Attorney Successfully Resolves Deceased Parents Tax Issues

The Back Story:

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Individual from Cook County, Illinois

Our taxpayer’s parents died and our taxpayer was named as the executor of both estates.  During his parents’ final illnesses, each of them received in-home care from caregivers that his parents interviewed and hired.  Both parents handled all of their financial affairs on their own, including paying the in-home caregivers.  Unfortunately, after both parents died, our taxpayer discovered that his parents did not file many years of tax returns with the IRS.  Further, Forms 1099 were issued to the in-home caregivers for some of the years and Forms W-2 were issued to the in-home caregivers in other years.  The parents also did not always issue Forms 1099 or W-2 to the in-home caregivers.  Worse yet, no Form 941 tax returns were filed related to the in-home caregivers that were treated as employees and no federal tax deposits were ever made.  After his parents’ deaths, our taxpayer attempted to engage both the IRS and the Illinois Department of Revenue regarding the outstanding tax issues.  Unfortunately, the IRS then attached his name to his parents’ tax problems and notices began to be issued in our taxpayer’s name.  Because there were no assets in either parent’s estate, we contacted the IRS and persuaded them to deem both parents’ cases as uncollectible.  Being deemed uncollectible means that the tax liability still remains in full force and effect and interest continues to accrue.  However, the IRS will not take any enforced collection action while the parents’ cases are in uncollectible status.  We also devised and implemented a strategy regarding the Illinois tax matters and our taxpayer has not heard from the State of Illinois since that time.  Although our taxpayer has lost both parents, he can now move forward knowing that his parents’ tax problem has been addressed and that he personally does not have to live in fear of the IRS.