# Death & us taxes



## susan85

Hi everyone,

Right, loooong story short:

I am an American living abroad. I try my best to do my taxes and keep them in order.

My mother and father also live/d abroad, but in a different country. My dad was very old and died at the start of the year. My mother is not American, has weak English, and is still alive.

My dad always did their taxes but never touched the internet in his life so filed the same way for the last 30 years. My mother continued the way he was doing it for the last few years, after he was sick and needed care (from my mother, full time).

Well, my mother got a bill for 8000 dollars relating to a recent tax year. She sent an amended return trying to fix it (and also redid 2017), but no idea if that arrived or not, as a a final warning bill - with late fees and interest - then came. No acknowledgement of the amendment.

Looking through the tax forms, my mother is very scared that if she tries to appeal and fix it (by sending the amended return again, in case they never got it), that they might start digging in previous years and find other mistakes that my dad might have made. She is inclined to just pay the 8000 and then hope 2017 is fine and then file for 2018 until the point when my dad died, and hope she never hears again (and then stop filing as she is not American). (She's not heard anything about 2017 yet, the original or possible amended.)

My questions are -

Is this the best strategy? Obviously she shouldn't really owe any taxes, as the taxes were all paid for locally in the country where they live, and there was just a mistake in the 1040 form and where the figures went. But there could indeed be a series of mistakes and other problems due to lack of knowledge, and from when my mother has been filing, lack of language as well, and not quite understanding what she was doing given she was busy 24/7 caring for my sick dad. I get the idea behind just paying to get them to stop digging, but in previous years, no tax was ever due - so my worry is that they might say "if 8k was due for this year, then every other year that was 0, surely there is something due?" and this apparent acknowledgement of wrongdoing and actually owing taxes could maybe actually get them to dig?

We have no assets, bank accounts, or money in the US. If more bills start appearing for other years - 2017 or previous years - and the decision were to be taken to not pay it given my dad is gone, there is no money left after paying this 8k, and it is not right to take the bit of money my mother has to pay double taxes on money that shouldn't be taxed and that wasn't even hers anyway - would there be consequences? My mother has no plan to ever go to the US in her late years now, but I am more worried - from this perspective - about myself, who is American. I have no plans to move back, but if I ever were, I don't want this 'possible' ridiculous debt to come after me. 

I read something about 'compromise' offers. This is a final warning letter with the bill, are we past the point where we could try to get a compromise offer to at least lower this 8k?

I welcome any and all thoughts. Stuff like this really makes me consider revoking my citizenship as it is all just such a hassle, and if I ever have a kid, I'm definitely not registering him as American as it is just more of a burden if you live abroad.  All this is completely unfair on my elderly, non-American mother!


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## Bevdeforges

You may want to try contacting the IRS taxpayer advocate to see what is going on here. https://www.irs.gov/taxpayer-advocate

None of this should rebound onto your shoulders. Your father is dead and certainly can't be expected to file a final return for himself. (I've heard stuff about filing a "final return" but I certainly never filed anything like that for my father, 10 years ago when he died.)

But the taxpayer advocate program has a good reputation for being able to work through bizarre stuff like this.


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## Nononymous

Susan - condolences. This is a perfect example of why long-term non-resident US citizens have no business filing US tax returns.

If your mother is not a US citizen, and there are no US assets, then the story ends here. All future mail from the IRS goes directly to recycling. She should not pay anything. She should not continue to file. Basta. With a few very specific exceptions, the IRS has no ability to collect penalties beyond US borders. (Does your mother have citizenship in her country of residence? You are free not to disclose if you don't wish to, but knowing countries of residence and citizenship is useful for providing advice.) 

I don't think there's any way your parents' tax issue could affect you in future. In your case, it's unfortunate that you've been filing, and you may one day wish to stop, if you have no plans to return. Depending on citizenship, place of birth and country of residence, it may be perfectly easy for you to conceal US citizenship from banks to avoid FATCA reporting and simply cease sending in tax returns.


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## JustLurking

susan85 said:


> Well, my mother got a bill for 8000 dollars relating to a recent tax year. She sent an amended return trying to fix it (and also redid 2017), but no idea if that arrived or not, as a a final warning bill - with late fees and interest - then came. No acknowledgement of the amendment.


If I were in your shoes, I would start here. Why has the IRS not acted on the amended returns?

How much time has elapsed since sending them? If only a little, well, the IRS is not exactly efficient, so it could just be that it is too soon for them to be processed. Otherwise, maybe start by requesting tax transcripts from the IRS for the years in question.

Beyond that, it seems like there is no harm in phoning the IRS and getting them to check over what they (think they) have received for these years. Use Skype and US toll-free numbers to avoid being bankrupted by their long hold times. Also, if you can use your time zone difference to your advantage, so as to call them as soon as they open, this might speed things along for you. Both you and your mother can be on the call, with you as interpreter. The morons who write US tax laws are cynical, heartless, callous, vindictive and cold, as is the IRS as an institution (I hesitate to write "service" here). But the individuals who work there, particularly on the front-line, are generally entirely human, and provided you deal with them courteously and politely will sometimes turn out to be much more helpful than you might expect. My own interactions with them have mostly been surprisingly positive.

What is the nature of the income for which the IRS thinks your mother owes them $8k? A foreign tax credit for local country taxes usually wipes out any US tax, but there are some areas where this doesn't happen. Some capital gains on a home sale, for example. Or gains or income in locally tax-advantaged accounts that the US simply does not recognise as tax-advantaged.

TAS is there if you need them after this. And ultimately of course, if you get nowhere with any of that, the supposed $8k 'debt' is effectively 'not collectable' by the US from people with no US assets or presence, so no way should your mother 'pay off' the IRS just for a quiet life. None of it can rebound on you personally either, since you (presumably) did not sign the returns in question.

TL;DR You can probably sort this out with a bit of persistence, and to my mind a clean exit beats a messy one, but in the worst case then as *Nononymous* already noted, you should be able to just ignore the 'debt', so either way you don't give in to the IRS on their demand for $8k.


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## susan85

Thank you for the replies. To address some of the points made above:

My mother has citizenship in her country of residence, and nobody where I live knows I am American as I use my non-American passport for bank accounts etc. However I do keep my finances tidy and in order, and as simple as possible, so I personally do file (FBAR too), and have never had a problem (as of yet!).

The amended returns were sent last summer, and this final warning came recently, with the same bill plus new fees. My assumption is they didn't get it since the bill was sent 3-4 months after the amended returns, but maybe they just rejected it outright, I don't know.

The issue with contacting the IRS, whether it is the advocate or anyone else, is that my mother's English is weak, and when she did phone last week, they did not allow her to pass on the phone to me or anyone else who could speak to them about it (not to mention that I am in a different country to her). All she managed to get out of the call was that the agent told her to fill out the cp504 appeal form.

My mother filed/files joint returns with my father (the American citizen), and she lived in the US two decades ago, but obviously now it is just her. She doesn't plan on continuing filing after she files his 'final return' for 2018 to bring it up to his death (she doesn't know that technically she needs to continue, and I do not plan on letting her know that to add to her stress).

The issue here is that despite her not being American and there being no US assets whatsoever, she is in an absolute panic about the IRS coming after her, or if she never deals with this, them coming after me later on when she dies. The letters/bills were sent in two copies, one in her name, and one in my now-passed father's name. There was a minor inheritance when my dad died, and from reading about it, the IRS could demand some of that money from me to pay these outstanding bills given the inheritance...right? Or? Online it says they can do it even if it's already been given out and spent, however, obviously the inheritance was dealt with under the local laws and handed out, so the IRS does not know about it (and I doubt my mother would know how to report it to them in the final return, so it won't be). But the theoretical possibility of them trying to down the line get it from me, especially if I were to ever consider moving back to the US (which I am not at this point at least), scares me.

