Failure to file for tax year 2006

Bishoop · Joined: 01 Feb 2008 Posts: 14

My SOs son failed to file a return for tax year 2006. He has filled his
return for tax year 2007.

In 2006 he had 1099-Misc income of about $14K. Not tax was withheld. He
does not have a copy of the 1099. He has no pay stubs from 2006. He claims
the company is no longer is existence and has no way of obtaining a 1099
copy.

What is the best way for him to proceed, pay his interest/penalties due and
get back on good paper with the IRS?

Thanks for any advice.

Archived from group: misc>taxes

Paul Thomas, CPA · Joined: 25 Aug 2007 Posts: 3094

"Bishoop" wrote
> My SOs son failed to file a return for tax year 2006. He has filled his
> return for tax year 2007.
>
> In 2006 he had 1099-Misc income of about $14K. Not tax was withheld. He
> does not have a copy of
> the 1099. He has no pay stubs from 2006. He
> claims the company is no longer is existence and
> has no way of obtaining a 1099 copy.
>
> What is the best way for him to proceed,

Prepare and file the 2006 return as soon as possible.

Take careful consideration on any expenses incured by him in generating that
income, as he should be sure there's support for the expenses (if any)
claimed.

> pay his interest/penalties due and
> get back on good paper with the IRS?

Remember there's a state that may want a few bucks too. Keeping that in
mind, the state is generally a smaller amount of tax due, especially so for
self-employed. Consider getting them paid in full (if possible) so that
there's only one government breathing down his neck.

Pay as much to the IRS as practical, and attach to the return an installment
agreement request (Form 9465) to the federal return letting them know how he
plans to pay them off. If the payment plan is reasonable, like paying $200
a month against a $4000 tax debt) then they'll most likely accept the
proposed plan. If you go that route, be sure to make all payments on
time - or before the due date.

--
Paul A. Thomas, CPA
Athens, Georgia

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Paul Thomas, CPA" wrote in message $N67.17296@bignews5.bellsouth.net...
>
> "Bishoop" wrote
>> My SOs son failed to file a return for tax year 2006. He has filled his
>> return for tax year 2007.
>>
>> In 2006 he had 1099-Misc income of about $14K. Not tax was withheld. He
>> does not have a copy of
>> the 1099. He has no pay stubs from 2006. He
>> claims the company is no longer is existence and
>> has no way of obtaining a 1099 copy.
>>
>> What is the best way for him to proceed,
>
>
>
> Prepare and file the 2006 return as soon as possible.
>
> Take careful consideration on any expenses incured by him in generating
> that income, as he should be sure there's support for the expenses (if
> any) claimed.
>
>
>
>> pay his interest/penalties due and
>> get back on good paper with the IRS?
>
>
>
>
> Remember there's a state that may want a few bucks too. Keeping that in
> mind, the state is generally a smaller amount of tax due, especially so
> for self-employed. Consider getting them paid in full (if possible) so
> that there's only one government breathing down his neck.
>
> Pay as much to the IRS as practical, and attach to the return an
> installment agreement request (Form 9465) to the federal return letting
> them know how he plans to pay them off. If the payment plan is
> reasonable, like paying $200 a month against a $4000 tax debt) then
> they'll most likely accept the proposed plan. If you go that route, be
> sure to make all payments on time - or before the due date.
>
>
>
>
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia

Thanks for the reply.

There is no state involved (Florida). No expenses will be claimed.

With no 1099 available what should he use for the 1099 income. He "thinks"
it's around $14K. Should he err on the high side.

How does he calculate interest and penalties or will the IRS send that info
after he files this late return?

I ran a calculation with 2006 TaxCut on $14K and the tax due without any
penalties would have been just over 500 bux. Can you guesstimate what
interest/penalties would be, or direct me where I can find this info. I
assume it would be best to include "something" over the tax that would have
been due if paid in a timely manner.

Thanks again for your kind help.

Phil Marti · Joined: 25 Aug 2007 Posts: 2520

"Bishoop" wrote:

> There is no state involved (Florida). No expenses will be claimed.
>
> With no 1099 available what should he use for the 1099 income. He
> "thinks" it's around $14K. Should he err on the high side.

That will work.

> How does he calculate interest and penalties or will the IRS send that
> info after he files this late return?

IRS will calculate and bill.

> I ran a calculation with 2006 TaxCut on $14K and the tax due without any
> penalties would have been just over 500 bux.

You did it wrong. This is Schedule C income, which will result in
self-employment tax well in excess of $1,000 on top of the income tax.

Late filing penalty will be 22.5% of tax. Late payment penalty will be .5%
per month or fraction of a month from 4/15/2007. Interest will be a little
higher than the late payment penalty.

