Question from Newbie

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  • #36312
    Elizabeth Adegbuji
    Participant

    I just filed a 2014 – 2018 income tax for a new client and he owes close to $70,000. His filing status was married filing separate as he did not want to include his wife with his tax issues. He claimed mileage on a truck that he told me belonged to him. However, when he filled out the 433A form, he said the truck is actually in his wife’s name so he did not include on the form. Does he need to include the truck on the form? The wife owns another car that she drives and my client mainly drives this truck. Or do I need to revise his returns to claim actual expenses instead of mileage since he doesn’t own the truck? This will greatly increase the tax owed. Any assistance would be greatly appreciated. Thanks!

    #36406
    Eric Green
    Keymaster

    Elizabeth,

    I am surprised that the mileage would make that much of a difference but the returns should be accurate. Your obligation under Circular 230 is to make him aware of it and see if he decides to amend the returns. Meanwhile I would explain that he uses his wife’s vehicle and it is already taken into account in the profit and loss so wont be deducted on the 433-A.

    Eric

    #36407
    Eric Green
    Keymaster

    Elizabeth,

    I am surprised that the mileage would make that much of a difference but the returns should be accurate. Your obligation under Circular 230 is to make him aware of it and see if he decides to amend the returns. Meanwhile I would explain that he uses his wife’s vehicle and it is already taken into account in the profit and loss so wont be deducted on the 433-A.

    Eric

    #36449
    Elizabeth Adegbuji
    Participant

    Thanks Eric!

    The client never filed a 2013 return and he cannot afford to pay the taxes due. Here is what I’m thinking and please let me know if I need to make any changes:

    – In order to buy time until next year, file an installment agreement knowing it will be denied because he’s not compliant. I just filed his taxes so do I wait until the IRS contacts him for payment before filing the IA?
    – In 2020, file his 2019 return and on April 15th 2020, he makes an estimated payment to the IRS to get him in compliance. As a result, he wouldn’t need to worry about filing for 2013. Then, put in an OIC or CNC.
    – Wait for the state to contact him for payment and then ask him to request for an installment agreement. The monthly payment will go on his OIC application.
    Am I missing anything or off on the above? Thanks for your help!

    #36574
    Eric Green
    Keymaster

    Elizabeth,

    Is the state liability older/in-front of the federal one in priority?

    Eric

    #36621
    Elizabeth Adegbuji
    Participant

    Hi Eric,

    No, the state liability is for the same years as the IRS – 2014 to 2018.

    Elizabeth

    #36766
    Elizabeth Adegbuji
    Participant

    Hi Eric,

    If I file his GA 2013 return, will it make the liability older if I don’t file the Federal with it? Thanks!

    Elizabeth

    #36789
    Eric Green
    Keymaster

    No, the issue of who is in front has to do with the date of assessment, not the year of the return.

    #36790
    Elizabeth Adegbuji
    Participant

    Thanks Eric. Would you recommend any other strategy for this client?

    Elizabeth

    #37015
    Eric Green
    Keymaster

    No I think the strategy is good. I would wait for the IRS to make demands for payment then submit the 433. BY then the client can get his 2019 return prepared and filed and hopefully take 2013 off the table.

    #37018
    Elizabeth Adegbuji
    Participant

    Thanks Eric!

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