The main issue here is that my mother is deathly afraid that if we try to send amended returns again, or file an appeal against this cp504, or phone and begin asking etc etc, that they will start digging into other years. As of yet we've not heard about 2017, so she is inclined to just pay this one as soon as possible (as in, this week), and hope we don't hear about 2017 and that we can file 2018 and then have it all done and over with the IRS forever.

It's all normal income as far as I know, and they normally use the exclusion to get rid of the tax bill, so I assume there must have been some sort of mistake made here. However my mother has not kept the original forms sent back in the day, only the amended one where there was then no tax due, so I don't know where the mistake was made. However I am not involved in their money or taxes or how they do things, so I am not completely sure.

Part of me wants to advise my mother to just ignore the bill, not pay, and never do anything about it, but what is more likely to get them to stop digging and harassing - including for other years - simply paying up, or ignoring, or trying once more to amend? Essentially, we, and my mother in particular, just want this to go away as easily as possible, and she is pretty much ready to spend loads of savings to pay this bill if that's the easiest way to get the IRS away forever. She is scared and also doesn't want this to become an issue for me down the line (through I read about the 10 year statute of limitations, too!).

Thanks again for any and all advice. It's all fairly urgent as she is trying to figure out some sort of way to send 8 grand via a postal order or something else this week.


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## Bevdeforges

OK, the one possibility I see from what you've said is that the Foreign Earned Income Exclusion doesn't apply to pensions or investment income and perhaps your father mistakenly used the exclusion for what the IRS calls "unearned" income. There are other ways to offset taxes on "unearned" income against taxes paid to your country of residence, so normally the IRS doesn't bother going after these sorts of errors. But maybe they hit an agent trying to make a name for himself.

This is the website for the Taxpayer Advocate Service: https://taxpayeradvocate.irs.gov/get-help

Unfortunately, there don't seem to be any "local" TAs outside the US, though I believe they refer overseas taxpayers to an office in Puerto Rico. (Maybe not restored since the big hurricane, since I don't see it listed on the site.) But maybe you could call them if only to ask if there is any TA assistance in your mother's language.


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## JustLurking

One other suggestion -- have you considered _Innocent Spouse Relief_, in particular, _Separation of Liability Relief_?

That is, rather than argue that the $8k is not owed (even where it is not) it may be easier to argue that your mother is not responsible for any tax mistakes your dead father may or may not have made. It certainly sounds like she meets all the requirements for these reliefs.


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## susan85

I looked at that form and I think that might be difficult to do since she signed herself when sending the amended return back in summer, since my dad had already died by then.

If the amended return had been received, would they have said anything about this before sending the next (final) warning with a bill?

The confusing thing is that this warning doesn't actually say what the mistake was (in their mind) that caused the bill. Maybe early warning letters never arrived before this cp504, but we're in the dark at the moment about it.

If it is pension income being chased after because it was done under the exclusion, that means other years would have been done the same, so the fear is that they might come after other years. But I don't know which option is worse, paying up for it or trying to amend again and fight it etc, in terms of getting them to dig further. Any thoughts on that? There would be no original documents to prove any of it either, and we wouldn't want to send these to the IRS anyway.

Also - any thoughts of any chance of them trying to chase this with me given my dad's death and inheritance (which as said was done all outside of the US and the inheritance won't be reported), if it were to not be paid?

Thanks again!


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## susan85

Right, it does seem to be that this issue came up because it was listed as pension income and then excluded at 2555 - and this is in the amended return, too, if they ever got it. 2017 was also done this way (both originally and in the amended sent over summer), so now my worry becomes that 2017 will also have a tax bill after it.

What would be the best option here then, given it has been done this year all other years and we don't want to open a pandora's box of all years being chased after? Options seem to be:

1 - amend this year again, with foreign tax credit? Never done it this way before so not sure it can be done. My father was sick for years so I think in this country, it actually made him exempt from paying taxes altogether... so maybe there'd have been no foreign tax on it at all. I'd need to check.
2 - just pay and hope they don't chase 2017 or other years
3 - ignore all this from now on and not pay at all (in which case my question above about inheritance and it being chased from me becomes the main issue)


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## susan85

(In the form, they listed the tax in the amended return, and attached the 2555, but they never actually put in a line that showed -8000 anywhere in the form, it just went from tax 8000, and then final tax 0 - maybe that's all the system caught, if it didn't care about the actual pension thing. Also, there is no tax treaty with this country where they live/d and the US.)


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## ndiamond

I registered for this forum only to try to help you, but it looks like my first reply to you was moderated out of existence. Sorry I didn't keep a copy. Maybe the super moderator can find it.

"when she did phone last week, they did not allow her to pass on the phone to me or anyone else who could speak to them about it (not to mention that I am in a different country to her)."

Your mother should submit IRS form 2848 to designate you as her representative. Meanwhile, if you do a conference call through Skype (you call your mother Skype-to-Skype and you add an IRS toll free phone number to make a Skype conference call) it's still free, as I did for my wife around 2 years ago.

"he doesn't plan on continuing filing after she files his 'final return' for 2018 to bring it up to his death (she doesn't know that technically she needs to continue,"

If your mother had a green card and didn't submit a form to officially relinquish it, do so now. After relinquishing the green card, she probably will not need to continue submitting US tax returns as a non resident alien. There are a few exceptions where US law would require her to continue submitting US returns, but it doesn't sound like your mother would be "covered" by them.

"The main issue here is that my mother is deathly afraid that if we try to send amended returns again, or file an appeal against this cp504, or phone and begin asking etc etc, that they will start digging into other years."

Do appeal the CP504. It sounds like there hasn't been a Notice of Deficiency yet, probably, but you should still check. From your original posting it sounds like they're planning to issue one. If a human reads the appeal of CP504 and reads a copy of the amended return then the problem might end without a Notice of Deficiency.

The IRS can decide at random whether to dig into other years. I can't imagine why the probability would increase due to your mother correcting an error. If a similar error was made in another year and your mother has to make a similar correction, the IRS should see that they wouldn't get any benefit from it.

But if your mother does nothing then she and you should expect that things will definitely get worse.

"As of yet we've not heard about 2017, so she is inclined to just pay this one as soon as possible"

DON'T DO IT. If she doesn't really owe the money, then she can prepare for the possibility that the IRS might issue a Notice of Deficiency and she will have to petition Tax Court, but a Low Income Tax Clinic should be able to prove in Tax Court that she doesn't owe the money. If she pays first then a lawsuit for refund has to be filed in US Court of Federal Claims, there will be no assistance from a Low Income Tax Clinic, the opponent will be the US Department of Justice instead of the IRS, and the DOJ tells even bigger lies than the IRS. She will not stand a chance that way. So do not pay, do appeal the CP504, and prepare for the possibility of a Notice of Deficiency.

Also she might be able to get assistance from a Low Income Tax Clinic now before things get worse, though I don't know how to choose one now.

Don't pay now, but don't ignore notices either.

"However my mother has not kept the original forms sent back in the day,"

Form 4506 can get a copy of the return. I think the fee is US$50. A Low Income Tax Clinic will need to see it, along with the amended return and other correspondence.

"(through I read about the 10 year statute of limitations, too!)"

The statute of limitations is tolled during the time your mother is outside of the US. I do not know if it will be tolled after her death when her estate will be outside of the US. There might be a reason why the IRS cannot obtain collection assistance from another country, but under US law the collection period will not expire.

"If the amended return had been received, would they have said anything about this before sending the next (final) warning with a bill?"

Yet again, theory and practice are unrelated. However, later you say that the amended return made the same mistake as the original return, so it might not affect the bill.

"The confusing thing is that this warning doesn't actually say what the mistake was (in their mind) that caused the bill."

No kidding. This is why your mother should try to contact a Low Income Taxpayer Clinic now. The IRS likely will not even answer this question until after the case is in Tax Court.

