Help - Did not file a return for 1998

Hi - I appreciate any help. thank you in advance.
State: Texas
On January 4, 1998, my employer went out of business. I was unemployed for 6 months until I became employed as a contract worker for an internet firm. The internet firm did not pay any taxes or offer any benefits (although I had a dress requirement and I had to be at the office a specific number of hours each week). They paid me $25K over a three month period and then ended the contract. I contracted to another firm for the remainder of the year, however they never paid me (owing me about $13K) until they folded (bankruptcy) and moved out of state.
I didn't find work again until January 1999.

Here is the question:
I bought equipment in order to do my job (about $3,800) and
had a total income of $12,000 for the year with about $15,000 (savings) that going to apartment rent and car payments. Now it's three years later and I want to rectify the situation. What should I do?
With all the various bills, no 1099's/W-2's from any employers.. I was scared about filing or filing wrong.



[Edited by Professor77 on 02-11-2001 at 07:36 PM]

The Internet firm may have been wrong in classifying you as an independent contractor rather than as an employer. A lot of them are getting in trouble with the IRS for that. If so, they would have some liability for not withholding for you.

However, you may have actually been an independent contractor, in which case, they should have sent you a 1099. I assume they did not, so they could also be in trouble for that.

Another thing to consider is that the IRS probably has no record of payments made to you, so they may never notice this.

Nevertheless, under the law, you are required to file for the year. Since you are late, there will be penalties and interest charged, and since you made $25,000, the penalties could be fairly significant, not to mention the slight possibility of more serious problems if this is not handled cautiously. Therefore, I highly recommend that you take this problem to a CPA or tax attorney to handle for you. Their experience is a very valuable resource in such situations.