2002 taxes were not filed – help please?
My Mom had a stroke in 2002 that left her disabled and unable to take care of herself. The IRS sent her a letter saying she owes $10,000 including penalties-interest. My Mom doesn’t have any paperwrk from 2002. They want it filed by 11\20 and we have not a clue what to do. I am affraid if we just file it she will be stuck with penalties– And she does not have any money or assets. I am sure they would have to consider it a hardship- unable to pay. She is living off of dissability only now. What will the IRS do if we don’t file by 11\20? She cannot leave her house to see a lawyer or tax professional.
She has received other letters- but we did not know of them until a few weeks ago. She had 4 strokes since 2002 and did not mention hat she didn’t file.
I was going to just send in the return, but an accountant told me we should contact a tax attorney- but she cannot afford one.
I don’t have power of attorney- she has not agreed to allow someone to be. I will call IRS tomorrow and let them know we are working on it. The $10,000 is most;y penalties but she also took out her pension that year because she lost her job and had a stroke. So it is complicated and I have no experience. The letter does have all of her 2002 income statement etc with it so I don’t think I need her w2.
What about Offer in comprimise? Is this done after the taxes are filed?
Comments (6)
Is this letter the first letter she has received? Is it LTR 2566C stating she has not filed and must file by 11/20? If so then if the return is not filed by 11/20 IRS will send her a certified letter sometime in late Dec or early Jan giving her 90 days to file the return and if not filed then yes IRS will file for her and more than likely the amount show on the letter will be owed.
You must understand that at this time your mom doesn’t owe IRS because she has not filed the return and IRS has not filed for her either. Don’ t ignore the IRS call the phone number listed on the letter have your mother talk to the IRS agent and give them permission to speak to you. The letter does include a page “summary of income” this is all the information reported to IRS by the employers or banks, you can use the summary of income to file the return, you don’t need the actual w2/1099’s. Once your mother files the return and if she owes she can write a letter and include it with the return and states she can’t pay and explain her hardship. You could include form 433F Collection Information Statement with the letter.
Make sure to mail the completed and signed return to the address listed on the letter so it can go directly to the area that processes the return (ASFR).
You don’t need a tax attorney, IRS just wants a return filed. You do know that if she is due a refund she won’t get it because the refund is barred since the refund was not claimed within 3 years.
livelaughlove,
Nov 20 is tomorrow. You need to send off a certified letter telling them that you will be working on accumulating the information. You have power of attorney and can represent her. Send them a copy of yoor power of attorney. They have 10 years from the date the return is due (4./15/2003) to collect any unrecorded liabilities. That is there statute.
As long as they know that someone is working on it, they will give you additional time.
You need to contact IRS and get a copy of her transcript for 2002 of your mom (Form 4506-T). This will list all information the IRS used to compute her tax. You would also want a copy of her account. This will list all the tax penalty and interest added to her account That will be the information that needs to be filed with IRS. This will take a week or maybe sooner to get from IRS. If you call them and have a IRS form 2848 signed (This is a power of attorney)., they may be able to fax it to you.
I have no idea how they came up with $10,000. She is probably listed as a non filer and penalty and interest have been added on.
Once you get this information, then either you can prepare the tax return or have a tax preparer prepare a 2002 tax return. I am also a tax preparer.
I find it hard to believe that she owes $10,000, but over the years , who knows.
Its a lot of information. I hope that I have been helpful.
Forget the Offer in Compromise, for several reasons too long to go into here. But it sounds like this will probably end up in “uncollectable” status, if she has no assets, and no money other that her disability income. But she (or you) does need to communicate with the IRS – right now as far as they know, she’s just ignoring them. And without power of attorney the IRS can’t deal with you on it, or even give you any info – can you talk her into giving you POA just for this IRS mess? If she calls the IRS, properly identifies herself, and then gives permission to talk to you, that might work.
Sounds like the taking out her pension is very possibly what got her into this mess, if she didn’t report it and pay tax on it. At that time she’d have owed income tax on it, plus maybe a penalty for early withdrawal.
Good luck.
If she took money out of retirement and was not 59 1/2, there is penalty of 10% plus her normal tax rate on the withdrawal, so imagine this is why she has big tax bill. At the time she took it out, she was informed of this, and generally they do some withholding unless she told them she was rolling it into another retirement account. There are certain circumstances for waiver of the 10% penalty, but no waiver of the tax amount. Get all the papers together and go to a tax pro and see what you can find out. Get info on your mother’s current income and assets and take with you. Even if she owes, may be able to get a payment plan or show hardship.
Can go to private account, tax professional, etc. Many Jackson Hewitt and H & R Block offices have professionals who can handle complex returns–don’t just walk-in and take a first year preparer. Offers in Compromise are VERY difficult to get approved, unlikely here, and you’re just at the threshold amount.
GET Power of Attorney for Mom, NOW. If she won’t willingly give it, you’ll have to go to court for legal guardianship. She obviously isn’t capable of handling her finances. Can limit POA to tax and financial matters, but probably want it for medical also. Without POA, IRS probably won’t even talk to you AT ALL.
It sounds like your mother has been assessed tax using the IRS substitute for return procedures. This basically means IRS filed a return for her and resolved all doubts in favor of she owes more money. To remedy the situation she needs to file a correct original return then deal with whatever tax is due. She may be entitled to relief from some penalties if she has been unable to function. She may need to have some professional representation if she can’t handle it herself.
I am very sorry to hear this about your Mom! She does have some options however. A true tax professional can help her greatly! The first step is to get the tax return filed. A tax professional should be able to contact the IRS and find out what her income was for that year and use that as her income on the tax return. Once the return is filed then the door is opened for negotiating with the IRS. She may be able to have a significant portion of the penalties waived due to the medical hardship that caused her to no to be able to file in the first place. This should reduce the taxes considerably!
Once the total tax liability has been reduced to the lowest point possible the a plan of resolution can be worked out with the IRS. Once this has been done then she should have nothing to fear from the IRS because she in in an agreement. Until she is in an agreement the IRS may take some type of collection action against her, most likely in the form of a levy on her income. A tax professional should be able to help you with this. For more information on levies and tax resolution see the link below.