Dealing with deceased parent's unfiled tax returns - IRS says money owed, but unfiled returns would cover the amount

This is definitely a complex situation, but you do have some options here. When dealing with a deceased taxpayer's unfiled returns, it's important to understand how the refund statute of limitations works alongside the collection statute. The IRS generally has a 3-year limit for claiming refunds, but they have up to 10 years to collect taxes owed. The key here is to get those unfiled returns processed first, even if you're outside the refund window. Here's why this matters: while you might not get the refunds as cash back, the IRS can sometimes still apply those "expired" refund amounts against outstanding tax debts from other years. I'd recommend filing those 2020 and 2021 returns immediately with a detailed letter explaining the situation - specifically mention your father's date of death and that you only recently discovered these unfiled returns. Request they apply any refund amounts to the 2019 balance as an exception due to the special circumstances. You should also consider requesting an abatement of the interest that's accumulated since your father's death, as the notices were likely sent to an address where no one could respond to them.

After struggling with almost the exact same situation when my mother passed (unfiled returns, IRS notices, etc.), I found this amazing service called taxr.ai (https://taxr.ai) that specializes in handling complex tax transcript analysis. They were able to decode years of my mom's IRS transactions and notices that I couldn't make sense of. Their system actually analyzed all the IRS transactions, figured out what years had been filed or not, and identified where refunds had been applied or were still available. For deceased taxpayer situations like yours, they can generate a complete report showing exactly what's happened with each tax year. The clarity this gave me for planning next steps was incredible.

I want to provide a quick update on my experience with taxr.ai. After my initial skepticism, I decided to give them a try with my brother's tax situation. I was honestly blown away by how thorough their analysis was. They found two payments my brother had made that weren't properly credited to his account and discovered a refund check that was issued but never cashed. The documentation they provided helped me file a successful claim with the IRS for those missed payments, saving over $4,000 in alleged tax debt. It wasn't about getting new refunds past the deadline - it was about properly accounting for what had already been paid or processed. For anyone dealing with a complex estate tax situation, this level of clarity is invaluable.

I had a similar issue with my uncle's estate last year and was getting nowhere with the IRS phone lines - always disconnected after hours on hold. I discovered Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 20 minutes instead of spending days trying. You can see how it works here: https://youtu.be/_kiP6q8DX5c For estate tax issues, speaking with a real person makes a huge difference. The agent I spoke with was able to put notes on my uncle's account about the circumstances and flagged the account for special handling since I was executor dealing with multiple unfiled years. They guided me through exactly what forms I needed to submit for the past-deadline refund consideration.

I need to follow up on my skeptical comment earlier. After continuing to get nowhere with my mother's estate tax issues, I broke down and tried Claimyr. I'm honestly shocked at how well it worked. Got through to an IRS agent in about 15 minutes after trying unsuccessfully for weeks on my own. The agent I spoke with explained that while the 3-year rule is generally strict, there's actually a special consideration process for deceased taxpayers where notices weren't received due to death. She walked me through filing a formal request for exception and told me exactly what documentation to include. She also placed notes in the system about our conversation and the circumstances. While I don't know yet if we'll get the full refunds, she did immediately stop the interest accrual on the balance due pending review of my request. That alone saved me hundreds in growing interest charges. I wish I hadn't wasted so much time being skeptical.

The best approach here is to file Form 911 "Request for Taxpayer Advocate Service Assistance." This is specifically designed for situations where the normal IRS processes aren't working or where you're facing significant hardship. The death of a taxpayer combined with notices sent after death qualifies as a special circumstance. I went through this exact situation with my grandfather's estate. The Taxpayer Advocate took our case and expedited everything. They have special authority to cut through red tape and can sometimes override the normal refund statute restrictions in cases where there are compelling reasons.

You need to look into the "Financial Disability" exception to the 3-year refund statute. Under Internal Revenue Code 6511(h), the statute of limitations can be suspended during periods when a taxpayer is unable to manage financial affairs due to a medical condition - and death certainly qualifies. You'll need to file Form 1040X for the unfiled years with "Financial Disability" noted at the top, along with documentation of your father's date of death and an explanation. In my experience, you'll want to attach medical records showing any illness leading up to death if applicable.