I have an interesting twist (to me) to what should otherwise be a straight-forward non-filer case. Someone came to me, the IRS is after him to file 2009-2017. He is a contractor and only has one 1099 per year and little in expenses. So far so good. The problem is that while he earned on average 75k-100k he only has two assets – a camper and a van. He didn’t have a good answer on what happened to the money even though both appear to live rather simply. He doesn’t have a bank account; he pays his bills using money orders and a reloadable debit card. He previously was levied in 2003 so he has knowledge of IRS’ collection procedures.
My question is this: how worried should I be that he could be criminally prosecuted. I want to help him get straight but I don’t think putting a reloadable debit card on his 433-A is going to look good at all. Should I pass this off to a criminal tax lawyer?! Any help appreciated. FYI – he is just a prospective client at this point.
Jim, I think you need to prepare the last 6 years of returns (12-17) which is what the IRM calls for to be in compliance. The issue here is that he cannot explain what became of his money. Do the 433-A analysis with him and see what it shows as additional future income available. The past is unlikely to be an issue simply because his inability to show expenses for the business will probably cover that,a nd there is an argument the returns may be overstating his taxable income because of it. The bigger issue is getting comfortable with doing the financial and the resolution. he needs to get a bank account and clean up his act or you need to pass. In my humble opinion.