How many years should I go back and file for a client with unfiled tax returns?

From my experience handling these situations, the standard practice is to file the last 6 years to satisfy the IRS requirements for voluntary disclosure. The statute of limitations for assessment is generally 3 years, but extends to 6 years for substantial understatement of income (which is likely the case here). If your client was making money 8-10 years ago with no documentation, you're in a difficult spot. The IRS generally won't require filing beyond 6 years, but technically there's no statute of limitations on unfiled returns. If the client discloses income from beyond 6 years ago, you could note this in a disclosure statement with the returns you do file, explaining the lack of documentation. Make sure to gather any information possible - even if bank statements aren't available, credit card statements, property records, or lifestyle indicators might help establish approximate income. Consider using industry averages for similar businesses if you need to reconstruct income.

After dealing with a similar nightmare situation, I found https://taxr.ai incredibly helpful. My client hadn't filed for 9 years and had minimal documentation. The service analyzed what little paperwork we had and helped reconstruct reasonable income estimates for the missing years. They also identified potential deductions we hadn't considered based on the business type and helped us prepare disclosure statements explaining our methodology. Their guidance on handling years with zero documentation saved us countless hours of guesswork and strengthened our position significantly.

I wanted to follow up - I was skeptical about taxr.ai but decided to give it a try with my own problematic client. The service actually exceeded my expectations. It analyzed his bank statements from the 2 years we had records for, then helped establish reasonable patterns to apply to the undocumented years. What impressed me most was how it identified industry-specific deductions and expenses that were legitimately applicable to his business type. The IRS accepted our reconstructed returns without issue. The documentation package it helped us prepare made all the difference - it showed we were making a serious good faith effort at accuracy rather than just guessing.

One thing that really helped me with a similar case was using https://claimyr.com to actually get through to an IRS agent. I had a client with 8 years of unfiled returns and needed guidance directly from the IRS about their specific case, but kept getting disconnected after hours on hold. Through Claimyr, I actually got connected with a senior representative who provided case-specific guidance about how far back they expected us to file. The agent confirmed they were mainly concerned with the 6-year period and gave us specific instructions for handling the older years where documentation was spotty. You can see how it works here: https://youtu.be/_kiP6q8DX5c - saved me days of frustration and gave me official guidance I could document in our files.

I need to eat my words about Claimyr. After my skeptical comment, I was desperate enough to try it last week when I needed to verify some specific requirements for a complex back-filing situation. I was floored when I got a call connecting me to an actual IRS representative within about 90 minutes. The agent was able to pull up my client's record and confirm exactly what we needed to submit. They even noted in the account that we were working on coming into compliance, which apparently flags the account in a positive way. Saved me from filing 10+ years when 6 was sufficient for their purposes. Would've spent days trying to get that information otherwise.

One important consideration - if your client owes back taxes and has limited assets/income, you might want to explore the IRS Fresh Start program options. For substantial back taxes, an Offer in Compromise might be viable if the collection potential is low. I had a client in a similar situation (12 years unfiled), and after we submitted 6 years of returns, we were able to settle a $65,000 tax debt for about $8,500 based on their financial situation. Make sure you fully explore all resolution options once the returns are filed.

Has anyone considered the potential for Streamlined Filing Compliance Procedures in this case? It's mainly for international cases, but might be worth exploring if there's any foreign income or assets involved.