--
Phil Marti
Clarksburg, MD

Paul Thomas, CPA · Joined: 25 Aug 2007 Posts: 3094

"Bishoop" wrote
> "Paul Thomas, CPA" wrote
>> "Bishoop" wrote
>>> My SOs son failed to file a return for tax year 2006. He has filled his
>>> return for tax year 2007.
>>>
>>> In 2006 he had 1099-Misc income of about $14K. Not tax was withheld. He
>>> does not have a copy of
>>> the 1099. He has no pay stubs from 2006. He
>>> claims the company is no longer is existence and
>>> has no way of obtaining a 1099 copy.
>>>
>>> What is the best way for him to proceed,
>>
>>
>>
>> Prepare and file the 2006 return as soon as possible.
>>
>> Take careful consideration on any expenses incured by him in generating
>> that income, as he should be sure there's support for the expenses (if
>> any) claimed.
>>
>>
>>
>>> pay his interest/penalties due and
>>> get back on good paper with the IRS?
>>
>>
>>
>>
>> Remember there's a state that may want a few bucks too. Keeping that in
>> mind, the state is generally a smaller amount of tax due, especially so
>> for self-employed. Consider getting them paid in full (if possible) so
>> that there's only one government breathing down his neck.
>>
>> Pay as much to the IRS as practical, and attach to the return an
>> installment agreement request (Form 9465) to the federal return letting
>> them know how he plans to pay them off. If the payment plan is
>> reasonable, like paying $200 a month against a $4000 tax debt) then
>> they'll most likely accept the proposed plan. If you go that route, be
>> sure to make all payments on time - or before the due date.
>>
>>
>>
>>
>>
>> --
>> Paul A. Thomas, CPA
>> Athens, Georgia
>
>
> Thanks for the reply.
>
> There is no state involved (Florida). No expenses will be claimed.
>
> With no 1099 available what should he use for the 1099 income. He
> "thinks" it's around $14K. Should he err on the high side.
>
> How does he calculate interest and penalties or will the IRS send that
> info after he files this late return?
>
> I ran a calculation with 2006 TaxCut on $14K and the tax due without any
> penalties would have been just over 500 bux. Can you guesstimate what
> interest/penalties would be, or direct me where I can find this info. I
> assume it would be best to include "something" over the tax that would
> have been due if paid in a timely manner.

You're missing something, and I suspect it's the self-employment tax. If he
wasn't an employee (meaning he should have received a 1099, as you've
indicated) then the earnings fall to Schedule C or C-EZ. Which at $14K
generates $2100 (roughly) of SE tax.

If you wanted to make the claim that he was the employers - employee - and
that he didn't receive a W-2, he'd attach Form 4852 as a substitute W-2.

One thing you may want to consider is contacting the closest IRS office and
get a transcript of his account (he'll have to do that) which would show if
any W-2 or 1099 was received by the IRS for that income.

--
Paul A. Thomas, CPA
Athens, Georgia

ChrisZ · Joined: 27 Jan 2008 Posts: 10

On Feb 27, 10:47 am, "Paul Thomas, CPA"
wrote:
> "Bishoop" wrote
>
>
>
> > "Paul Thomas, CPA" wrote
> >> "Bishoop" wrote
> >>> My SOs son failed to file a return for tax year 2006. He has filled
his
> >>> return for tax year 2007.
>
> >>> In 2006 he had 1099-Misc income of about $14K. Not tax was withheld.
He
> >>> does not have a copy of
> >>> the 1099. He has no pay stubs from 2006. He
> >>> claims the company is no longer is existence and
> >>> has no way of obtaining a 1099 copy.
>
> >>> What is the best way for him to proceed,
>
> >> Prepare and file the 2006 return as soon as possible.
>
> >> Take careful consideration on any expenses incured by him in
generating
> >> that income, as he should be sure there's support for the expenses
(if
> >> any) claimed.
>
> >>> pay his interest/penalties due and
> >>> get back on good paper with the IRS?
>
> >> Remember there's a state that may want a few bucks too. Keeping that
in
> >> mind, the state is generally a smaller amount of tax due, especially
so
> >> for self-employed. Consider getting them paid in full (if possible)
so
> >> that there's only one government breathing down his neck.
>
> >> Pay as much to the IRS as practical, and attach to the return an
> >> installment agreement request (Form 9465) to the federal return
letting
> >> them know how he plans to pay them off. If the payment plan is
> >> reasonable, like paying $200 a month against a $4000 tax debt) then
> >> they'll most likely accept the proposed plan. If you go that route,
be
> >> sure to make all payments on time - or before the due date.
>
> >> --
> >> Paul A. Thomas, CPA
> >> Athens, Georgia
>
> > Thanks for the reply.
>
> > There is no state involved (Florida). No expenses will be claimed.
>
> > With no 1099 available what should he use for the 1099 income. He
> > "thinks" it's around $14K. Should he err on the high side.
>
> > How does he calculate interest and penalties or will the IRS send
that
> > info after he files this late return?
>
> > I ran a calculation with 2006 TaxCut on $14K and the tax due without
any
> > penalties would have been just over 500 bux. Can you guesstimate
what
> > interest/penalties would be, or direct me where I can find this info.
I
> > assume it would be best to include "something" over the tax that
would
> > have been due if paid in a timely manner.
>
> You're missing something, and I suspect it's the self-employment tax.
If he
> wasn't an employee (meaning he should have received a 1099, as you've
> indicated) then the earnings fall to Schedule C or C-EZ. Which at $14K
> generates $2100 (roughly) of SE tax.
>
> If you wanted to make the claim that he was the employers - employee -
and
> that he didn't receive a W-2, he'd attach Form 4852 as a substitute
W-2.
>
> One thing you may want to consider is contacting the closest IRS office
and
> get a transcript of his account (he'll have to do that) which would show
if
> any W-2 or 1099 was received by the IRS for that income.

