If you had a close family member pass, how do you handle getting them into tax compliance?
First, find out when they last filed. You can give your Tax Professional IRS Power of Attorney to investigate the record for you. Learn what they owe in taxes, what are unfiled, and get Wage/income transcripts.
Second, file three to six years depending on what is owed. This is a judgement call to some degree, but filing six years of returns should close the door to any scrutiny. Perhaps less can be filed depending on whether they owe or were due refunds.
Third, pay the taxes due from the deceased person to avoid personal assessment. Unpaid taxes can pass thru to their heirs. Best to pay off the taxes from the person's remaining assets if you can and ask for a penalty waiver.
Most Estates, that is the assets and liabilties left to heirs, aren't taxed, but if an Estate stays open for years without being distributed, capital gains and income from Estate are taxable. In that case, getting an EIN for the Estate will be necessary and Estate tax returns (Form 1041) with tax payments will be required.
