A few questions

I have gone through this. A few pointers:

1. He should drop off the 2003 return at the nearest IRS office, and get a date stamp on the copy ... and make sure there is an *original* signature on the copy (dont just photocopy the original after the original's been signed). I had an IRS person once refuse to accept a return because my photocopy didnt have an *original* signature. Why drop it off and not just mail it? Because this close to the 3 year statute, there are too many land mines with cert mail (both in case law and US Mail potential screw-ups).... i just drop these off.
2. Will the IRS roll the refunds fwd? Yes, but you need to "stagger" the filing of the returns so the earlier ones get into the system first. So obviously, file the 2003 return by Friday... and wait on the later returns, filing each one successively, as the prior ones get into the system. Why go through this hassle? Because the IRS will fu** it up, that's why. I once filed a 2000 return (with a refund carryforward to 2001) and a 2001 return at the exact same time. The IRS sent me the check for the 2000 return, thereby messing up my credits on the 2001 return. I cashed the check (luckily 2001 had a refund coming anyway, without the year 2000 credit) because i found out it would have been an administrative nightmare to get things corrected (if they were correctable at all). Good luck.

Face it, Dick, you have a warm fuzzy persona that you just can't shake.

They'll send him refunds. Tell him not to lose them.

-- Phil Marti Clarksburg, MD

Delinquent return credit balances generally won't roll forward but (as you know) their refunds will offset to the oldest assessed liability. Does he owe for years prior to

2003? If not, he could file 2003 and prior and 2006 now; file 2004 & 2005 after 2006 is assessed. He may get some P&I benefit from the 2004 and 2005 refund offsets.

First, if IRS is not after him for earlier years, he may only need to file for 2001 and later years. Normally, IRS will accept returns for the 5 latest years from a non-filer who comes forward on his own. For earlier years that show a refund, he should file the returns and choose have the overpayments applied to estimated taxes for the subsequent year. IRS will do this is the refund is not barred by the statute of limitations. Then, on the return for the subsequent year, he should show that overpayment on the line for estimated tax payments. IRS will apply any overpayments to a deficiency if the underpaid return has been processed. Otherwise, they will make the refund. In addition, if they intercept the refund, they will still assess late filing and late payment penalties on the full balance. If he asks them to apply the refunds to the next years estimated payments, the penalties will be assessed on the net balance. Lanny K. Williams, CPA Nawarat, Williams & Co., Ltd. Income Tax Services for Expatriate Americans

Dick Said:..

All should be processed with no problem, assuming no SFR's have been started! Ideally if the 2006 return posted first as a liability period, the refunds will be captured from the proceeding years 05, 04 & even 03 since the Refund Statute is Open, at least for the next couple of days!! Certified is a minimum, Return Receipted would be even better. Ideally hand deliver it into the nearest Customer Service Site if one is conveniently available.

Really? I've filed delinquent returns several times (inside the 3 year statute) and the credit balances have always rolled forward. If he files 2003, 4, and 5, and rolls all the credit balances forward to 2006, those credits would function just like withholding, and significantly reduce any

2006 P&I.

Really! I've secured many delinquent refund returns, highlighted and underlined in red the amount to be carried forward, seldom with success. Processing personnel couldn't provide explanation. May have something to do with the processing timing of simultaneously filed multiple returns. An old CP-45 gives possible clue when it states, "We are not able to apply credit elect to a tax year for which a return has already been filed and processed." Of course, returning and reapplying refund checks from whence they came will revive credits which may then be transferred, giving taxpayer the benefit of prior year credit availability dates.