"If it is pension income being chased after because it was done under the exclusion, that means other years would have been done the same"
[...]
"Right, it does seem to be that this issue came up because it was listed as pension income and then excluded at 2555 - and this is in the amended return, too,"

No wonder the IRS is chasing your father's estate. Submit a second amended return using Form 1116 Foreign Tax Credit to reduce the amount of US tax by the amount of tax your father paid to the other country. Do not delay. Also appeal the CP504, explain this mistake, and include a copy of the second amended retun. The IRS might still ignore it, but your mother has to do it. Send the amended return by registered mail or EMS if EMS is affordable in your mother's country.

Do prepare to submit amended returns for other years that had the same mistake.

"My father was sick for years so I think in this country, it actually made him exempt from paying taxes altogether... so maybe there'd have been no foreign tax on it at all. I'd need to check."

Yes you need to check.

"Also - any thoughts of any chance of them trying to chase this with me given my dad's death and inheritance"

Yes. Therefore again, you should not let your mother ignore the notices. Though if all of your assets are in a country where you hold citizenship then your country will not help the IRS collect.


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## Bevdeforges

Had not heard before of these Low Income Tax Clinics, but it appears that they are linked with the Taxpayer Advocate Service. 

It might also be a good idea to get transcripts of the last few years of tax returns, if only to see what is the version currently "in the system." https://www.irs.gov/individuals/get-transcript I don't believe there is a charge for transcripts.


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## susan85

ndiamond said:


> I registered for this forum only to try to help you, but it looks like my first reply to you was moderated out of existence. Sorry I didn't keep a copy. Maybe the super moderator can find it.
> 
> "when she did phone last week, they did not allow her to pass on the phone to me or anyone else who could speak to them about it (not to mention that I am in a different country to her)."
> 
> Your mother should submit IRS form 2848 to designate you as her representative. Meanwhile, if you do a conference call through Skype (you call your mother Skype-to-Skype and you add an IRS toll free phone number to make a Skype conference call) it's still free, as I did for my wife around 2 years ago.
> 
> "he doesn't plan on continuing filing after she files his 'final return' for 2018 to bring it up to his death (she doesn't know that technically she needs to continue,"
> 
> If your mother had a green card and didn't submit a form to officially relinquish it, do so now. After relinquishing the green card, she probably will not need to continue submitting US tax returns as a non resident alien. There are a few exceptions where US law would require her to continue submitting US returns, but it doesn't sound like your mother would be "covered" by them.
> 
> "The main issue here is that my mother is deathly afraid that if we try to send amended returns again, or file an appeal against this cp504, or phone and begin asking etc etc, that they will start digging into other years."
> 
> Do appeal the CP504. It sounds like there hasn't been a Notice of Deficiency yet, probably, but you should still check. From your original posting it sounds like they're planning to issue one. If a human reads the appeal of CP504 and reads a copy of the amended return then the problem might end without a Notice of Deficiency.
> 
> The IRS can decide at random whether to dig into other years. I can't imagine why the probability would increase due to your mother correcting an error. If a similar error was made in another year and your mother has to make a similar correction, the IRS should see that they wouldn't get any benefit from it.
> 
> But if your mother does nothing then she and you should expect that things will definitely get worse.
> 
> "As of yet we've not heard about 2017, so she is inclined to just pay this one as soon as possible"
> 
> DON'T DO IT. If she doesn't really owe the money, then she can prepare for the possibility that the IRS might issue a Notice of Deficiency and she will have to petition Tax Court, but a Low Income Tax Clinic should be able to prove in Tax Court that she doesn't owe the money. If she pays first then a lawsuit for refund has to be filed in US Court of Federal Claims, there will be no assistance from a Low Income Tax Clinic, the opponent will be the US Department of Justice instead of the IRS, and the DOJ tells even bigger lies than the IRS. She will not stand a chance that way. So do not pay, do appeal the CP504, and prepare for the possibility of a Notice of Deficiency.
> 
> Also she might be able to get assistance from a Low Income Tax Clinic now before things get worse, though I don't know how to choose one now.
> 
> Don't pay now, but don't ignore notices either.
> 
> "However my mother has not kept the original forms sent back in the day,"
> 
> Form 4506 can get a copy of the return. I think the fee is US$50. A Low Income Tax Clinic will need to see it, along with the amended return and other correspondence.
> 
> "(through I read about the 10 year statute of limitations, too!)"
> 
> The statute of limitations is tolled during the time your mother is outside of the US. I do not know if it will be tolled after her death when her estate will be outside of the US. There might be a reason why the IRS cannot obtain collection assistance from another country, but under US law the collection period will not expire.
> 
> "If the amended return had been received, would they have said anything about this before sending the next (final) warning with a bill?"
> 
> Yet again, theory and practice are unrelated. However, later you say that the amended return made the same mistake as the original return, so it might not affect the bill.
> 
> "The confusing thing is that this warning doesn't actually say what the mistake was (in their mind) that caused the bill."
> 
> No kidding. This is why your mother should try to contact a Low Income Taxpayer Clinic now. The IRS likely will not even answer this question until after the case is in Tax Court.
> 
> "If it is pension income being chased after because it was done under the exclusion, that means other years would have been done the same"
> [...]
> "Right, it does seem to be that this issue came up because it was listed as pension income and then excluded at 2555 - and this is in the amended return, too,"
> 
> No wonder the IRS is chasing your father's estate. Submit a second amended return using Form 1116 Foreign Tax Credit to reduce the amount of US tax by the amount of tax your father paid to the other country. Do not delay. Also appeal the CP504, explain this mistake, and include a copy of the second amended retun. The IRS might still ignore it, but your mother has to do it. Send the amended return by registered mail or EMS if EMS is affordable in your mother's country.
> 
> Do prepare to submit amended returns for other years that had the same mistake.
> 
> "My father was sick for years so I think in this country, it actually made him exempt from paying taxes altogether... so maybe there'd have been no foreign tax on it at all. I'd need to check."
> 
> Yes you need to check.
> 
> "Also - any thoughts of any chance of them trying to chase this with me given my dad's death and inheritance"
> 
> Yes. Therefore again, you should not let your mother ignore the notices. Though if all of your assets are in a country where you hold citizenship then your country will not help the IRS collect.


Thank you for the extensive reply.

I checked with my mother and because he has been sick, he's not had to pay taxes in his country for the last free years...the pension becomes tax free I'd you're ill. And there's no exclusion for pensions there since there is no tax treaty with the US. So now I'm not sure what to do. Because then I guess technically the tax is due to the US.

I'm worried that if we pay then they could dig for other years, this will be the same for all/countless years. Since the inheritance was done in his country, how could the Us chase me if they don't know how much inheritance, if any, there was? 

All the court chat in your reply has properly scared me.


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## Bevdeforges

Don't get freaked out by the court talk. Do contact the Taxpayer Advocate Service. That's the kind of thing they are there for. Strangely enough, they do actually defend the interests of the taxpayers, and at the very least, you can find out how to get support for your mother in her native language if it's available. Or else how to officially get approval to deal with the IRS for your mother.

It's highly unlikely that any tax issues of your father's should come back to roost on you. That's just not how tax law works in the US.


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## JustLurking

susan85 said:


> I looked at that form and I think that might be difficult to do since she signed herself when sending the amended return back in summer, since my dad had already died by then.


I'm not sure this is a barrier to claiming Innocent Spouse Relief. This is your father's pension, not your mother's, and _Separation of Liability Relief_ should specifically allow your mother to disengage from any tax debts or understatements relating to your late father's income. That is its purpose.

All your mother has to do is to show that she is widowed (easy) and then affirm that she had no 'actual knowledge' of the original understatement or omission (also easy). Later attempts to remedy some paperwork fault don't alter the fact that this income was never hers in the first place.

Also, I can't see any barrier to pursuing this in parallel with any attempts you might make to straighten things out in any other way. And if the money does turn out to be something that really is US taxable (tax-free local pension income, say), then Innocent Spouse Relief looks likely to me to be the best way to get free of the debt without having to pay it. In particular, it looks like you won't want to pay first and then try to obtain a refund through Innocent Spouse Relief, because refunds are specifically not available under Separation of Liability Relief.


