The problem with that, Janet, is that the TP may discover that they owe taxes on those earlier years. Even if they don’t owe taxes, it’s too late to get any refunds, so why bother going to the expense of preparing them, and raising additional possibilities for audit, especially since IRS Policy 5-133 says that IRS doesn’t care whether they’re filed or not. It may be better to “let sleeping dogs lie”.
You’re right that the unfiled years stay open, but if the IRS has not requested the old years prior to 2002, it’s extremely unlikely that they ever will. It’s probably better to forego the lost depreciation if research indicates it can’t be claimed by filing the 3115 for 2002. Regarding that, it would be worthwhile to do a little research to see whether the issue has ever been dealt with by statute or some other authority, or decided in a court case. If not, it may be worth a shot to claim the back years’ depreciation for 2002.
John Stevens, EA
Stevens Tax & Accounting, Inc., dba Equi-Tax
651-773-5000
FAX 651-457-4529
equitax@unique-
www.equitax.
From:
Sent: 10/02/2008 9:08 AM
To:
Subject: [taxchat] Re: Hasn't filed a tax return since 1999
I may be off point on this, but I thought as long as a tax return was
not filed a year stayed open with the IRS. Why not file the missing
years without depreciation and then claim it on 2002? I haven't
stayed up with all the discussion on this topic so if I am "N/A"
that's ok.
Janet
--- In taxchat@yahoogroups
<equitax@...
>
> You raise a good point, Arnie. The usual situation I see the 3115
for is
> when a client has been filing returns all along, but for some
reason has not
> claimed depreciation for something (rental building, for example).
Clients
> sometimes think that they don't have to reduce the basis in the
property if
> they don't claim the depreciation - wrong! In that instance the
3115 is
> filed and all the back depreciation is taken on the current year's
return.
>
>
>
> Donna's situation is different. The returns prior to 2002 haven't
been
> filed, so it raises the question as to whether the missed
depreciation for
> those earlier years is allowable. We know it wasn't allowed since
no
> returns were filed. So maybe, as you suggest, since no returns
were filed,
> or will be filed, for those old years, her client can't take that
old
> depreciation on the 2002 return. I think some research needs to be
done to
> answer that one.
>
> John Stevens, EA
> Stevens Tax & Accounting, Inc., dba Equi-Tax
>
>
> 651-773-5000
> FAX 651-457-4529
> equitax@...
> www.equitax.
>
>
>
>
> _____
>
> From: taxchat@yahoogroups
Behalf Of
>
> Sent: 10/01/2008 4:23 PM
> To: taxchat@yahoogroups
> Subject: Re: [taxchat] Hasn't filed a tax return since 1999
>
>
>
> My guess, No. Allowed and allowable is for accum deprec to date of
return.
> Can't take prior years depreciation if returns are not to be filed.
Take
> only the current years' deprec in the first year, 2002 like John
says.
> (unless John has a cite - and I do appreciate him - thanks John.
>
>
>
> ----- Original Message -----
>
> From: Donna L Loeffler CPA <mailto:dllcpa@
>
> To: taxchat@yahoogroups <mailto:taxchat@yahoogroups
>
> Sent: 10/01/2008 4:58 PM
>
> Subject: Re: [taxchat] Hasn't filed a tax return since 1999
>
>
>
> Arnie,
> Does the 3115 come into play here, then? Could I take the
depreciation not
> taken if I use that form?
>
> Donna
> Donna L. Loeffler, CPA
>
>
> (507) 251-8119
> dllcpa@hbci. <mailto:dllcpa@
> The information in this message, and any files transmitted with it,
is
> confidential, may be legally privileged, and intended only for the
use of
> the individual(s) named above. Be aware that the use of any
confidential or
> personal information may be restricted by state and federal privacy
laws.
> If you are not the intended recipient, do not further disseminate
this
> message. If this message was received in error, please notify the
sender
> and delete it.
> IRS Circular 230 Disclosure: Unless expressly stated otherwise in
this
> transmission, any tax advice contained herein, forwarded with or
attached to
> this message was not and is not intended to be used, nor may it be
relied
> upon or used, by any taxpayer for the purpose of (1) the avoidance
of any
> tax-related penalties under the Internal Revenue Code or applicable
state or
> local tax law provisions, or (2) promoting, marketing or
recommending to
> another party any tax transaction or tax-related matters that may be
> addressed herein.
>
>
>
>
> Arnold M. Socol wrote:
>
> Donna,
>
>
>
> You can back in to the allowed or allowable depreciation. You need
the date
> in service and the basis, then you can go back and run a
depreciation
> schedule from the first year forward.
>
>
>
> Arnie
>
> ----- Original Message -----
>
> From: Donna L Loeffler <mailto:dllcpa@
>
> To: taxchat@yahoogroups <mailto:taxchat@yahoogroups
>
> Sent: 10/01/2008 4:27 PM
>
> Subject: Re: [taxchat] Hasn't filed a tax return since 1999
>
>
>
> I really appreciate your thoughtful responses to all of my
questions.
