ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Monday, February 26, 1996 TAG: 9602270005
SECTION: MONEY PAGE: 6 EDITION: METRO
COLUMN: Money Matters
SOURCE: MAG POFF
Q: About 20 years ago, I dropped out of paying income tax after earning no income for two years. I have regained some income, and it has steadily increased for 18 years until it's now in six figures - and I still haven't paid any taxes.
After 20 years, what are the chances of the Internal Revenue Service finding out about this and doing anything about it?
A: The IRS would advise you to come forward and pay the taxes, so we put the question instead to a certified public accountant with a specialty in tax matters.
Fulton Galer of McLeod & Co. in Roanoke had the same advice.
Galer had never heard of anyone getting away with failing to file a return for more than two or three years. He said you must be self-employed to avoid filing a W-2 withholding form with the government. You can't have any investments because the bank, brokerage or other provider of investment also would be required to report. Galer said he doesn't see how anyone with even a bank checking account could get away with such a course of conduct for very long.
Of course, you may operate entirely on a cash basis or use false numbers.
The chances are "pretty good" that the government will find you sooner or later, Galer said.
He would advise you to contact the government because the penalties for failing to do so are severe. You may get away with it permanently, but if you don't, he said, "there's really going to be hell to pay."
If you are caught after 20 years, he said, you could face criminal prosecution.
That would be in addition to civil fines and penalties. If you file a return, the government can question it only for three years unless fraud is involved, he said. But if you fail to file at all, the IRS can go back for the entire 20 years.
You probably would face only civil fines and penalties if you go to the IRS and turn yourself in, Galer said.
But do not go alone. You should retain the services of a certified public accountant who is a specialist in taxes and who is qualified to practice before the IRS. Let the accountant advise you on the best way of handling the situation.
LENGTH: Short : 49 linesby CNB