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## Nononymous

Susan - a few points.

One, it sounds like the biggest hurdle you will face is psychological. If your mother is convinced that it has magical powers, she will live in fear of the IRS for the rest of her time on earth. This is unfortunate and I'm not sure what if anything you can do about it. Your parents (and you) should never have been filing, but what's done is done.

Two, there's a chance she might actually owe the damn tax, if it was pension income that became tax-free in your country of residence. Bad luck it was figured out at the end, if he'd excluded it (incorrectly) with FEIE but gotten away with it until now. At which point the strategy becomes not so much how do we fix this, but how do we not make it worse and how do we find a psychologically acceptable means to not pay. I suspect Innocent Spouse Relief route is a good one. So is ceasing all future filing and communication. Do NOT, as you've been advised by multiple people, just pay the bill.

Three - how shall I put this? - be very careful with advice from ndiamond. He is well known on another forum. This post was relatively lucid (the usual mantra about "perjury is required but honesty is punished" is nowhere to be found) but essentially he has spent the last twenty years fighting the IRS about something nobody quite understands, so while his knowledge of tax court and whatnot is impressive, the bigger point is somewhat missed. That point being, don't give them your money, and stay the hell away. Disengage, quit while you're ahead.

My advice then is to try the spouse relief or low-income tax clinic route to find out what exactly happened, but knowing that you might not erase the debt (if the FEIE was wrongly applied) and that past years may also be wrong. So be prepared to convince your mother that the IRS has no ability to get her or her estate or you, and under no circumstances should she send them so much as a dollar. I suspect that this will not be easy for you.


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## susan85

JustLurking said:


> susan85 said:
> 
> 
> 
> I looked at that form and I think that might be difficult to do since she signed herself when sending the amended return back in summer, since my dad had already died by then.
> 
> 
> 
> I'm not sure this is a barrier to claiming Innocent Spouse Relief. This is your father's pension, not your mother's, and _Separation of Liability Relief_ should specifically allow your mother to disengage from any tax debts or understatements relating to your late father's income. That is its purpose.
> 
> All your mother has to do is to show that she is widowed (easy) and then affirm that she had no 'actual knowledge' of the original understatement or omission (also easy). Later attempts to remedy some paperwork fault don't alter the fact that this income was never hers in the first place.
> 
> Also, I can't see any barrier to pursuing this in parallel with any attempts you might make to straighten things out in any other way. And if the money does turn out to be something that really is US taxable (tax-free local pension income, say), then Innocent Spouse Relief looks likely to me to be the best way to get free of the debt without having to pay it. In particular, it looks like you won't want to pay first and then try to obtain a refund through Innocent Spouse Relief, because refunds are specifically not available under Separation of Liability Relief.
Click to expand...

Hnmm. Interesting. If we apply for this and thus don't pay for now, we are already at the last warning level. Would this cause issues and escalate, increase interest, etc. In the event it fails? It said to pay within 30 days.


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## susan85

Nononymous said:


> Susan - a few points.
> 
> One, it sounds like the biggest hurdle you will face is psychological. If your mother is convinced that it has magical powers, she will live in fear of the IRS for the rest of her time on earth. This is unfortunate and I'm not sure what if anything you can do about it. Your parents (and you) should never have been filing, but what's done is done.
> 
> Two, there's a chance she might actually owe the damn tax, if it was pension income that became tax-free in your country of residence. Bad luck it was figured out at the end, if he'd excluded it (incorrectly) with FEIE but gotten away with it until now. At which point the strategy becomes not so much how do we fix this, but how do we not make it worse and how do we find a psychologically acceptable means to not pay. I suspect Innocent Spouse Relief route is a good one. So is ceasing all future filing and communication. Do NOT, as you've been advised by multiple people, just pay the bill.
> 
> Three - how shall I put this? - be very careful with advice from ndiamond. He is well known on another forum. This post was relatively lucid (the usual mantra about "perjury is required but honesty is punished" is nowhere to be found) but essentially he has spent the last twenty years fighting the IRS about something nobody quite understands, so while his knowledge of tax court and whatnot is impressive, the bigger point is somewhat missed. That point being, don't give them your money, and stay the hell away. Disengage, quit while you're ahead.
> 
> My advice then is to try the spouse relief or low-income tax clinic route to find out what exactly happened, but knowing that you might not erase the debt (if the FEIE was wrongly applied) and that past years may also be wrong. So be prepared to convince your mother that the IRS has no ability to get her or her estate or you, and under no circumstances should she send them so much as a dollar. I suspect that this will not be easy for you.



Thank you. Yes she is freaking out and I started as well when I saw that reply about them coming after me, and the statute of limitations never ending while abroad, since who knows when I might ever return to the US! Certainly I visit sometimes.

I guess we can expect a bill for 2017 and now I wouldn't know how she would file 2018 up to his death. But maybe it being only a partial year, exclusions and deductions would be enough to cover it.

For now I guess the step is to apply for innocent spouse, but I'm worried about how final this notice was, and its deadline, while the other is considered. Not sure how often it is successful either?


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## Nononymous

If the IRS does not know about the inheritance, let alone to whom it was handed out, then I don't think they can realistically come after you for anything. Your future visits to the US should be safe.


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## Nononymous

susan85 said:


> Hnmm. Interesting. If we apply for this and thus don't pay for now, we are already at the last warning level. Would this cause issues and escalate, increase interest, etc. In the event it fails? It said to pay within 30 days.


Interest and late fees wont be an issue because you will never pay the bill. Your approach should be to stall and appeal and whatnot, and if that fails, buy a shredder for all future IRS mail.


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## susan85

Should I encourage my mother to just fill out the innocent spouse form and send it to the address on the cp504 bill warning letter, or to its normal place? And what about the appeal form? Should I get her to use that or not? Just one, or both? 

Thanks...not sure how to best advise the logistics of it.


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## Nononymous

Susan, one more quick thought. Two actually.

One, this really is a perfect example of why non-residents should never file US taxes, if possible. An utterly reasonable thing - home-country pension becomes tax-free in event of chronic illness - suddenly creates a huge US tax liability. The old "I file every year and it's never a problem because I never owe anything" refrain doesn't help when something like this happens.

Two, from a psychological perspective, if you could do the paperwork to be able to represent your mother in future dealings with the IRS, you could tell her that it's all sorted out and under control, while buying your own shredder for all their mail. If you'd feel comfortable doing that. You'd want to check that this won't somehow blow back on you as a US taxpayer, however.

PS on edit - Per comment number two, I would at least try the innocent spouse route as well, not go dark immediately. But you may have to go dark eventually, if they insist that she owes.


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## Nononymous

susan85 said:


> Should I encourage my mother to just fill out the innocent spouse form and send it to the address on the cp504 bill warning letter, or to its normal place? And what about the appeal form? Should I get her to use that or not? Just one, or both?
> 
> Thanks...not sure how to best advise the logistics of it.


Nor am I. Perhaps someone else here would know. I suppose one could fill out the innocent spouse form and attach a cover letter explaining that an amended return was filed and saying something like my husband passed away, I do not understand English very well and this must be a mistake, then send copies to every possible address, whatever is on the innocent spouse form, whatever is on the warning letter, and the taxpayer advocate service. Then see what comes back.


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## susan85

Nononymous said:


> susan85 said:
> 
> 
> 
> Should I encourage my mother to just fill out the innocent spouse form and send it to the address on the cp504 bill warning letter, or to its normal place? And what about the appeal form? Should I get her to use that or not? Just one, or both?
> 
> Thanks...not sure how to best advise the logistics of it.
> 
> 
> 
> Nor am I. Perhaps someone else here would know. I suppose one could fill out the innocent spouse form and attach a cover letter explaining that an amended return was filed and saying something like my husband passed away, I do not understand English very well and this must be a mistake, then send copies to every possible address, whatever is on the innocent spouse form, whatever is on the warning letter, and the taxpayer advocate service. Then see what comes back.
Click to expand...

