DEAR J.S.: This is a relatively common proposition. If your friend comes forward, it is very unlikely that penalties, other than maybe some financial penalties, would be assessed. It's not the IRS's position to put her into a striped suit. That observed, I suggest that she find a CPA who specializes in "tax matters." You're right, having CPA in their title is not enough. If she prefers, she can contact an "enrolled agent." This is someone who is licensed to practice before the IRS, and most enrolled agents are former IRS employees. They will submit for her what are called amended return. If there are penalties and interest, just enclose a check with the amended return, and I think you will find that the matter is concluded.
DEAR BRUCE: I co-own a house in Florida with my father. Upon his death, does the house become mine, or does half of it go to his estate? Also, if he needs long-term care and runs out of money, would the house be considered part of his assets? -- T.A., via e-mail
DEAR T.A.: With regard to your first question, this depends upon how the house is titled. If the house is titled in joint tenancy with the right of survivorship, then upon either of your demise, the other guy owns the house in its entirety. Otherwise, his half will go into the estate. Other things being equal, unless our dad has reasons not too, I would want to see the house so titled and have it changed if it is not that way. If he needs long-term care and collects Medicaid, the house is part of his assets and upon his demise his piece of the action could be attached by the state providing the Medicaid help. If you were to put the house in your name, then you would have to satisfy the "look back" period, which is five years. That means that if he collects any aid before that look back time has expired, the house would still be considered his asset.