was biased or assumed the taxpayer was lying. But don’t under-estimate the Agent’s power.

Don’t send hand written returns. The IRS has all the back tax return forms online you can fill out and print. Or use tax software.

Don’t estimates or round numbers. I think the IRS know it’s hard to get older tax documentation.

Don’t lie. So far your unfiled tax returns are a civil matter. Don’t escalate your back tax return case into a criminal matter.

Don’t be eager to tell the IRS about your back tax return issues. The IRS will see these issues without your help. Sometimes they let things slide by.

Back tax return cases aren’t always a smooth ride, even if they’re 100% accurate

Be prepared for frustration. It seems different tax years get processed in different IRS systems.

What does the IRS want to see?

I try to imagine what an 8 to 5 Revenue Agent wants to see.

Consider adding a cover letter to explain any unusual circumstances. Let a few fiends or relatives edit it first.

Consider sending supplemental documentation. Try to make it concise and easy to follow.

You don’t want to miss reporting some revenue item the IRS has on file

Pull your IRS records online. Easy to do. This shows you what the IRS has on file.

What if I can’t pay?

While back tax returns CPAs sometimes see refunds generated, some Clients end up owing the IRS.

Consider an Offer in Compromise. The IRS has a “qualifying tool online.

Consider an IRS Installment Agreement (Form 9465). The IRS allows 7 years of monthly payments.

Consider trying for IRS uncollectible status. Here you and the IRS agree you owe taxes but you can’t pay anything now. Uncollectible status can go for years. But the IRS awaits if, somehow, eventually, you can pay.

The after glow

Follow up your back tax case by reconciling the IRS accounts.

Ask for penalty abatement. This often works but you have to ask.

Remember the State back tax returns if required

Filing back tax returns with the IRS sometimes triggers a State’s collection activities.

Have a feasible plan to deal with back State tax returns.

When do you need a back tax return CPA?

Some guidance:

  • You don’t understand the tax issues involved in the back tax returns.
  • Is the stress too much for you?
  • Do you think the IRS favors a CPA signed back tax return?
  • Back tax returns CPAs sometimes fund legitimate deduction you didn’t know existed.
  • The amount of tax due, or conversely, refund due is large enough hire a CPA.

 

2 comments to Back Tax Return CPA offers tips about unfiled tax returns

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