Confronting my idiocy...

What is the name of your state? I currently reside in Colorado. However, although the first set of tax issues I'm looking to resolve are Federal, Michigan is the state which I conducted business and have issues in.

Please help me.

I haven't filed taxes for '99 to '06. I have all my paperwork. Four of those years are self-employed. All combined, there's only a 12" stack of related documentation for all 8 tax years and I'm certain there's not over $60K profit during my business years.

If you were me, what kind of accountant would you contact to clean up this mess? Before submitting taxes to the IRS, would you have a tax lawyer retained already?

Are there any resources you're aware of that could help me with this?

If you have no suggestions, thanks for taking the time to read. If you do have suggestions, thanks for taking the time and thank you for any help.

Sincerely,
GettingRight!

I have many people come to us who have not filed in a few years and they are terrified of the possible consequences. While I do not want to make light of the situation, the fact is, if you come forward and file your delinquent tax returns, the chances of any problems beyond the penalties and interest are remote. The IRS does not prosecute late filers who come forward with their returns except in rare cases.

But how far back should you go? Well, the stock answer is, as far back as you have not filed. This is naive however. How far back you should go depends on the facts and circumstances of your case. But in general, you should go back six years unless:

(1) The IRS has filed a substitute for return against you for an earlier year and the liability they have calculated is much greater than if you filed the return.

or

(2) After the returns are filed, you will need to enter into an installment agreement or want to make an Offer In Compromise. This is because they will not generally consider either one if you have returns outstanding.

It may be that you do not have to file for some years if you did not have a filing requirement. The 1040 instructions will help you determine if you have a filing requirement.

Since you are likely to owe tax after the returns are filed, I recommend you hire an experienced professional to help you file the returns and deal with IRS collection issues.

The bottom line is, if you come forward and file your delinquent tax returns, an enormous burden will be lifted from your shoulders.

GettingRight said:

What is the name of your state? I currently reside in Colorado. However, although the first set of tax issues I'm looking to resolve are Federal, Michigan is the state which I conducted business and have issues in.

Please help me.

I haven't filed taxes for '99 to '06. I have all my paperwork. Four of those years are self-employed. All combined, there's only a 12" stack of related documentation for all 8 tax years and I'm certain there's not over $60K profit during my business years.

If you were me, what kind of accountant would you contact to clean up this mess? Before submitting taxes to the IRS, would you have a tax lawyer retained already?

Are there any resources you're aware of that could help me with this?

If you have no suggestions, thanks for taking the time to read. If you do have suggestions, thanks for taking the time and thank you for any help.

Sincerely,
GettingRight!

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Go to a local tax office, preferibly one that is open all year long (because they tend to have more experienced people) and have ALL of the returns prepared. You can't get a refund for any year prior to 2004, because the opportunity for a refund will have expired. However any refunds for 2004 forward would offset tax liabilities for earlier years. Many firms will give signficant discounts for preparing multiple year returns.

Once you have the returns prepared (and all but 2006 would be paper returns that would have to be mailed, and even 2006 can also be mailed), you will have a better idea of your overall liability. It may turn out that you don't actually owe anything, or don't owe very much. If that is the case, then file the returns.

If it looks like you will owe a signficant amount of money, then get a consult with a local tax attorney.

Don't pay an expensive tax attorney to prepare the returns, and watch out for firms that promise you "pennies on the dollar". Our firm ended up preparing returns for someone who had paid 2k to a firm that promised "pennies on the dollar", because that firm would not give him something that he was clearly entitled to receive. Yes, they could have settled his tax liability for far less than THEIR returns said that he owed, but THEIR returns said that he owed more than double what he REALLY owed.

Thank you to both of you. It really is an awful burden. I had a CPA at one time and he charged me an arm and a leg for very little work. I've worked with about six lawyers over the past fifteen years or so on different projects and have always felt cheated. That's really at the heart of why my taxes aren't done.

My business taxes seemed complicated enough that I didn't feel comfortable doing them myself. However, being burned, I didn't know where to turn for a professional that seemed to be out to help me. One thing, of course, lead to another...and here I am.

