There is a Statute of Limitations on IRS Refunds

timemoneyIt physically pains me to find someone, through oversight or because of overwhelming life events, failed to do what was needed to get the refund to which they were entitled to receive from the IRS.

I just learned this when a client was told by the IRS that the 2014 and 2015 returns she eventually filed were submitted too late to allow her to receive the nearly $12,000 she was entitled to receive. She thought her life partner had filed these when we started working together. Unfortunately, he never did file them or ask for an extension.

According to I.R.C. Section 6511(a) “Claim must be filed within 3 years from the time the return was filed or 2 years from the time the tax was paid, whichever of such periods expires the later, or if no return was filed by the taxpayer, within 2 years from the time the tax was paid.”  There are things like extension requests that help your timing. Check with an accountant to learn more about this if you might be in this boat.

At least half of the families I have worked with find out that taxes didn’t get filed. The early signs of dementia are subtle and the individual may believe they are doing all the right things. It usually takes a couple big financial mistakes before people realize their loved one is unable to really manage their financial affairs.

If you are not sure if the taxes have been addressed, you can request transcripts from the IRS here.

Caring for a loved one can be overwhelming. If you need some help looking into this and no one is able to help, you could find a local Daily Money Manager who can help out. If you have a lot of medical expenses, the few hundred dollars it might take to hire them to help will more than be repaid when you receive your refund. If you can’t find one in your area, let me know. There are several members of my team that can assist with this remotely.  Recommended. 



The Cascading Impact of Missing Tax Filings

tax seasonAs Ben Franklin penned in 1789, “…in this world nothing can be said to be certain, except death and taxes.”

As caregivers, those two events are challenging to navigate for very different reasons. I don’t think I need to say more about death, but the annual taxes is a sleeper issue for many families. If you are not living near mom and dad, you may not know that they have failed to file their taxes. The organization and project management can be overwhelming to those battling fatigue as well as mild cognitive impairment.

I have one case where the person who is trustee can’t recall her dad’s social security number, and has no idea where the prior taxes are located. She has never gone through the process to become the Representative Payee with Social Security (SSA) or the Office of Personnel Management (OPM) so they won’t talk with her until she follows their approval process.  They do not recognize Durable Powers of Attorney. We at least know the name of the accountant to we can request a copy of the last tax filing they prepared.  Before we can even begin, we have two major milestones to overcome with SSA and OPM.

In another case, medical expenses escalated and consumed all of the couples liquid assets. While my client owns a business interest, home and commercial property, they have limited cash flow that can’t cover their current monthly expenses. Without last years taxes, we can’t apply for a loan to bridge them through the next few months until one of the properties can be sold.

This is on top of all the emotions and energy around dealing with failing health. While skipping the taxes might seem like a simple solution to catch your breath, it just might knock you down a year later.

Just sharing a reminder NOW, so you have time to get in the 2017 taxes. Encouraged.  

The Lingering Nuisance of Tax Issues

taxesI have seen several reports that discuss that symptoms of dementia can be present up to ten years prior to any type of diagnosis. I know that it took our family several years to finally get my parent’s diagnosed officially. That was well after my siblings and I held two interventions to share our concerns around our parent’s living and driving arrangements.

We noticed behavioral changes, witnessed problems handling home maintenance, and a growing number of dings on their car bumpers. We were primarily concerned for their health and welfare.

Today I had to follow-up on an state tax notice about returns not being filed. The notice is for returns related to my mom’s antique repair business. It’s also covering the period of 2005. I know in the past my sister had to chase down tax issues for my parents.

Two weeks ago I placed the first call. After navigating the phone system, I finally reach a person who tells me they can’t help me because they need a copy of the Durable Power of Attorney giving me the ability to represent my mom. I faxed it in and followed up today to resolve the issue. After 40 minutes in a variety of queues and in speaking with two different divisions of the state tax department, I finally reach the person who can help me resolve the issue.

When she starts asking me for my mom’s address and phone number, I let her know my mom is in the care of a dementia community and is unable to speak on her own behalf. I also tell her I have only been doing mom’s taxes for 2 years and never gotten a notice until now.  I tell her that we no longer have copies of the 2005 taxes because we followed the guidance that says you keep them for 7 years. I just ask her what I need to do to resolve the issue.

The representative is very kind and asks a few follow-up questions. She tells me she is going to resolve this issue. Apparently, mom was sending in the money, but never sending in the Sales and Tax Use reports that were to be filed with her payments.

I wish there was something I could have done when I first noticed problems, but I’m not really sure it would have changed the outcome. I am just glad this was a relatively easy lingering tax issue that is now resolved. Completed.