From: Colorado

Dear TaxMama,

I have a very trickey situation on my hands.

About two years after my mother passed away, I was helping my father clean out and old desk in the living room.

I found tax filings back to 1960, but no recent ones (1998 - 2002). When I asked dad about it, he said mom always handled that, and after she got sick, he didn't know what to do.

How to I go about getting this right with Uncle Sam, without getting my father into a load of trouble.

He only has a small pension, so doesn't have the ability to take on a large debt.

Mike

 

 

Hi Mike

Ouch. Big Owwiieee.

Don't go to IRS.

First, gather all the information and prepare all the missing tax returns.

If you don't think you have all the income information, you can get the missing data from IRS via Form 4506-T and check box 6e

No doubt, you'll learn there were refunds due. And your parents are likely to lose the ones that are over 3 years old. (So prepare 2001 quickly to save it.)

If there are taxes due, you will probably be able get IRS to do two things for you, under the circumstances:

1) Waive late filing penalties - with a good explanation.

2) Set up an installment plan for the balance due so your dad can pay it over time.

If dad doesn't own anything (spelled 'home'), he might even be able to get an offer in compromise and settle the whole thing for a fraction of the balance due.

But if he owns a home, and has equity...IRS will want the debt paid.

A home equity line should be easy to get.

I suspect there's little or nothing due, though. So don't panic.

Just pull it all together and see where he stands, first. OK?

Once you see the whole picure...the next steps will be obvious. And don't stress Dad over this.

Best wishes,

Eva Rosenberg, MBA, EA