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Penalties and interest can be huge amounts but may be negotiable. I've been through a business tax audit. If I were in your shoes I'd spend the money to consult with a good tax attorney. Don't talk to the IRS without representation.
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Pure and simple, it is Lawyer time. They may advise you make an appointment with the IRS with all the info you have. This is not going to be the first time this has happened and they will likely appreciate that it is not "on you" and that you are doing all you can to provide what you can. Bring all records you have of what she DID file, if anything, of what she kept records of, or anything you know. Yikes! Please update us how it goes.
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OurOldHouse Jul 2019
Luckily most of the recent stuff she did was being stored at her house so I did manage to snag a lot of paperwork that could probably help. And I will most certainly keep you guys updated because I bet this is an issue that other people would like to know how to deal with! I've been lurking on this site ever since last year when she was finally diagnosed and I cannot express how helpful this site has been for me; you guys are a great community and I really appreciate all of the answers!!
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Since this is federal taxes.....The IRS can garnish her social security, that much I know for sure. They can only garnish a small % though. The IRS can also seize her retirement account but that doesn’t mean they will. The IRS can seize her money. But again, no one can here can tell you what will happen for sure. Good luck, this sounds like a mess!
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OurOldHouse Jul 2019
It it is a mess! and the worst part about it is that she is so out of it now that she thinks that because she's not working she's no longer responsible for anything. She keeps saying, "but I'm retired!" She literally does not understand that she's responsible for any of this.
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Oh boy, I'd get a lawyer involved asap if I were you. In Canada the fines can be worse than the unpaid taxes and kept growing until it was resolved, and they can even garnish part of your government pension for this.
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Don't know about this stuff but have heard that there are attorneys who are specialized in geriatrics. Since this was a dementia issue. Just wanted to put that out. Best of luck.
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Ok, this is bad, actually she could actually go to prison for this. The real biggie is that she deducted from employee's pay check and did turn over the funds to the government, now you have fraud, as since she did not turn over the money, the employees SS and so on was not credited to the employee, the government does not take kindly to this, and then there is the IRS. Yes, everything can have a lien placed against her assets, of any kind. My recommendation is to sit with an Enrolled Agent, it is the highest level of tax preparers, this person can represent your mother in court if need be. Do not go to H&R Block or one of those preparers, they, under no circumstance are qualified to handle this mess. Step one is to get her back IRS taxes filed...do not attempt to do this yourself. Has she been declared mentally incompetent? This is an important factor.
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OurOldHouse Jul 2019
She was formally diagnosed with dementia just this past September, but it was an uphill battle for a year-and-a-half with her Dr., until finally her doctor dropped her for forgetting to show up to her appointments, and the new doctor finally gave the diagnosis. She was lying to her first doctor so they didn't believe us about the memory problems... and you all probably know how hard it is to get the damn diagnosis long after the symptoms show up!
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Need more infro, are you talking about IRS taxes, or other, such as she collected withholding for SS from her employees and did not pay the government what she withheld. Or was this a retail business and she collected sales tax and did not pay to the state?
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OurOldHouse Jul 2019
Thanks for your quick reply. It was everything. Social Security tax that was deducted from employees' paychecks but never filed; also state tax: unemployment, workers comp, use tax...the state sales tax was pretty much the only one that got paid because she let another employee handle that.
It was an S corp so she was required to report any earnings or loss from the business on her personal taxes but she didn't file her personal taxes either :/ I tried filling out her personal tax for 2018 a few months ago and I am at a total loss because I I don't know how to report her business income or loss because she literally wasn't keeping any records the last couple years!
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