The issue of course is that the amended ones, and all others, will also be wrong haha.

It's all a mess. My mother is elderly herself so will never go back to the US so that's fine, but it's more this coming after me down the line that worries me, since I hopefully still have a fair few years left!

And yes - I file because I'm an easy case so why not, but who knows when it can turn nasty overnight. It honestly makes me want to just get rid of my American citizenship while I am still an easy case.

My worry is my mother will want to do as she's told and will be desperate to pay, but given the situation, I imagine it's safe to say a similar bill will come for 2017 and could for others...

I guess the other thing to do simultaneously is to revoke the greencard? It's been unused for over a decade. I'll look into that.


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## Nononymous

It is indeed a mess.

If your mother never renounced her green card, she should file an I-407 immediately. That ends any future tax obligations. Or if she can be persuaded to go dark, that's another postage stamp she can save.


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## susan85

I saw this bit about the innocent spouse:

Whether the erroneous item represented a departure from a recurring pattern reflected in prior years' returns (for example, omitted income from an investment regularly reported on prior years' returns)


So that would concern me in terms of digging in other years since it'd have been done effectively the same way.


Also - I think my mother attached some sort of cover letter with the amended returns saying a mistake had been made and here is the new returns last summer. Wouldn't this then imply to the IRS that she knew about it all?


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## susan85

Just thought as well - innocent spouse doesn't actually clear me, does it. If it were to be successful it's no longer my mother's problem but it would be my father's so in theory at least the problem could follow the heir - me. 😕


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## Nononymous

The whole question of estates is rather a grey area. As a cheerfully non-compliant US-born Canadian who has not bothered to renounce, one small concern of mine over the years has been what would happen in the event of my death, were I not to be penniless. In one strict interpretation, the executor of the estate becomes a US person and is personally liable for ensuring that all US tax returns are filed correctly and debts with the IRS are settled etc. But of course if the deceased is non-compliant the IRS won't know of their death, and if the executor is a home-country citizen (i.e. a Canadian living in Canada) with no US financial ties, the IRS has no ability to enforce penalties. The risk then is that the executor panics upon learning of this responsibility and hires a bunch of lawyers and accountants to bring the estate into compliance, and there's no money left after all the fees, let alone tax bills.

I don't know if any of the above was helpful to you, but it could be that future problems would not follow the heir - you - but rather the executor, whoever that was. But again this is an area in which I do not speak with any great certainty. And the problem with seeking professional advice is that it generally always ends with "follow the law and file and pay" when "yes you'll get away with it" is the correct answer.


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## susan85

Nononymous said:


> The whole question of estates is rather a grey area. As a cheerfully non-compliant US-born Canadian who has not bothered to renounce, one small concern of mine over the years has been what would happen in the event of my death, were I not to be penniless. In one strict interpretation, the executor of the estate becomes a US person and is personally liable for ensuring that all US tax returns are filed correctly and debts with the IRS are settled etc. But of course if the deceased is non-compliant the IRS won't know of their death, and if the executor is a home-country citizen (i.e. a Canadian living in Canada) with no US financial ties, the IRS has no ability to enforce penalties. The risk then is that the executor panics upon learning of this responsibility and hires a bunch of lawyers and accountants to bring the estate into compliance, and there's no money left after all the fees, let alone tax bills.
> 
> I don't know if any of the above was helpful to you, but it could be that future problems would not follow the heir - you - but rather the executor, whoever that was. But again this is an area in which I do not speak with any great certainty. And the problem with seeking professional advice is that it generally always ends with "follow the law and file and pay" when "yes you'll get away with it" is the correct answer.


The executor was one of my half brothers - my dad's son, also living abroad, in the same country as my mother.

I spoke to my mother who is in a total panic and is convinced she must break her savings and pay, now. Fine, but what are the chances 2017 (or earlier years) will come knocking if she does? Or is it all not connected together? It took a year for this bill to appear (or rather when she got it, it was already stern, so maybe some letters were missed) but obviously 2017 has only had a few months, less if the wrong amended one was received.

I can cope with one year to end all this permanently, but all again for 2017...


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## Nononymous

Don't do it. If it was a three-year error, this might not be the last bill. Paying one is no guarantee that others will not appear.

The reality is that the IRS has no ability to enforce a penalty against your mother, if she is a citizen of the country in which she lives and has no US assets. Nor are you at risk as an heir.

However, unless you or someone else can get power of attorney, she has the right to make her own mistakes. Sadly at this point I think you have a bigger elder-management problem than you do an IRS problem. The only advice I can offer is for you to tell her that you will help her begin an appeal process that could take years, but in the meantime it's not necessary to pay, and that she need not worry because the IRS has no ability to enforce penalties - against anyone - outside the US. (That's not quite true, but it is true for anyone with citizenship in their country of residence.)


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## Bevdeforges

OK, the "sins of the father" are not going to visited on you as the daughter. US inheritance tax doesn't kick in until and unless the estate in question totals at least $5 million (I think it is). And at that, the IRS is only going to be aware of any assets your father left in the US. Plus, since you still have your US citizenship as of the time when the estate was settled and paid out, you aren't subject to any of the special rules for foreigners inheriting from a US estate. So take the money and run. It's the executor who is responsible for seeing that the inheritance taxes are paid.

Even people who have not filed US tax returns from overseas for many years are not stopped on entry to the US due to "failure to file." There are way too many completely legitimate reasons you may not have to file a US return from overseas (most commonly a simple matter of not having income above the filing threshold). 

The key thing at this point is to try to get your mother squared away so that she's not losing any more sleep over all this. I would at least attempt to contact the Taxpayer Advocate Service to ask about what they can do for your mother. They have filed any number of reports and studies very sympathetic to the difficulties and hassles of having to file from overseas and I'm fairly sure that if they aren't able to help you and your mother, they will tell you as much.

Ultimately, Nononymous is right - the IRS has little or no enforcement power outside the US.


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## susan85

Obviously the executor only worked within the local laws so did nothing with the IRS! All the IRS chat about demanding things back from heirs even after payout etc spooked me.

So I spoke to the mother - I've never heard her so panicked.

Her main concern is indeed the impact on me down the line (and the half brothers), and on her if I were to move back to the US and she would feel like she can't visit because the US is "out to get her".

If we were going to hear about other years going back or even 2017, would we have heard by now? She filed in April for 2017 and the amended one was in July I think. I think her grand hope is to pay and then hope no other year has an issue.

On the I407 form front, things are better. She is happy to fill that out and send away her old green card from ages ago along with the form to USCIS, so hopefully that will be done over the next day or two. So at least that eliminates the problem from the future.

She's still convinced the best thing is to pay this one to remove the burden from herself and from me (and the half brothers) down the line, and hope for a miracle, as she stated it, that 2017 (and then 18) and previous years will go untouched, somehow.

The whole situation makes me angry - people don't deserve this, and the US is the only country to do this to its own people (and in this case, to others who aren't even its own!).


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## Nononymous

Yeah it's a ****ty situation. If they had never filed, this would never be an issue.

Otherwise I have no real idea what to say here. Probably the approach to take is to control the information and set expectations that there is no fast way to resolve this, but no immediate danger either, so no reason to do something impulsive. Tell her that paying one bill won't magically make other problems go away, if mistakes were made over multiple years. Tell her that the IRS has no ability to enforce penalties against her or you or your half-brothers (though her concern is more about future mobility if someone should move to the US). Tell her that you will do your best to take care of it but not to worry in the short term because it will be a long process. Then slow-walk the appeals.


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## Bevdeforges

susan85 said:


> She's still convinced the best thing is to pay this one to remove the burden from herself and from me (and the half brothers) down the line, and hope for a miracle, as she stated it, that 2017 (and then 18) and previous years will go untouched, somehow.


In some sense she's right. $8000 in taxes implies a taxable income of only about $50,000 for a couple filing jointly. It's frankly peanuts as far as the IRS is concerned and there is a reasonable chance they won't bother doing anything on the 2018 return (especially if she just doesn't file one due to the death of the US taxpayer). 



