Wednesday, February 8, 2012

Is There a New Special 80% Tax Bracket I Missed?

A relative who is retired in Canada is being hit up by IRS for more than $80,000 in back taxes for 2006-2008--a period when she had less than $40,000 a year in income.  Or does IRS just make up the bills?

UPDATE: Simpler than I thought.  The relative was senile; her son is a U.S. citizen, but hasn't lived in the U.S. in decades, and the daughter-in-law is a Canadian.  They didn't know that they had to file tax returns for a U.S. citizen with income coming from the U.S.  IRS, not seeing a tax return, made assumptions about income and deductions (which were not favorable) and assessed an $8000 penalty for each year that there was no tax return filed.  It will be interesting to see if IRS can be persuaded to drop the failure to file penalties because of ignorance.


  1. I'd suspect penalties and interest are involved.

  2. Are they imputing income based on some bogus 1099's? Like a forgiveness of mortgage?

  3. IRS's usual stunt: when you don't file tax returns, they make the worst possible assumptions as an encouragement to file in the future.