So I come home today and what do I find in my mailbox but a notice from the IRS saying I owe them money from tax year 1996. So after getting up off the floor I call my friendly and helpful IRS guy who tells me “you didn’t file a return in 96 so we filed it for you”. He says I need to file a new return for 96.
Two questions:
how do I file a new 96 return, and how do I dispute with them that I owe anything?
Ok 3 questions.
What should I do next?
This is not legal advice.
They have a web site with downloadable forms. Check to see if '96 is there, if not, call them and ask for it with the booklet of instructions. If you were an employee for '96, you should have been given W-2 forms showing your income and tax withholding. If you were self-employed, you should have been given 1099 Forms. Possibly. Sounds like they may have received info. via W-2s or 1099s on you and prepared them with those. So they would not know how many dependents you have or number of exemptions, or possible itemized deductions, etc.
Depending on the complexity of your situation, you may want the advice of a tax preparer. If a lot of income, etc. is involved, a tax attorney may be needed.
What you should do now: Determine what kind of income you had in '96. Salary? Business? Investments? Drug dealing (oops!)?
Good luck.
This is not legal advice either.
I recently had an issue with filing an old return. My understanding is the you can only file an amended return 3 years after the tax year in question. If that is true you are probably stuck. OTOH, hand I could be wrong.
In any case hiring a tax expert is probably a good idea.
Eric
Addition non-legal advice here. This link discusses the statute of lims issues: http://taxes.about.com/library/weekly/aa050800a.htm
“If no tax return was filed for a tax year, the three year statute of limitations never begins to run for that year; therefore, it never ends. If no return is filed, that tax year is always open for audit and assessment of tax.”
If they “filed for you,” you are truly fucked. The IRS themselves lost my 1997 return and I had to refile but only after they politely informed me that they filed one for me: as a married filing separately. What’s strange is that they know damn well that I’m single with no dependents. WTF?!
Don’t discuss this over the phone. Go in person to one of the walk-in service centers. Those folks are actually very helpful.
Second what Monty said, about them actually being helpful. The IRS doesn’t really want to put you in jail, because if you’re in jail, you’re not out earning money to pay your back taxes.
So don’t go in all defensive–just work it out.
Strange,
Even though the statute of limitations might not apply, usually the IRS has a time horizen of about 18 months to start an audit after a filing. I’m just surprised that they found it after all those years. What kind of penelty will be assessed for a five year late return?
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Did you actually file a '96 return, and if so do you have your copy? If you had a service or CPA file for you (i.e. H&R Block or even a private CPA) then they will have a copy of your return on file (required by law).
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Whether or not you filed, you can request a copy of your return from the IRS. If thei “filed for you” this is very helpful if someone else’s W2s or 1099s made their way onto your socsec#. If this is the case then you should be able to file a 1040 or 1040X for that year to fix it.
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If this is a large pile of money they want (i.e. $10,000 in penalties, etc.) you should find a CPA who handles this sort of thing.
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I don’t know how old you are, or your situation with regard to past parental support, but before diving in to this: if you were living at home or away at school in ‘96 you should find out for sure whether or not you were claimed as a dependent on your parents’ tax return for that year, as it will affect whether you can claim yourself on your return.
Disclaimer: I am not a CPA, I’m a C programmer. This is not legal or financial advice. My father is a CPA who does handle “this sort of thing” however and if you happened to be in the Las Vegas area I’d be happy to hook you up 
Despite what I’ve posted, somehow I feel that I’ve been somewhat unhelpful. I would echo the sentiments of others, and beware dealings with the IRS by phone.
AmbushBug
long-time lurker
I used to work for IRS so I no longer represent them, but here’s my advice: Get the forms from the library (Package X for 1996) or online, and file the return. If IRS has to file it for you, as another poster alluded to, they don’t give you dependency exemptions (other than yourself) and they don’t itemize (Schedule A). Also, they may not have the correct filing status, so your standard deduction amount would be affected. If you didn’t have any income (although IRS probably prepared it from some source document), you’ll have to file the return to show that. If you did have income, you’ll have to file the return to show how much tax you do or don’t owe. That is how you dispute the amount they say you owe, by filing the return to show the correct numbers. Don’t worry. Just file the return ASAP. If you do owe, you can make an installment agreement, which they will offer you once you file the return, and the tax, if any, is assessed, and you call and tell them you can’t pay it (if that is the case). Dealing with IRS for most taxpayers is no big deal AS LONG AS you ALWAYS respond to any calls or correspondence right away and ALWAYS keep your promises, e.g. an installment agreement. I only was forced to lien, levy and seize when people were given every chance over a period sometimes of years, and then did not live up to an agreement and did not contact me if they could not. If you have a good reason for not filing (and have filed every other year) and you do indeed owe tax, you can request an abatement of the penalties; and I understand now they may even abate the interest (we didn’t when I was in Collections). ONCE the tax is assessed the statue starts running, so it runs from when IRS prepared the return and the tax was assessed. Also, if there is fraud, no limit applies. If you have moved from one service center area to another that could explain why it took so long, but it is an inordinately long time, esp if you have filed returns in the interim. When I was there the penalties were up to 25% collectively for Failure to File Penalty, 5% for Failure to Pay; plus interest.
Thanks everyone. I feel better today, yesterday I was more than a little flustered. That all sounds like good advice I think I will definitely go into one of the centers. The IRS is going to send me the stuff they filed and the w-2’s they used. I should be able to get it all straightened out.
Thanks again