Didnt file '03

[yh1]

What is the name of your state? PA

Hi, I didnt file a federal return in 2003, because I didnt have the $4k I owed nor any way to make payment arrangements on it.

I just completed my 2004 return, and Ive got about $14k coming back.

What is the best way to handle this?

 

[tdavidl]

the only way to handle it is to go ahead & prep the 2003 now & bite the bullet on the penalties & interest. you may be able to wiggle out of the penalties, it'll be tough though.

file the returns & they will bill you for the penalties & interest. pay the full balance & include a letter asking to abate the penalties for reasonable cause (be prepared with a good story). they should write back & let you know.

paying the balance stops the accumulation of interest and penalties.

good luck

 

[LdiJ]

the only way to handle it is to go ahead & prep the 2003 now & bite the bullet on the penalties & interest. you may be able to wiggle out of the penalties, it'll be tough though.

file the returns & they will bill you for the penalties & interest. pay the full balance & include a letter asking to abate the penalties for reasonable cause (be prepared with a good story). they should write back & let you know.

paying the balance stops the accumulation of interest and penalties.

good luck

Actually...if the two returns are filed together (paper) he may not have to physically pay the 2003 taxes. The money may be taken from the 2004 refund.

If he files 2004 first, he can expect that the refund may be held. I have a few clients this year who did not file 2003 returns (because they didn't work that year or didn't have enough income to be required to file) and a couple of them had the refunds held by the IRS until their 2003 status was determined.

 

[tdavidl]

i concur, that is certainly one way to bite the bullet....

 

[yh1]

Thank you for your responses.

What are some examples of "stories" that work?

 

[Some Random Guy]

'What are some examples of "stories" that work?'

How about the truth? Why didn't you have the money before? Was it due to illness? Lots of CC debt? Divorce? Or was it just plain greed?

Once you lie to the IRS be prepared to defend that lie when they turn up evidence to the contrary. Be prepared to pay the consequences if they catch you in that lie.