What is the name of your state?What is the name of your state? Oregon
Well, I live in Oregon but have been helping a friend deal with his brothers tax situation in regards to the state of California. I have posted here before asking for advice. I can't say that I got great advice, but it is free so I really cannot complain. I thought I would share my experiences dealing with a situation for a friend of mine. It is a bizarre situation.
Let me lay a little ground work. This friend of mine who passed away about 5 months ago from what I can tell has not filed a federal or state tax return for at least the last 20 years that I can tell. People have asked why he never filed and I really do not know. My freind had some form of mental illness I know that for sure. Yet he was capable of making some rational decision as well so I do not think he could have been declared incompetent. His situation was really sad.
Anyway, there were 3 years of tax returns that had issues. Years 1988, 1989, and 1992.
Year 1992. His only income from that year was from buying and selling stocks. Since he did not file his return and he sold $30,000 worth of stock that year, he was taxed on $30,000 less his standard deductions. Of course the tax due generated all sort of penalties and interest over the years because he did not pay it. Eventually a lien was placed on his house for $4500 and last year when his house sold, the lien was taken by the state. I got involved after the house was sold.
I was able to obtain all of the stock trade records from the broker which actually has changed hands a couple of times. I did this via a power of attorney. I calculated what his gain/loss was on each stock. It turns out that my friend actually actually had a loss on all of his stock transactions. I obtained the tax forms for the state for that year, filed return and was able to get all of the $4500 back, however it was applied to a different year.
The reason I was able to file this return and get it reversed was because the money was collected via a lien just last year and when that happens, one has I believe one year, but it may be two to file a claim. So good news for my friend.
Year 1989. The state provided me with records showing where my brothers income came from. He worked for a school district that year and got a paycheck as well as he traded stocks. The state told me his gross earnings as well as his withholding. Here is what is weird. The state I am assuming at one time got a W2 from the employer. Even though my friend had taxes withheld, because he did not file a return, they did not allow his withholding and taxed him accordingly. He owed like $1600 in taxes which after penalties and interest and all accumulated to about $8500 owing. What is odd is since my friend never paid the $8500, I could not find any record of a lien. I am thinking that maybe there was at one at one time but it expired.
So what I did was I filed the tax return for that year showing the $1300 withholding. The state disallowed the $1300 because there was no W2 record of this withholding provided by me. Most employers do not keep records dating back 15 years. So I then called the state on the phone about this. I argued with them that I merely used their numbers. I used their income and I used their withholding, yet they were denying their own numbers. It made no sense to me that they could accept their income numbers but not their withholding numbers. I guess the person I was speaking saw the light of the logic and they accepted the withholding.
Remember 1992. They had taken the $4500 that was supposed to be returned and applied it to the $8500 taking the balance owing for 1989 down to about $4000.
Back to 1989. Since they finally accepted their own numbers, that made my friends tax due for that year like $270. They said they are going to re-compute the penalties and interest based on $270 rather than $1600. Since my friend has a $4500 credit to his account from 1992, I am assuming he will get some of it back. I should know next week.
Tax year 1988: This one is really weird. The state supplied me with the source of income from my friend for that year. There was no school W2 income and no stock trades. This was odd but I did not know my friend back then so perhaps that was true. The income reported was estimated income. The state said that my friend was on record that year for having obtained a license from the Bureau of Automotive Repair. In speaking with my friends brother who I am helping get through all this, he says his brother could not change a flat tire and was never in the automotive business. What the state did was since no tax return was filed and they supposedly had some record that my friend had obtained a license, they said the industry average for this business was $38000 and they taxed my friend accordingly. Nice huh. Penalties, interest and taxes came to almost $5000 which of course my friend never paid. Again no lien so again my assumption is there must be some sort of statute of limitations.
I told the state that I thought there was an error on their part. They told me if I want the numbers changed, I have to file a tax return. Since I have no evidence of any automotive income nor any other type of income, I filed the return with $0 income. All taxes, penalties, and interest were removed by the state.
I have to seriously wonder how many people they do this sort of thing to and then get paid either directly or via liens and the people do not contest it. Maybe out of fear, maybe just now knowing what or how to do it.
My friend is gone now. I wish he was here to see all of his issue go away. I hope this helps some of you.