I have a couple more questions, if you'd be so kind. First, after thinking about it more, my records were a mess. I mean bad. Sometimes I'd forget my invoice book. I'd just write up a w.o. on one of the blank ones I had around and put a number that was totally out of sync with my other invoices. The result is that I have out of order bills. How bad is that? To compound that, I don't have all my bank statements from then. Do I need them? If so, can I just write the old banks to get copies?


Why the difference in opinions? Six years taxes vs. all years taxes?


When an idiot reaches my depth of violation, but never really made any money, is it more just a "as long as this idiot files the best he can at this point" sort of thing?


Finally, how would you go about finding a decent accountant? Should I be looking for an actual CPA? That's different than a person who just does taxes, isn't it?


Thank you so much for your time and assistance. I can't express how awful this is. Thank you.

In looking for a tax preparer, ask for recommendations from folks. Look for the credential "E.A." - enrolled agent ... they can argue your case in front of the IRS. Definitely a year-round office - the MAIN office if possible. Feel free to talk to several accountants.

You have the problem of living in Colorado and having to file a Michigan return. Ask for expertise in doing that state return. You may find that you'll find more knowledgeable people (for Michigan) in places that deal with people who stay part of the year from other places.

I'm in Florida - originally from Michigan. I can handle returns now from Michigan, Wisconsin, Illinois, Indiana, Ohio (yuck) - and have learned down here to do New York (double yuck), New Jersey, etc. You get the drift - we have snow birds who bring there stuff with down here. And NO - I am NOT interested in doing your return!

GettingRight said:

Thank you to both of you. It really is an awful burden. I had a CPA at one time and he charged me an arm and a leg for very little work. I've worked with about six lawyers over the past fifteen years or so on different projects and have always felt cheated. That's really at the heart of why my taxes aren't done.

My business taxes seemed complicated enough that I didn't feel comfortable doing them myself. However, being burned, I didn't know where to turn for a professional that seemed to be out to help me. One thing, of course, lead to another...and here I am.

I have a couple more questions, if you'd be so kind. First, after thinking about it more, my records were a mess. I mean bad. Sometimes I'd forget my invoice book. I'd just write up a w.o. on one of the blank ones I had around and put a number that was totally out of sync with my other invoices. The result is that I have out of order bills. How bad is that? To compound that, I don't have all my bank statements from then. Do I need them? If so, can I just write the old banks to get copies?

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The most important records to have are records of your income (whether invoices are out of sequence or not) and records of your expenses. The bank statements are not important if you have those.

Why the difference in opinions? Six years taxes vs. all years taxes?

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Its not necessarily a difference in opinion. I am telling you to get all of the years prepared, and if you will not owe, or will not owe much, then I am suggesting that you file all of them. However, if you will owe alot, then I am suggesting that you consult a tax attorney regarding whether or not you should file all of them.

The bottom line is that until you have all of them prepared, you have absolutely no idea what you are looking at.

When an idiot reaches my depth of violation, but never really made any money, is it more just a "as long as this idiot files the best he can at this point" sort of thing?

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Yes, that is more or less it...the IRS is going to work with you on this. They aren't going to be too hard on a taxpayer who comes forward voluntarily.

Finally, how would you go about finding a decent accountant? Should I be looking for an actual CPA? That's different than a person who just does taxes, isn't it?

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You don't need an expensive CPA to get the taxes prepared. An EA, like Ginny suggested would be good, but what you really need is someone with experience, and there are many highly experienced people out there who are not EAs. Again, a local tax office that is open all year long tends to have the most experienced people.

Thank you so much for your time and assistance. I can't express how awful this is. Thank you.

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It may not be nearly as awful as you think. That is why I am urging you to get all of the returns prepared, so that you will know for sure what you are dealing with.

LdiJ said:

It may not be nearly as awful as you think. That is why I am urging you to get all of the returns prepared, so that you will know for sure what you are dealing with.

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After hearing what you folks have said, I'm starting to feel that way too. However, the "awful" part is just facing it. It's just scary...like the bogey man or something...you don't know what you're afraid of, you're just afraid.


Thank you all so much. (And thanks for clarifying LdiJ. I didn't understand the prep/lawyer point in the first post or that an EA wasn't a CPA.)

You folks have changed a man's life.

Have you gotten it right?

GettingRight
How did it go? Hope you got this resolved by now. Please advice us how you went about it.