1120 - skipping unfiled years

[ILLMAS]

I have a client that has not brought in their information since 2012, and they need their 2016 and 2017 corporate tax return to be prepared for a loan they are applying for, can I go ahead and skip 2012-2015 (screw retained earnings) and just prepare and file 2016 and 2017?  I have never encounter this situation before.

[Lee B]

About 10 years ago Oregon had a tax amnesty. I prepared 11 years of regular corporate  returns . My  client filed the state returns and did not file the federal returns.

My client paid Oregon the corporate tax due plus 1/2 of the interest. The state waived all penalties and 1/2 of the interest.

The next year I prepared and my client filed both federal and state corporate returns, which we have done every year since then.

To my surprise, my client has never received any letters from the IRS about the missing 11 years of Form 1120.

[Max W]

I don't think the IRS will be a problem.  The first year that penlties were applied for non-filing was 2015, so  I think 2014 would have had to been filed in order to flag 2015.

A larger problem, but not yours, is that your client didn't file an annual report(s) with the SOS, which is required to keep it in good standing.  The SOS maintans an on-line list with each corporation's status.   If the corp is not in good standing, the bank might deny the loan  and/or put more honerous conditions on the loan.  

Ir is also possible that the corp has ben suspended.  Suspended corp contracts are null and void.

[Catherine]

The other piece is depreciation on any assets bought during the "missing" years.  If the corporation is in a position to Section179 everything - or if they didn't buy anything that qualifies as an asset during those years - then if your client can confirm through the SOS's office that the corporation still exists, go for it.  Many times, too, you can reinstate a corporation by filing all the back annual reports and paying the fees (plus a sweetener, frequently called a reinstatement fee).  Else he has to open a new corporation, get a new EIN, and he can kiss this particular loan goodbye and try again once his paperwork is in order, in two or three years.  Of course, no one is going to loan money to a brand-new corporation with zero history...  You can't save some people from themselves and it's NOT our job to try.  

[Max W]

13 hours ago, Catherine said:

 You can't save some people from themselves and it's NOT our job to try.  

Amen!

[Roberts]

It's rather shocking to me that sending in a return doesn't produce a letter from the IRS requesting those missed years.

[Abby Normal]

28 minutes ago, Roberts said:

It's rather shocking to me that sending in a return doesn't produce a letter from the IRS requesting those missed years.

The IRS treats each year separately, and they're underfunded and understaffed right now. The shutdown plus the new tax law with a 1040 redesign, have put them in a serious bind.

[Max W]

4 hours ago, Roberts said:

It's rather shocking to me that sending in a return doesn't produce a letter from the IRS requesting those missed years.

I don't think that happens any more, since the non-filing penalties were introduced.

[Roberts]

Mailed in a state power of attorney form - state says it takes up to 16 weeks to process their mail. Mention it's over 16 weeks - well it may have been lost.

Mailed in an amended return because client said she received her IRA distribution and then later figured out she rolled it over. It's been 16 weeks and IRS has sent her two bills for past due and still hasn't processed the amended return.

[Max W]

IRS open year amended returns used to take 4 months to process.  Older years ????   I had one that took 18 months and that was only after TAS got involved.