The IRS audited my deceased dad's estate last year, and looks like they want to audit again. How long?

Question

My dad's revenue streams were converted to trust about 5 years prior to his passing. It has been 5 years since his passing. Last year, we were audited for his estate. There was a finding that there was no revenue. This year, I received a notice that they want to audit for two years.ago They even replaced his first name with Deceased. What kind of government bureaucracy flags a $0 income estate that has been closed (previously proven by IRS audit) Also I am not the executor, nor the recipient of any of the trust money.
Has the IRS gotten that callous and unfeeling that live people are not enough for them? Who was the idiot who changed his first name to Deceased in the IRS records? They spent over $100 Million on new computers and software, yet they can't determine that auditing closed estates over and over is counterproductive? First audit was 7 year audit, recent one is single year, 2005.

Answer 1

This is just a guess, but I'd say that the trustee didn't properly prepare the trust's tax returns when they were due. If the trust has been wrapped up, a final return should have been filed. That would have put the IRS on notice that there was nothing to go looking for any more and would probably have them off of your back now.

Answer 2

I hear your frustration, but there is some confusion in the way you have stated the problem. (BTW, I agree with Boston that improper prep of, or failure to file a required return may be behind this.)

Here's the confusion: you mention that All his income passes thru his Trust. Trusts often continue for 5 or more years. Estates generally are wound up within 2 years, (occasionally longer if the beneficiaries go to court or such). Is it possible that there are payers of income that are reporting using the TIN of the estate when the income goes to the trust? I would contact the auditor and see if this is the case. Also, if it is not the same auditor, ask him to contact the previous auditor and/or look at the previous audit.

Now, as a rule if IRS has audited 2 years and made no changes they are barred from subsequent audits of the same items, absent fraud.

Now, if neither of those end this silliness, you have recourse to the Taxpayer Advocate.

Finally, you have experienced the true meaning of IRS: this is an organization that gets money from dead people. No wonder they think they are god.

Answer 3

Presidents can no longer order audits. it is a criminal offense and an impeachable offense. it is section 6103 of the Tax Code, which replaced into enacted after Richard Nixon (R) ordered the IRS to audit his enemies.