I would definitely get a transcript of the account to confirm the actual
earnings. If it's Schedule C income there are associated expenses and
income and tax could decrease significantly.

--
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Bishoop · Joined: 01 Feb 2008 Posts: 14

"Phil Marti" wrote in message $Dz4.1112@trnddc01...
> "Bishoop" wrote:
>
>> There is no state involved (Florida). No expenses will be claimed.
>>
>> With no 1099 available what should he use for the 1099 income. He
>> "thinks" it's around $14K. Should he err on the high side.
>
> That will work.
>
>> How does he calculate interest and penalties or will the IRS send that
>> info after he files this late return?
>
> IRS will calculate and bill.
>
>> I ran a calculation with 2006 TaxCut on $14K and the tax due without any
>> penalties would have been just over 500 bux.
>
> You did it wrong. This is Schedule C income, which will result in
> self-employment tax well in excess of $1,000 on top of the income tax.
>
> Late filing penalty will be 22.5% of tax. Late payment penalty will be
> .5% per month or fraction of a month from 4/15/2007. Interest will be a
> little higher than the late payment penalty.
>
> --
> Phil Marti
> Clarksburg, MD

Thanks to you guys for your assistance. Yes, I did forget about the SE tax.
I recalculated and it looks like he owes about $3K plus interest/penalty.

I found some info on the IRS web site that eludes to the fact that a person
can call them and find out just what was filed by his employer for the tax
year 2006. Does this sound like the way to start. Then with this
information, if available, file a 2006 return.

Thanks again.

Bishoop · Joined: 01 Feb 2008 Posts: 14

All the replies I have received have been very helpful.

I have instructed the man to contact a local IRS office for a transcript of
his account. With this information in hand he can then proceed with filing
his 2006 return.

Thanks again....

Paul Thomas, CPA · Joined: 25 Aug 2007 Posts: 3094

"Bishoop" wrote
> I found some info on the IRS web site that eludes to the fact that a
> person can call them and find out just what was filed by his employer for
> the tax year 2006. Does this sound like the way to start. Then with this
> information, if available, file a 2006 return.

Yeah. He'll need to do the calling though. You get to listen in.

Do remember that the call gets logged, in that *they know you called about
that year's income*, so if they tell you that there was no 1099 / W-2
received, don't think that you can just forget about filing. The machine
remembers you called. And will wonder why the call wasn't followed up with
a tax return.

--
Paul A. Thomas, CPA
Athens, Georgia

Bishoop · Joined: 01 Feb 2008 Posts: 14

"Paul Thomas, CPA" wrote in message $IG1.1755@bignews9.bellsouth.net...
>
> "Bishoop" wrote
>> I found some info on the IRS web site that eludes to the fact that a
>> person can call them and find out just what was filed by his employer for
>> the tax year 2006. Does this sound like the way to start. Then with this
>> information, if available, file a 2006 return.
>
>
>
>
> Yeah. He'll need to do the calling though. You get to listen in.
>
> Do remember that the call gets logged, in that *they know you called about
> that year's income*, so if they tell you that there was no 1099 / W-2
> received, don't think that you can just forget about filing. The machine
> remembers you called. And will wonder why the call wasn't followed up
> with a tax return.
>
>
>
>
>
>
> --
> Paul A. Thomas, CPA
> Athens, Georgia

Just one more thing. If the transcript does come up empty, shall he file on
the amount that he can remember? Would a letter of explanation accompanying
the return be advisable?

Thanks.