Does anyone know?

Please keep the details of your situation as anonymous as possible, you do not want to lose any confidentiality privileges, whatever they might be in your situation, by disclosing confidential information to a third-party, such as this group.

In general, you should also consider requesting a meeting with the auditor's manager, request an appeals conference

and read Pub. 3605, "Fast Track Mediation: A Process for Prompt Resolution of Tax Issues".

-Mark Bole

Thank you. I guess what I wanted to know is can the IRS suddenly demand in

2008 that a tax payer file his 2000 return when the IRS had never sent in the past any notice or made any request about the old return that a taxpayer had forgotten to file?

With other words, are there any procedures or steps of actions that the IRS must do first (as required by the law) before demanding that a tax payer either do what the IRS wants him/her to do in 2008 or get shot at with a "shot gun"?

And if you have court cases to support your answer, that would be perfect.

My other question is this, can a tax payer be held liable for Social Security taxes when the employer, for some reason, had misclassified a W-2 employee as a 1099? What is the most recent court ruling on something like this?

.

Thanks.

There is no statute of limitation for not filing (one good reason to hang onto tax returns indefinitely)--would be interesting if anyone knew of court cases where someone argued that it was an undue burden on the taxpayer to show proof of filing from x number of years ago. And what constitutes proof of filing if you didn't file electronically or use certified mail?

There is a procedure if you feel that you have received a 1099 in error. You fill out an SS-8 and then file Form 8919, which will calculate your half of the employment taxes due. The IRS will send an SS-8 to the employer and, if they respond, will make a determination as to employee or independent contractor.

Sorry if this has been explored before.

If the taxpayer didn't file a required 2000 return the IRS long ago would have sought it. Initial inquiry probably would have been in the 2003-2005 broad timeframe. Had they sent an inquiry to the last address they had for you at that time would you have received it?

As has been noted there's no legal limit to how far back they can go. However, there is a policy statement that they will not go back more than 6 years except for extraordinary situations. You can find it at 1.2.14.1.18 of the Internal Revenue Manual

I would say that you are at least entitled to an explanation of why they're pursuing this return now.

"Forgotten to file?" Never got-a-round-to-it or neglected to file, maybe, but, absent a medical condition, it's doubtful one would forget to file. Tax filing deadline is the primary topic of conversation at most work and social gatherings every April 15th, and there are reminders in all the news media. Forgetting to file would be akin to forgetting to drive at or below the posted speed limit. It's your responsibility to voluntarily comply.

Of course the IRS can ask that you file a delinquent return. That said, the IRS can't compel you to file. They can charge and prosecute you criminally for failure to file. They can secure your income information from you and from third parties and file a return for you, assessing civil penalties and interest on the tax due. Should they have demanded that you file a return out of the normal six year investigative scope? Not enough facts presented here to make that determination. Does the demand indicate a "bias IRS tax examiner" as stated in your original post? Probably not. Certainly no literal "shot gun" involved here, nor is the IRS figuratively shotgunning. Ensuring full compliance with tax filing and paying requirements is the basis of civil tax enforcement.

As noted by another poster, you can, at a minimum, be held liable for the FICA and Medicare taxes which would have been withheld had you been treated as employee. It would be beneficial to your case if you can present documentation that your employer ignored your objection(s) to receiving gross rather than net paychecks in 2000.

Over in misc.taxes this poster has the same problem with his 2001 return, that he did file and received a refund on, but has 1099 mis-reporting issues.

I suspect there are other years of 1099 income being mis-reported.

Multiple year issues would justify expanding delinquency investigation beyond the Policy Statement's normal six year purview.

So far you've gotten a lot of GOOD responses to your post. I would like to add a bit and ask a question or two.

Your first post said that the IRS auditor was bias. I see nothing in your second post to indicate any bias. Why do you believe the auditor to be biased?

As to what steps or procedures the IRS must do first - it is likely that one of two things have happened - EITHER

A - the IRS has sent notices that you have not received, OR

B - while investigating you for something more current they have discovered prior year delinquencies.

In either case they are within their rights to enforce compliance for however many years they feel is necessary. There is a policy position within the Internal Revenue Manual that starts with NORMALLY they will not go after more than six years or returns. But I am aware of NOTHING that would stop them for going after 50 years of returns if they believe they are justified in doing so.

In fact, depending on your circumstances they may actually be using you to set an example. Make no mistake, this is NOT discrimination - especially if you didn't file. And you'll never get them to admit openly IF they are tying to make an example of you, but that wouldn't change it IF they were. And let me be real clear here - I am NOT suggesting that the IRS is attacking you personally and I'm NOT suggesting that they are trying to make an example of you. I'm simply giving you my take on the situation based on my 25+ years of dealing with the IRS on behalf of taxpayers.

I cannot impress upon you how important it is that you get professional help with this matter. This is even more true IF they are trying to make an example of you. Representing yourself is a recipe for disaster - get professional help from someone who specializes in taxpayer representation. As an EA I'm inclined to send you to

- the National Association of Enrolled Agents website where you can search for a tax pro in your area. EAs, by definition, specialize in representing taxpayer before the IRS. However, a CPA experienced in representing taxpayers would be just as good at this point. I would NOT engage a tax attorney just yet, until either an EA or CPA has assessed your case. Tax attorneys have a place, but that is usually NOT at the beginning of the process UNLESS you have reason to believe that criminal charges may be pending.

As to whether you can be held liable for Social Security taxes - most definately YES, in one form or another. If you were self employed you are responsible for SE tax on your net income. If you were an employee you are responsible for your half that should have been withheld - whether you are responsible to the authorities or your employer is a matter for a different discussion, but you are responsible one way or the other.

Be careful about asking for court rulings. These are very specific and address specific cases with specific fact patterns which may or may not match the intricacies of your situation. Not to mention that your question is so broad that I could provide you with cites for either side - for or against. Assessment of whether a legal ruling, or for that matter the interpretation of The Code, Tresury Regs - whether they be perm, temp or proposed -, Rev. Rules, Treasury Decisions, PLRs, TAMs, or whatever, are best left to qualified professionals.

You also need to keep in mind that IF you attempt to represent yourself everything you say or produce will become part of your file and it will be virtually impossible for you to get professional help later on to counteract anything that you SHOULD NOT have produced or said.

Get professional help NOW - even if it is just to help assess your situation. Talk to someone qualified who is looking out for YOU before you say or give anything to the authorities.

Good luck, Gene E. Utterback, EA, RFC, ABA

(snipped....)

(part of reply also snipped for brevity....)

Since OP was referring first to tax year 2000, I took it that the second question about incorrect classification also referred to same tax year.

The form 8919 is a recent "invention", and only applies to tax years

2007 et seq. If for tax year 2006 or before use the "old" form 4137, just like we used to.

ChEAr$, Harlan Lunsford, EA n LA (home again)