> The whole situation makes me angry - people don't deserve this, and the US is the only country to do this to its own people (and in this case, to others who aren't even its own!).


You're preaching to the choir here. Even the Taxpayer Advocate Service has published reports making this same point. But they have been effective in getting assessments reduced. It's certainly worth a shot at this point. (To reassure your mother, if nothing else.)

There are people and groups online who seem to take great pleasure in whipping up people's anxieties when they run afoul of the IRS on even very basic (and trivial) issues. Surrendering the green card was a good first step (although it technically has been invalidated by her residence abroad anyhow).

Don't know what your mother's resources are, but just paying the damned thing and then tossing any and all further communications from the IRS could be the easiest and quickest way to put this all to rest. It will not come back on you, even if you travel back and forth to the US with some degree of regularity. (Trust me on this one.)


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## Nononymous

If the debt were "legitimate" (i.e. tax actually owed due to some horrid quirk of the system, rather than an error) and paying it once was guaranteed to make all future problems go away, and one could afford it, then *maybe* paying it for peace of mind would be an acceptable bargain (to my mind, but I'm not the one at the receiving end). But if the letters will keep coming for other years, it's money wasted. If you're going to throw away all future mail and ignore future bills, might as well start with the present bill and save $8k.

The problem here is not actually knowing fully what was filed in past years, and what might be lurking round the corner. I'd say either go completely dark and stop responding, or appeal this however it may be appealed with the intention of eventually not paying and going dark if a satisfactory outcome is not reached. Use the TAS and the innocent spouse provision if it applies.


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## susan85

My mother is sending the i407 today so that will be done, at least.

In terms of the taxes, I think she is settling on paying this one and just getting it out of the way, and hoping for the best with 2017 in terms of not hearing at this stage (and earlier years, of course). If she does, then we'll probably take stand that it'll just go into the recycling bin.

2018 should be ok when filing the deceased return next year, I think, since it'll only be a few months' worth of income and hopefully deductions will be enough to make that tax 0 regardless of anything else. I hope. Then never file again!

We are struggling to find a way for her to pay everything in one go, other than by me using my credit card, but it has some pretty serious fees when it comes to payments in foreign currency, so I'd be keen to avoid that. Technically, the 30 day notice of this bill comes next week. She can only send about 2000 USD in one go by western union I do believe. I don't know if that's per sending or a monthly limit (she seems convinced you can pay the IRS by western union, but I am not even totally sure?). Would it cause any issue, or add any more fees, if she were to pay in several instalments, knowing that some of it will come 'late' compared to this 30-day notice? (Though I read somewhere it's a 60-day deadline automatically if you live abroad, despite it saying 30 on the form?)

Thanks!


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## Bevdeforges

This is the information regarding making tax payments from abroad if you don't have a US bank account: https://www.irs.gov/individuals/international-taxpayers/foreign-electronic-payments

I really think you should contact the Taxpayer Advocate Service, as they can help arrange for payment in installments if that would work out better for her. (They may also be able to negotiate the amount to be paid down by some degree.)


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## Nononymous

At the end of the day it's your mother's decision, and your mother's money - but fighting this will take your time and emotional energy - so if it's not throwing her into poverty and it means she'll sleep nights, then maybe that's the bargain you both need to make.

But before sending any money I would try to appeal and delay so that you can contact the TAS or get some help. At least find out whether you're going to receive any further $8k bills. Because paying this won't give your mother any psychological stability if one or two more arrive in the post. 

Ultimately the IRS has no ability to tax or enforce penalties on non-US residents with non-US assets or income sources. I understand the emotional dynamics here, but your mother needs to know that this would be a voluntary contribution on her part, and that she cannot be coerced or compelled to make any payment.


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## susan85

So, the big shock has come: that same "final notice intent to levy" document has come for 2017 (says other notices were sent, but this is the first my mother has received), and for 2017 it is a whopping 15k!!! Of course my mother is in an utter panic.

It is clear that they never got the amended returns and there must have been some massive mistake.

I think our first step is to send in the amended one that shows no tax - is it worth sending an amended one for 2016 too, to see if they'll refund the big payment my mother has already paid, or is it better to just leave that one be?

Thanks again for the advice.


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## susan85

...keeping in mind I am not sure how to amend it given they listed X amount as pension income, and then excluded it, but it can't be excluded since it is not earned, and there doesn't appear to be a tax treaty with their country. Not sure how to sort this one to make it disappear.


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## Bevdeforges

I really think this is a job for the Taxpayer Advocate Service: https://www.irs.gov/taxpayer-advocate

If there are copies available of what was filed, the Taxpayer Advocate is the most likely resource that will know how to proceed. From everything I've heard they really are on the side of the taxpayer.


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## susan85

I think we might have hit the jackpot: filing an amended return with medical expenses and itemize. His medical expenses for 2017 were so high that they'll pretty much cancel out all tax.

I might then look to do the same for 2016, and see if they will refund us what we paid.

Any thoughts? Does this sound sensible?


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## susan85

Ok, so, I have redone it.

1. My mother used the wrong exchange rate, massively so, no idea how. With the right exchange rate, the US salary is much smaller.
2. When I itemize deductions, the medical expenses for 2017 is so high that there is only a little bit of income left after I apply it, and then with the standard deduction, the tax is 0.

So my thoughts: send the above amended return in (to more than one address if needed, the normal address and the one from the CP504 notice form?), and explain in the explanation box about the exchange rate and also choosing to itemize.

Sound ok?

If it is beneficial, I am tempted to try for 2016 as well to try to get a refund, though since it is already paid, my mother is wanting to just leave it. I see her point of view, but if we can get loads of money back that we paid, maybe it's worth it. Obviously we don't want to open a can of worms and have them try to dig in other years and see what pennies they can try to extract from us.

Any thoughts?


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## Nononymous

It's never nice to say "I told you so" but I hope that when your mother received a bill for $15k, you reminded her that she paid $8k to prevent that from happening. 

Obviously if you can send in a corrected 2017 return reducing the amount owed to $0, you should do that. And do not pay the bill first! 

If you think there's a chance you can do the same for 2016 and get the money back, might be worth the effort. Stranger things have happened.


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## susan85

Nononymous said:


> It's never nice to say "I told you so" but I hope that when your mother received a bill for $15k, you reminded her that she paid $8k to prevent that from happening.
> 
> Obviously if you can send in a corrected 2017 return reducing the amount owed to $0, you should do that. And do not pay the bill first!
> 
> If you think there's a chance you can do the same for 2016 and get the money back, might be worth the effort. Stranger things have happened.


Haha. Indeed. Not easy dealing with an elderly lady though who think they will come after her (or me).

The exchange rate fix cut the US income by half, and with the health care deductions, it should sort it then. I assume they won't think it is being made up, in their eyes it being "convenient" that these fixes were discovered after such a huge bill came? It is honest, though.

The sickness began halfway through 2016 so I don't know if I'd be able to clear it using this method (I've not checked yet if the exchange rate issue applied in 16 or not), but I guess it'd be worth a shot.


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## susan85

(Strangely, looking at the figures, I don't even see how they got to the tax figure, as it is a far, far higher percentage than the tax rates! Of course only this last notice arrived - again - so no explanation of how they even got to this massive, incorrect figure. This means I'll have to the leave the 'current' box empty in the 1040X as I have no idea what their figures are after they adjusted it themselves, but I assume this is not an issue.)


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## Nononymous

If you go back and fix 2016 with the medical expenses, remember you don't pro-rate based on your father getting sick partway through the year, you claim it all. I have no idea what are the odds of a refund but I suppose it's worth a stamp. Really too bad she paid the bill, but as we all agreed, her money and her decision.


