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Can Filing Without an IRS Prescribed Form Cause You a Tax Problem?


Some contend that you can get a blank piece of paper and write your income and expenses and file it with the IRS as your return. According to them you are considered that you filed your income tax return. They say that it is a tax return as long as your liability can be calculated from the information you provided.

The IRS stipulates that a tax return must contain sufficient information a) to calculate the tax b) on the prescribed IRS forms c) signed under penalty of perjury. So, if you file a piece of paper even if it contains all the information mentioned above except the right IRS form, the IRS may take the information but you will not benefit according to the IRS for example of collection statute of limitation that applies only to filed returns.

If you omit information that substantially causes incorrect tax liability, you may be considered to have filed a frivolous return. The penalty for frivolous returns is very heavy at $5,000.

The question has risen…what if you are a drug dealer? Should you file the tax return to include your illegal income and thus expose yourself to self incrimination or not file the tax return because every citizen is protected against self incrimination? Thus, instead of filing the return you invoke the Fifth Amendment.

Although the Fifth Amendment may have a precedent over the requirement to filing, the courts reject the nonfiling argument. So what should one do? If the drug dealer files and discloses the illegal income he will go to jail for engaging in illegal activities. If he does not file the return, he will go to jail for not filing? 

It is suggested (consult your tax lawyer or legal representative) that he should file the return and invoke the Fifth as to the occupation to avoid self incrimination. Even claiming the Fifth against certain questions in the tax return may render the information as incomplete and deprive the taxpayer from the definition of a filed return. Tricky isn’t it? This is rough water, make sure to consult your tax attorney (not your CPA or enrolled agent).

Signing the tax return is also tricky. First off if you did not sign the tax return you are considered to not have filed (the IRS will send you a form saying that the return is in their custody and you approve it. Then it is ok even if you did not sign the original return as long as you agree with the letter). 

When you sign the return, the IRS assumes that the signatures are correct. Sometimes if a husband signs for the wife and later the wife claims that she did not sign the return to pass the tax problems to her husband. It was held that her mere tacit approval of him signing on her behalf constitute a valid signing by her.

Amended returns

You can amend the tax return before the lapse of the three years of limitation. The question has risen…when one filed a fraudulent tax return originally and then amend the fraudulent return into the correct return, does he enjoy the privilege of the three year statute lapse after the assessment? It is known that there is no statute of limitation for fraud. For example if one files a fraudulent return, can the IRS audit him after three years when they normally cannot do that with “honest” tax returns?

The answer is yes, they can audit him anytime because the return was prepared with fraud. Now the question: What about the amendment with an “honest” return, would the audit statue in this case apply and protect taxpayers after three years from the correct tax return filing? The answer is no. The IRS considers in this case the original return the one to go by for the statute.