Re: Tax Resolution Services
I asked my CPA about this and this is what he said ...
The statute of limitations deals with the period of time to assess the tax or in the taxpayers cases to file an amendment. For 1986, the tax must have already been assessed and now just needs paid. Once assessed in the case of individuals it will follow you for life. I have seen some assessesments go only for 10 years in which IRS will not renew for another ten years if it appears the taxpayer does not have the means to pay.
Keeping your returns.---Keep the stuff supporting the returns for 5 years. Keep the returns forever. When you turn 65+ and want to collect Social Security, how do you prove what your 2008 wages were if you don't have a tax return???? Do you think the government keeps that stuff. Do you think their database is accurate.
In the case of your friend, IRS will tell him why he owes the $18,000, Probably 65%+ of it is interest and penalties by now. Is the liability recorded at the local country court house? Something that old there is normally no room for adjustment. An Offer in Compromise may be possible. This is where the taxpayer offers something less than 100% of the tax bill and the IRS considers it but the government only accepts theses offers when it is in the best interest for the government. As always, lots of paper work.
So, if they are saying you owe, then it is because it was claimed that you owed and you did not pay (at least they do not have the records). So it is up to you to prove what you reported and what you paid. If you cannot do that, then you are out of luck. If you can, you have a case.
If you can't, you can prove hardship from your disability and ask for leniency and/or a pay plan. You might get most, if not all, of the penalties reduced. But start out by getting them to tell you what you owed, what was paid, and how much are the penalties. Then you will know what you have to prove.
Good Luck!
My truck is next unless the CPA has a better idea.