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## Nononymous

Some reassurance for you and your mother. This concerns a different subject, but applies. Facebook post from the guy behind IRS Medic (who is a rare good person in the US expat tax world):



> Examining expats is very difficult for the IRS. Examining an expat who is a citizen of another country and who no longer claims to be subject to the jurisdiction of the IRS is even harder. Maybe someday the IRS will have find the perfect target - a famous or infamous taxpayers who did not renounce properly. But until then, I think we will see the same lack of interest.


Except of course that in your mother's case she panicked and paid.


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## susan85

Yes, absolutely. I think I will send this to the address they say to send on 1040x, rather than anything to do with the cp504 - ignore that notice for now and just deal with the amendment (in the hopes it'll erase the notice anyway)?

I imagine 2016's income would be low enough to have the tax be erased by the medical stuff, especially if there was also a currency exchange issue -- I have NO idea where the figure my mother got came from, but it cut the gross income by half by just using the right figure for the year!

I've explained these two changes in the 'explanation' box but I guess I will just send that as is, without any sort of cover letter or reference to the cp504.


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## susan85

Nononymous said:


> Some reassurance for you and your mother. This concerns a different subject, but applies. Facebook post from the guy behind IRS Medic (who is a rare good person in the US expat tax world):
> 
> 
> 
> Except of course that in your mother's case she panicked and paid.


In good news at least, my mother got official notice that her green card has been fully revoked, after she sent it away back in December when we were originally discussing this. So that's all been done at least.


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## susan85

Hopefully it won't be an issue that I can't list what the 'current' figures are for all the tax related stuff (and maybe my 'current' for the income etc won't match either), as I have no idea what other documentation they might have sent showing other figures that never arrived. It is oddly curious that only the very final cp504 notice seems to arrive, and not all the supposed many letters beforehand...


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## susan85

1040X says if you are sending 1040 as a response to an IRS notice, send it to the address on the notice (which cp504 is in Kansas City) but if it says the situation does not apply, send it to an address in Texas if you live abroad. Which should I advise my mother to send it to?


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## Nononymous

Since I refuse to comply, I am not a good source of advice here. Could one send to both or would that invite disaster?

It might not be a bad idea to contact IRS Medic if you are willing to pay for advice from someone whose business model is not expat exploitation. Particularly if they have a shot at getting the $8k back.


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## Bevdeforges

It used to be that the Taxpayer Advocate services were limited to those who had already paid an assessment or fines that they considered unjust. But I see from the information on the IRS website that they seem to have expanded their services by quite a bit.

It sounds as if it might be a good idea to contact them - if only to ask what address or addresses you should be sending your amended returns to in order to stave off any further actions or penalties from the IRS. They actually do have a good track record in getting refunds in cases like that of your mother.


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## susan85

Just got off the phone with them. Didn't really get far since I am not my mother. I asked some generic questions, like the address for sending an amended return, which they said I'd have to ask the IRS for. If the amended return is all good, then the updated owed amount would hopefully become 0 and the cp504 would become history, so that part is good.

The one thing I did find out is that each cp504 is for an individual year, so the much bigger cp504 notice for 2017 is just for 2017, not for 16+17 (I thought maybe the 2016 payment might not have 'hit' their account yet when the 2017 one was generated and they'd have added it together). The income figures in both years were pretty much the same, so I don't get why 2017's is pretty much double that of 2016. It doesn't make sense to me. 2017's is nearly perfectly double 2016's.

Don't really want to phone the IRS and try to do a conference call or anything to try to find out, and I can't create an online account for my mother (since she has no US financial links) to see if they have any workings there as to how they got to double the figure for 2017, but it worries me to just file an amendment if there are other wacky things there that aren't obvious...


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## susan85

Phoned the IRS itself and the lady was actually really nice. Got general questions like the address to send it to, need for a cover letter, etc. answered.

The only thing she couldn't answer without my mother having to get involved is the issue above -- worried about sending an amendment when I simply cannot see how they got to double the figure. Based purely what's on the return was submitted it should be about half that, similar to the now paid 2016. I don't want to miss something that can needs amended by submitting without knowing, but at the same time, it really shouldn't be different so I really don't get it at all.


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## Bevdeforges

Sounds like you're running into one of the "protections" in the system. For obvious reasons, they don't want people to be able to file amendments (or original tax returns for that matter) "for" someone else. Even filing an amendment, I think your mother will have to sign it and if she isn't interested in amending the returns, that could be a problem.

Tread carefully here.


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## susan85

Oh no no - she is happy to amend and sign if I have found a way to fix it. I just meant that I don't know how they got to a bill double to what both my mother and I think it should be, and it'd be nice to know that before amending in case there is something else that I didn't notice that needs fixed. 2016 and 2017 had nearly identical figures yet the bill is double and even if I add things like the healthcare charge (that would have been exempt but no exemption form was sent in of course), I can't get it to as high as it says.

My other concern is if amending would get them to dig in previous years - obviously 2015 is still within the 3 year statue of limitations (does that expire in April or Oct, since there's an automatic extension?). 2015 and other years were obviously accepted and I imagine they were all done very similarly to 16/17, but obviously the amended 17 one is going to (correctly, mind you) make the income figure drop pretty big compared to other years (and the deduction increase, but that's obviously unique to that year given the medical costs).


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## Bevdeforges

Amending the form probably won't lead to them digging into earlier tax years - unless somehow the amendment shows something potentially seriously wrong. (And they rarely audit someone to refund something to them.)

There is also a statute of limitations of 4 years on returns filed. As long as your mother (or father) declared all their income your Mom is safe on anything older than 4 years. Undeclared income remains an open issue forever - but generally the amount has to be substantial to draw any attention.


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## susan85

Obviously I don't know for sure, but I imagine that in all previous years, the FEIE was used (incorrectly) to exclude pension income, but only in 2016 & 17 did they care enough to actually not accept it and send a bill. Hopefully I'll be able to fix that by going the route of the medical expenses (at least 17, 16 is already paid for obviously), but obviously I wouldn't want someone to then start looking at 15 and earlier and possibly start sending out bills for those by ignoring the FEIE application... since with no big medical expenses, it'd be hard to find ways to cover the taxes in those.

It seems like the exchange rate was done incorrectly in 16 too, so if the medical bit pans out, both 16/17 would be very different to other years in that the income would be much smaller with the correct exchange rate using, there would be high itemized deductions, and the FEIE would not be used. So that's why I was concerned they might look back, but hopefully not.

I am tempted to try a conference call later today to find out how they got to the really high tax bill for 2017 that I can't figure out how, but I am just concerned for 2015 and earlier.

(2018 seems totally fine as the income up to the death was low enough to not create any issues with the final filing, so I am comfortable about that.)


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## Nononymous

If I recall correctly, prior to your father getting sick he paid home-country taxes on the pension, did he not? So those taxes would offset US taxes with the Foreign Tax Credit. This would not work when he stopped paying taxes in the final years of his life, but then if you can claim medical expenses you can probably work it back down to zero.

Really a pity your mother paid that bill, because it's probably harder to get money back than to not send it, but if you can amend the 2016 return and recover the loss, worth doing. I would certainly try it, but on condition that your mother swear not to pay any further bills that result from digging into old returns. The point is that they should never have owed, but someone didn't know what they were doing and filed the tax forms incorrectly.


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## susan85

The phone call was horrendous. First person was lovely, but the call dropped, so we got a second person, who was downright rude and insulting the whole time.

The lack of knowledge was also astounding. He looked into 2015 which made me nervous but given the lack of knowledge it didn't go anywhere anyway. I looked at it myself and in 2015 a 2555 was sent but the figure was written in foreign tax credit to bring it to 0, and they were happy with that...that's why I am nervous if someone with knowledge properly digs.

My favourite bit: he said why are we even filing at all, the income is non-US and nobody is in the US, so you don't need to file!


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## Nononymous

The grumpy person is probably right for countries where the tax treaty means that you don't need to file or pay US tax on a government pension. Which is of course what your parents should have done all along, tax treaty or no.

