When does SOL expire if disputed whether return was filed?

[Ed Roberts Jr]

Taxpayer filed joint returns with the IRS and the state of California
in 1988. The next year the couple divorced and the wife moved out of
state. She recently returned to California and the FTB started
garnishing her wages. They never contacted her in the last 16 years,
nor did they notify her they were going to garnish her wages.
Presumably they did not have her correct address. We will probably not
be able to find out from her ex-husband if they ever contacted him.

Apparently the FTB claims the return was never filed. Unfortunately the
taxpayer no longer has any records from 1988, cannot prove she filed,
and cannot reconstruct the missing return.

As far as I can tell, the statute of limitations should have expired
long ago for a timely filed return, but what if the taxpayer and FTB
disagree over whether the return was filed? When does it expire then?

What can the taxpayer do?

Thanks,
Ed

 

[Frank S. Duke, Jr.]

... what if the taxpayer and FTB
disagree over whether the return was filed? When does it expire then?

What can the taxpayer do?

The Statute of Limitations starts to run when the taxing
authority acknowledges receipt of the return. If they say
they never received it, then it does not start unless the
taxpayer can prove that it was filed.

The only way to prove that would be to produce a canceled
payment check for a balance due, a record of a refund check
received or some correspondence regarding that return for
the year in question. 1988 is long before E-filing which
would provide proof.

In this case, the SOL may not have started and the taxpayer
is SOL (different meaning) without the records.

All freely provided advice guarantee correct or double your
money back

Frank S. Duke, Jr. CPA
Cincinnati, OH USA