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Message
Filing past years tax returns
Posted on 7/16/12 at 11:30 am
Posted on 7/16/12 at 11:30 am
My girlfriend has a sole proprietor DBA business and has not filed taxes since 2004. She has gotten everything together to file. She is afraid of criminal action by the IRS if she files. I told her that I think if she went to the IRS and laid her cards on the table, the IRS would work with her, although she would still owe the money and penalties. She doesn't have the money to hire a CPA or one of the firms that advertise on the radio or TV.
She owns a small service providing compnay doing all the work herself, so no employees, just supplies, business phone, used her personal vehicle for going to her jobs, which she has logs for mileage. Her gross revenue was between 20-40K depending on the year, so we're not talking major tax work.
She is starting a job working for someone in a different industry and wants to get these returns filed ASAP, as she doesn't want to deal with this after she starts her new job as she will be on a steep learning curve in this new industry.
What would the tax experts of the MT recommend to her on how she should proceed?
She owns a small service providing compnay doing all the work herself, so no employees, just supplies, business phone, used her personal vehicle for going to her jobs, which she has logs for mileage. Her gross revenue was between 20-40K depending on the year, so we're not talking major tax work.
She is starting a job working for someone in a different industry and wants to get these returns filed ASAP, as she doesn't want to deal with this after she starts her new job as she will be on a steep learning curve in this new industry.
What would the tax experts of the MT recommend to her on how she should proceed?
3
Posted on 7/16/12 at 11:34 am to doublecutter
I don't think there's any way not to hire a professional
Posted on 7/16/12 at 11:52 am to doublecutter
does she really need to go back that far? I thought they only looked 3 years back?
Posted on 7/16/12 at 12:28 pm to C
The IRS can go back forever if you never file a return.
If she wants to avoid the case being referred to criminal, she should file before the IRS figures out she hasn't been filing. However, there is no way to guarantee the case won't get referred to criminal.
If she wants to avoid the case being referred to criminal, she should file before the IRS figures out she hasn't been filing. However, there is no way to guarantee the case won't get referred to criminal.
Posted on 7/16/12 at 1:07 pm to BrandNew
quote:
However, there is no way to guarantee the case won't get referred to criminal.
No way to guarantee, but the government wants their money more than anything. I think if she gets them filed, is willing to pay interest & penalties, they'll let it go. She might be able to work out a repayment plan over a time period or say hey if I pay a lump of $$$ (for a majority of it since I don't have a ton of cash), will the IRS forgive some of the interest or penalties?
I know when company's get audited for sales tax, they can usually cut a deal. "We're disputing a bunch of these items, so we'll cut you a check today if you waive interest and penalities."
Maybe have her say I don't have a ton of cash (might have to forward banks account statements to the IRS) but say "I'll cut you a check for 90% of the interest & penalties today to settle the balance since I don't have much cash/enough cash to pay the whole balance."
Posted on 7/16/12 at 1:09 pm to yellowfin
and this:
Might be more helpful in getting the taxes owed reduced or know adjustments/deductions to get the tax liability down, which lowers the interest & penalty amounts.
quote:
I don't think there's any way not to hire a professional
Might be more helpful in getting the taxes owed reduced or know adjustments/deductions to get the tax liability down, which lowers the interest & penalty amounts.
Posted on 7/16/12 at 1:55 pm to doublecutter
You really need to seek professional assistance. There were special provisions for Katrina victims that should apply to your girlfriend. Taking advantage of them might enable her to get out of her situation at a very low cost.
What is probably going to occur is that she will owe little or nothing in income tax, but she will have some unpaid self-employment taxes. You will want to claim as many expenses in 2004 and 2005 as possible to reduce the net income from the business to as little as possible. The reason for this is that she has no payments or credits to cover any unpaid taxes for those yeears. Beginning in 2006 there were various credits that were available to offset any taxes she owed.
What is probably going to occur is that she will owe little or nothing in income tax, but she will have some unpaid self-employment taxes. You will want to claim as many expenses in 2004 and 2005 as possible to reduce the net income from the business to as little as possible. The reason for this is that she has no payments or credits to cover any unpaid taxes for those yeears. Beginning in 2006 there were various credits that were available to offset any taxes she owed.
Posted on 7/16/12 at 2:10 pm to yellowfin
quote:
professional help
When I say she can't afford a CPA, she is living week to week, she has no cash except that to live on.
Posted on 7/16/12 at 2:21 pm to doublecutter
does she realize she could be facing criminal charges?
I'd look into getting a loan or credit card or something
I'd look into getting a loan or credit card or something
Posted on 7/16/12 at 2:26 pm to doublecutter
Throw a few greenbacks her way to assist in the procurement of professional help.
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