I have a client who has been having health problems for several years, which led to tax problems. Five years ago the IRS dreamed up and filed tax returns for him. He claims the tax required is much more than it should have been. He owes them money and is paying it off as
Can he go back and file the old returns to accurately reflect the tax due? He was told that he can't do that, but I had never heard the law worked that way.
Thanks.
Stu
Yes. A return can be filed to replace the Substitute for Returns. They can be filed at the regular service center but they will be processed faster if sent to one of the ASFR units. Call to find out which one to use for your client.
BTW, told by who?
Yes, seems he can amend these old returns. See
TITLE 26 > Subtitle F > CHAPTER 66 > Subchapter B > § 6511
§ 6511. Limitations on credit or refund(h) Running of periods of limitation suspended while taxpayer is unable to manage financial affairs due to disability (1) In general In the case of an individual, the running of the periods specified in subsections (a), (b), and (c) shall be suspended during any period of such individual?s life that such individual is financially disabled. (2) Financially disabled (A) In general For purposes of paragraph (1), an individual is financially disabled if such individual is unable to manage his financial affairs by reason of a medically determinable physical or mental impairment of the individual which can be expected to result in death or which has lasted or can be expected to last for a continuous period of not less than 12 months. An individual shall not be considered to have such an impairment unless proof of the existence thereof is furnished in such form and manner as the Secretary may require. (B) Exception where individual has guardian, etc. An individual shall not be treated as financially disabled during any period that such individual?s spouse or any other person is authorized to act on behalf of such individual in financial matters.
It would seem this law applies to state tax returns too.
So it might, but remember there are 50 states, most with income taxes and many with different rules relating to acceptable amendments. One compatriot found there were real problems amending in New York statement and failure to timely amend was denied.
ChEAr$, Harlan Lunsford, EA n LA
In general, I agree. However, if the client has already fought the SFR assessments in the Tax Court, he's had an assessment and therefore, since he's beyond the 3 year period, he can file his returns but will be limited to a refund or abatement subject to the last two years paid plus the unpaid balance.
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