If the FTC is used for 2015, correct me if I'm wrong, then it should be okay. But I thought 2555 was the form for FEIE, and 1116 the form for FTC.


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## susan85

Yeah, that's what I mean in terms of his lack of knowledge. They listed the number as FTC, but sent the 2555 form instead. It was all a big mess.


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## susan85

The new income figure for 2017 is actually bigger than I thought, I missed a part. So it still results in some tax. Is it worthwhile to amend, if it isn't going to clear the whole thing? I can't think of any other deductions or tricks or anything to manage to get to 0.


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## susan85

susan85 said:


> The new income figure for 2017 is actually bigger than I thought, I missed a part. So it still results in some tax. Is it worthwhile to amend, if it isn't going to clear the whole thing? I can't think of any other deductions or tricks or anything to manage to get to 0.


As it stands, if I amended, it'd be around 1.5k of tax. There aren't a lot of receipts for the medical expenses though, some of these things - incl doctors etc - didn't issue them since they wanted to not have to claim it in their own tax locally (third world minor corruption, joys). So if they were to come back and ask for receipts for all of this, it'd be a no-go...


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## Bevdeforges

The chances of the IRS asking for receipts for medical expenses in a foreign country are definitely in the "slim to nil" range. (Especially a foreign country without a universal health care system - well, except for the US.) What are you using to add up the medical costs? All you need is some sort of backup - bank records, old checks, whatever.


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## susan85

They pretty much just withdrew cash each month and then paid from that. My mother has no debit or credit card. A lot of it there are receipts for, but a lot of it were just cash transactions. So there'd be receipts for a lot, but not all -- but with a big enough discrepancy that it'd result in a big tax difference I guess.

Submit like this anyway, hope for the best, and pay the 1.5k or whatever I can get it down to, or? Any thoughts?


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## Nononymous

You know what I'd do - go dark or pump up the medical expenses to zero out the taxes, since they aren't likely to ask for receipts.


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## susan85

I am leaning toward suggesting the latter, maybe leaving just a little bit in tax so they get something token (not that they deserve it), but I am not sure how my mother will handle this mentally. But I do think it may be the best option. Report the income correctly and whatnot of course. If they ask for receipts, I guess we can just explain that a lot of it is cash transactions and there aren't receipts for it all given how things work in that country -- which would effectively be true anyway -- or just not respond at that stage. Thoughts?

On the phone yesterday they put a hold on the collections for a couple of months so we don't need to act for a little while anyway. For 2015, does the statute / 3 year time period for them to chase things end in April or in June (it was filed in April, but I know if you are abroad you get an auto 3 month extension)? I am tempted to not amend until just before this 3 year period comes to an end, so that 2015 can't be touched... thoughts?


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## Bevdeforges

The statute of limitations runs based on the tax year - so 2015 is open for review in 2016, 2017, 2018 and 2019. At the end of this year, then, if they haven't tried to hit you up for additional taxes, the only way they can do it is to assert that there is some income that wasn't reported at all on the return that should have been reported.


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## susan85

Oh, so they could chase 2015 all the way up to the end of 2019? Would it be better then to not amend until the end of the year, or just amend anyway and hope for the best?


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## Bevdeforges

I don't know anything about the numbers or issues involved (or potentially involved) but my inclination would be to let sleeping dogs lie until and unless the IRS raises some question or issue about the 2015 return.


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## Nononymous

My advice is simply to amend the 2017 return to get to zero owing, then amend the 2016 return in an effort to get your money back, and ignore any further bills if something goes pear-shaped. But it's a case of managing your mother's paranoia, I suppose.

It's quite legit to claim medical expenses that were paid cash; only an issue if they demand receipts but even then you can probably send bank records showing all the withdrawals and explain the situation. If you haven't given them any money, you're in the driver's seat.


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## susan85

Whether or not the medical expenses are listed to bring it to 0, or close to 0, or still fairly high, I am not sure, that will have to be discussed with my mother as she is back on the "IRS will come after her/me" train.

Certainly, we will amend the 2017 one, and I have agreed with my mother that we leave 2016 to 'die'. It's paid and cleared, and she wasn't want to remove it from its grave.

So at this stage, our only concerns are really:

-Them poking around in 2015, which can still be audited, since they didn't mind anything in that return before and we want to keep it that way. Thus why I am thinking of delaying this amendment for a while...at least a month or so, send it in with the big crowd of returns in March? I don't know.

-A request for receipts or something like this since it's going to go from standard deduction every year to this outlier year with a massive medical charge, not all of which we can back up, other than to say X amount of money is taken to of the acct every month and then that stash is used to just pay everything that comes up each month...not very concrete.

The benefit of the high deductions though I guess is that it's in the 1040X form where there is an explanation box, where it will be clearly stated that it's being done for that year since there was a major illness that eventually did result in his death later on. Surely, then a reasonable person will see it was in a foreign country, there was an illness involved, the person is now gone, accept whatever amount we've now chosen to pay, and let it rest? You'd hope, anyway.


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## susan85

Helping with the 2018 return to finish this off (and 2017 I suppose, we still have not decided how to best proceed in terms of 'how much' to report). IRS paperwork says to write in 'filing as surviving spouse' in the signature area but I don't understand exactly where my mother is meant to sign. Sign in the spouse box? In my dad's box, with filing as surviving spouse just written above somewhere? Sign in both boxes?

Also: it has always been the case that my dad was listed first, mom second. Is it still ok to do it here? So under "your signature" - deceased - and my mother still signs in the spouse's signature part (and thus the same at the top, your name, father, spouse's name, mother)? Or does it have to be switched?

Does anyone know?

Thanks


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## Bevdeforges

I wouldn't worry too much about the details here. As long as you make a good faith effort to indicate what you're doing. Sounds reasonable to indicate "deceased" in the taxpayer signature line, and then "filing as surviving spouse" above the spouse signature line, where she would sign.

The IRS really does like you to keep the names in the same order, so what you have proposed sounds like a good plan.


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## susan85

Thanks, will do that.

Still going back and forth about what to do about 2017, in terms of 'how much' to pay, if any, via the amendment. As you can imagine, my mother is still paranoid that the IRS will fly over to her country and take everything. 2018 seems fine so I will get that filed within a few weeks - no tax due, and with all the deceased writing, it'll hopefully put an end to IRS filings permanently. She does not want to touch 2016, as it has been paid and laid to rest, so that's fine, her choice.

One final, unrelated thing maybe... my father never took his social security benefits. My understanding is that because my mother used to live in the US, she could apply and get them. Is this wise in light of the tax stuff? Easy to do? Opens a can of worms?

My thinking is almost that at the very least, if further tax bills appear (or if 2017 continues to be an issue), then they could take the money from this each month as part of their collections procedures?

Thanks!


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## Bevdeforges

susan85 said:


> My thinking is almost that at the very least, if further tax bills appear (or if 2017 continues to be an issue), then they could take the money from this each month as part of their collections procedures?


That's the real catch here.

As far as your father never having taken his US Social Security, your mother's entitlement would be a "spouse pension" which is equal to one half of whatever your father was entitled to. But if she doesn't have US nationality, she would receive the spouse pension as a NRA (non-resident alien) and they would automatically withhold 30% of 85% of her benefit. (That's the tax rate on non-residents.)

Up to you if the amount your mother might receive would be worth resolving the 2017 issues (one way or another).


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## susan85

I guess once 2017 amended/2018 are sent, we can wait a few months and see what comes of it all, and then decide at that point. If it's all sorted, I guess there is no harm in getting some money she is entitled to, and if not sorted, it could help pay a bit over time, I guess, to help clear his name, and not receiving the money would be no change compared to now. No idea how much he would be entitled to, though.


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## susan85

I think we are ready to submit the amended return. I have written 3 small paragraphs for the 'explanation of changes' - would anyone here mind if I PMed them this just to get their opinion on it (has more personal details so by PM would be appreciated)? I'd really appreciate it, and hopefully this will be the end of it all for all this saga.

Thank you


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