Client has not filed since 2007

[Marcus C.]

Okay, the client is a 50 year old man, who because of family situation and I think some depression, has not filed since tax year 2007.

Receives K-1 from another family member. Total income from all sources less than $15,000 for each of these years.

Client wants to file for 2010 leaving '08 and '09 unfiled for now.

Will that be making a mistake?

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My experience is storefront for several years and small scale indy practice. This one I feel I'm over my head. I do want to help this guy if possible.

Thanks.

 

[kirby]

Bigger mistake would be to not file anything. At least filing 2010 is a start. On your side i think a written memo from you to him detailing his need to file the other years is important C Y A for you. Once IRS spots him he is about to become even more depressed.

 

[Marcus C.]

Thank you. And yes, a calm, matter-of-fact C Y A is part of it, too.

Is there an IRS practice where someone doesn't get a refund if they're more than 3 years later?

 

[kirby]

I'm not aware of a limitation like that.

But there is also the STATE side of this.
and I DO know that some states assess a late filing penalty NOT on the net tax due but on the TAX itself (BEFORE any tax withholdings or payments) - so in those states being due a refund does not save you from being hit with late filing charges cause those late charges are based on the gross tax amount, not the net tax or refund due.