>
> He will appreciate that I don't have to file those earlier years.
As far as
> an engagement letter goes, I get engagement letters from all of my
clients.
> I have already gotten a retainer from him, but we haven't agreed on
prices
> yet. I'm thinking I'm going to charge him by the month--that way,
he will
> hurry up and get me everything I need. He tends to give me stuff
> piece-meal.
>
> I just called the IRS. I have to submit a 4506T to get the tax
return. The
> unfortunate thing is that she said they probably don't have it as
far back
> as 1998. He didn't file in 1999, according to her. It is pretty
hard to
> find a starting point. If he only had personal property
depreciating, I
> wouldn't worry about it, but that real property should have a lot of
> depreciation left.
>
> Donna
> Donna L. Loeffler, CPA
>
>
> (507) 251-8119
> dllcpa@hbci. <mailto:dllcpa@
> The information in this message, and any files transmitted with it,
is
> confidential, may be legally privileged, and intended only for the
use of
> the individual(s) named above. Be aware that the use of any
confidential or
> personal information may be restricted by state and federal privacy
laws.
> If you are not the intended recipient, do not further disseminate
this
> message. If this message was received in error, please notify the
sender
> and delete it.
> IRS Circular 230 Disclosure: Unless expressly stated otherwise in
this
> transmission, any tax advice contained herein, forwarded with or
attached to
> this message was not and is not intended to be used, nor may it be
relied
> upon or used, by any taxpayer for the purpose of (1) the avoidance
of any
> tax-related penalties under the Internal Revenue Code or applicable
state or
> local tax law provisions, or (2) promoting, marketing or
recommending to
> another party any tax transaction or tax-related matters that may be
> addressed herein.
>
>
>
>
>
> John Stevens, Equi-Tax wrote:
>
> Donna,
>
> IRS Policy 5-133 says that the IRS only wants the past 6 years for a
> nonfiler, so I would file 2002-2007. The adjusted basis on the
real estate
> will include depreciation "allowed or allowable", so the basis
should be
> adjusted even for the missing years. One thing you could do,
however, is
> file Form 3115 for 2002 and claim the depreciation that was missed
on the
> 2002 return. Keep in mind that Policy 5-133 is just a policy that
IRS
> follows. It's not law, and they can change it. One of the reasons
for the
> 6 year aspect of it is that, until recently, wage and income
information has
> been available online (easily retrieved by IRS employees) for only
the past
> 6 years, but they now are able to easily access information back to
1999,
> and by next year will be able to easily go back 10 years. I've been
> wondering whether they might change the policy, but so far they
haven't.
>
> As a practice management procedure, I always get a substantial
deposit from
> multiple-year nonfilers, and a signed engagement letter. It can be
a good
> niche business, but you need to protect yourself. Nonfilers often
don't
> like paying taxes or their accountants, or anybody, for that
matter. My
> experience is that most nonfilers experienced some kind of event in
their
> life that threw them a curve (divorce, drugs, alcohol, gambling,
> self-employment, etc). Many sincerely want to straighten out their
taxes,
> but often wait until the IRS or a state agency backs them into a
corner, or
> levies on their paycheck or bank account, or files liens. Many
will follow
> through with you, but some won't, so that's why you want to get
some money
> up front so you don't wind up spending a lot of time fruitlessly.
>
> John Stevens, EA
> Stevens Tax & Accounting, Inc., dba Equi-Tax
>
>
> 651-773-5000
> FAX 651-457-4529
> equitax@...
> www.equitax.
>
> CONFIDENTIALITY NOTICE: The information in this message, and any
files
> transmitted with it, is confidential, may be legally privileged, and
> intended only for the use of the individual(s) named above. Be
aware that
> the use of any confidential or personal information may be
restricted by
> state and federal privacy laws. If you are not the intended
recipient, do
> not further disseminate this message. If this message was received
in
> error, please notify the sender and delete it.
>
> IRS Circular 230 Disclosure: To ensure compliance with requirements
imposed
> by the IRS, we inform you that any
contained in this
> communication (including any attachments) is not intended or
written to be
> used, and cannot be used, for the purpose of (i) avoiding penalties
under
> the Internal Revenue Code or (ii) promoting, marketing, or
recommending to
> another party any transaction or matter addressed herein.
>
>
>
> _____
>
>
> From: taxchat@yahoogroups
Behalf Of
> Donna L Loeffler CPA
> Sent: 10/01/2008 12:35 PM
> To: taxchat@yahoogroups
> Subject: Re: [taxchat] Hasn't filed a tax return since 1999
>
> Thank you, John, for the information. So far, the IRS hasn't done
anything.
> Just the State has filed an SFR and that was for 2004.
>
> So, what I understand is that I shouldn't file anything older than
2002.
>
> However, should I calculate the depreciation for the "missing
years" and
> continue to depreciate as though he filed those years? He has a
retail
> business and he has residential rental real estate.