Well, I live in Oregon but have been helping a friend deal with his brothers tax situation in regards to the state of California. I have posted here before asking for advice. I can't say that I got great advice, but it is free so I really cannot complain. I thought I would share my experiences dealing with a situation for a friend of mine. It is a bizarre situation.
Let me lay a little ground work. This friend of mine who passed away about 5 months ago from what I can tell has not filed a federal or state tax return for at least the last 20 years that I can tell. People have asked why he never filed and I really do not know. My freind had some form of mental illness I know that for sure. Yet he was capable of making some rational decision as well so I do not think he could have been declared incompetent. His situation was really sad.
Anyway, there were 3 years of tax returns that had issues. Years 1988, 1989, and 1992.
Year 1992. His only income from that year was from buying and selling stocks. Since he did not file his return and he sold $30,000 worth of stock that year, he was taxed on $30,000 less his standard deductions. Of course the tax due generated all sort of penalties and interest over the years because he did not pay it. Eventually a lien was placed on his house for $4500 and last year when his house sold, the lien was taken by the state. I got involved after the house was sold.
I was able to obtain all of the stock trade records from the broker which actually has changed hands a couple of times. I did this via a power of attorney. I calculated what his gain/loss was on each stock. It turns out that my friend actually actually had a loss on all of his stock transactions. I obtained the tax forms for the state for that year, filed return and was able to get all of the $4500 back, however it was applied to a different year.
The reason I was able to file this return and get it reversed was because the money was collected via a lien just last year and when that happens, one has I believe one year, but it may be two to file a claim. So good news for my friend.
Year 1989. The state provided me with records showing where my brothers income came from. He worked for a school district that year and got a paycheck as well as he traded stocks. The state told me his gross earnings as well as his withholding. Here is what is weird. The state I am assuming at one time got a W2 from the employer. Even though my friend had taxes withheld, because he did not file a return, they did not allow his withholding and taxed him accordingly. He owed like $1600 in taxes which after penalties and interest and all accumulated to about $8500 owing. What is odd is since my friend never paid the $8500, I could not find any record of a lien. I am thinking that maybe there was at one at one time but it expired.
So what I did was I filed the tax return for that year showing the $1300 withholding. The state disallowed the $1300 because there was no W2 record of this withholding provided by me. Most employers do not keep records dating back 15 years. So I then called the state on the phone about this. I argued with them that I merely used their numbers. I used their income and I used their withholding, yet they were denying their own numbers. It made no sense to me that they could accept their income numbers but not their withholding numbers. I guess the person I was speaking saw the light of the logic and they accepted the withholding.
Remember 1992. They had taken the $4500 that was supposed to be returned and applied it to the $8500 taking the balance owing for 1989 down to about $4000.
Back to 1989. Since they finally accepted their own numbers, that made my friends tax due for that year like $270. They said they are going to re-compute the penalties and interest based on $270 rather than $1600. Since my friend has a $4500 credit to his account from 1992, I am assuming he will get some of it back. I should know next week.
Tax year 1988: This one is really weird. The state supplied me with the source of income from my friend for that year. There was no school W2 income and no stock trades. This was odd but I did not know my friend back then so perhaps that was true. The income reported was estimated income. The state said that my friend was on record that year for having obtained a license from the Bureau of Automotive Repair. In speaking with my friends brother who I am helping get through all this, he says his brother could not change a flat tire and was never in the automotive business. What the state did was since no tax return was filed and they supposedly had some record that my friend had obtained a license, they said the industry average for this business was $38000 and they taxed my friend accordingly. Nice huh. Penalties, interest and taxes came to almost $5000 which of course my friend never paid. Again no lien so again my assumption is there must be some sort of statute of limitations.
I told the state that I thought there was an error on their part. They told me if I want the numbers changed, I have to file a tax return. Since I have no evidence of any automotive income nor any other type of income, I filed the return with $0 income. All taxes, penalties, and interest were removed by the state.
I have to seriously wonder how many people they do this sort of thing to and then get paid either directly or via liens and the people do not contest it. Maybe out of fear, maybe just now knowing what or how to do it.
My friend is gone now. I wish he was here to see all of his issue go away. I hope this helps some of you.
You messed up! You said this was a friend in all of your postings.