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Timely Filing: Do You Want the IRS to File Your Tax Return?

2022 – 05/04 When taxpayers fail to timely file tax returns, the IRS may do it for them. One engineer had substantial income from various entities. For several years, he filed returns late or not at all and didn’t cooperate with the IRS. The IRS used third-party financial records to reconstruct his income and assess a tax liability. He argued that the IRS erred by not allowing him certain business expenses, though he failed to support the expenses. The U.S. Tax Court found indications of fraud by the taxpayer, notably the “intent to mislead, conceal, or obstruct” the IRS tax assessment, including his filing of false Forms 1099. The court upheld the tax and penalties imposed by the IRS. (TC Memo 2022-33)

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