>
> Donna
> Donna L. Loeffler, CPA
>
>
> (507) 251-8119
> dllcpa@hbci. <mailto:dllcpa@
> The information in this message, and any files transmitted with it,
is
> confidential, may be legally privileged, and intended only for the
use of
> the inividual(s) named above. Be aware that the use of any
confidential or
> personal information may be restricted by state and federal privacy
laws.
> If you are not the intended recipient, do not further disseminate
this
> message. If this message was received in error, please notify the
sender
> and delete it.
> IRS Circular 230 Disclosure: Unless expressly stated otherwise in
this
> transmission, any tax advice contained herein, forwarded with or
attached to
> this message was not and is not intended to be used, nor may it be
relied
> upon or used, by any taxpayer for the purpose of (1) the avoidance
of any
> tax-related penalties under the Internal Revenue Code or applicable
state or
> local tax law provisions, or (2) promoting, marketing or
recommending to
> another party any tax transaction or tax-related matters that may be
> addressed herein.
>
>
>
>
> John Stevens, Equi-Tax wrote:
>
> Donna,
>
> IRS Policy Statement 5-133 pertaining to nonfilers says that you
only have
> to file the last 6 years' returns, which means that you would file
for
> 2002-2007. If, however, the IRS filed "Substitutes for Returns"
(SFR) for
> any period prior to 2002, I would prepare "Corrected Returns" (the
> taxpayer's original returns) for those periods to replace the IRS's
SFR's,
> in order to start the statutory running of the Collections Statute
> Expiration Date (CSED), and possibly to lower the tax calculated on
the
> SFR's by claiming deductions and possibly changing filing status and
> claiming extra exemptions for dependents. Note that if the IRS
filed SFR's
> the Corrected Returns need to be sent to a special address,
depending on
> whether he was self-employed. You can get that address from the
IRS.
>
> John Stevens, EA
> Stevens Tax & Accounting, Inc., dba Equi-Tax
>
>
> 651-773-5000
> FAX 651-457-4529
> equitax@...
> www.equitax.
>
>
>
>
> _____
>
>
> From: taxchat@yahoogroups
Behalf Of
> Donna L Loeffler CPA
> Sent: 09/30/2008 5:55 PM
> To: taxchat@yahoogroups
> Subject: [taxchat] Hasn't filed a tax return since 1999
>
> I have a client who hasn't filed federal or state income tax
returns
> since 1999. I am going to order the 1999 tax return from the IRS.
> However, I would like any tips from anybody as to what to do and
what
> not to do before I ask the IRS for copies of anything.
>
> He has a notice from that state that they filed a return for him
for
> 2004. They want the taxes they calculated.
>
> I'm in the middle of a sales tax audit for this guy for 2004-2008.
So,
> it is really hard to get 2004 done without having the previous
years
> done first.
>
> I know I sound really disorganized. I feel like I am--I have been
> inputting into QuickBooks like crazy, just trying to get a grasp on
all
> of this financial information that he has been giving me. He gives
me
> it in pieces as he finds it.
>
> --
> Donna
> Donna L. Loeffler, CPA
>
>
> (507) 251-8119
> dllcpa@hbci. <mailto:dllcpa%
> The information in this message, and any files transmitted with it,
is
> confidential, may be legally privileged, and intended only for the
use of
> the individual(s) named above. Be aware that the use of any
confidential or
> personal information may be restricted by state and federal privacy
laws. If
> you are not the intended recipient, do not further disseminate this
message.
> If this message was received in error, please notify the sender and
delete
> it.
> IRS Circular 230 Disclosure: Unless expressly stated otherwise in
this
> transmission, any tax advice contained herein, forwarded with or
attached to
> this message was not and is not intended to be used, nor may it be
relied
> upon or used, by any taxpayer for the purpose of (1) the avoidance
of any
> tax-related penalties under the Internal Revenue Code or applicable
state or
> local tax law provisions, or (2) promoting, marketing or
recommending to
> another party any tax transaction or tax-related matters that may be
> addressed herein.
>
>
>
>
>
>
>
>
>
> _____
>
>
>
>
>
>
> No virus found in this incoming message.
> Checked by AVG.
> Version: 7.5.524 / Virus Database: 270.7.5/1702 - Release Date:
10/1/2008
> 9:05 AM
>
>
>
>
>
>
> _____
>
> size=4 width="90%" align=center>
>
>
>
>
>
> No virus found in this incoming message.
> Checked by AVG.
> Version: 7.5.524 / Virus Database: 270.7.5/1702 - Release Date:
10/1/2008
> 9:05 AM
>
>
>
>
>
>
>
> _____
>
> size=4 width="90%"
>
> align=center>
>
>
>
>
>
> No virus found in this incoming message.
> Checked by AVG.
> Version: 7.5.524 / Virus Database: 270.7.5/1702 - Release Date:
10/1/2008
> 9:05 AM
>
Change settings via the Web (Yahoo! ID required)
Change settings via email: Switch delivery to Daily Digest | Switch format to Traditional
Visit Your Group | Yahoo! Groups Terms of Use | Unsubscribe
__,_._,___
