The IRS receives 1099 reports for independent contractors. As a self-employed individual, your friend may not have received 1099s. Many companies fail to properly follow the 1099 regulations and submit reporting to the IRS. If he did receive these forms, the IRS would have a record of it. The Statute of Limitations on Collections is 10 years from the date of filing. Since he has not filed, the statute has not begun to run. This is why the IRS may not have come after him on the deficiency yet -- they have all the time in the world.
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Never second guess the IRS. They hold all the cards and can ignore or suddenly take actions as they please.
This is not legal advice but a general comment on society. International Law 24/7 hotline +1-202-318-2406 - Dr. Jonathan Levy, PhD calls or emails usually returned within 24 hours.
Giving advice at second-hand is always perilous, so your friend should check with his own competent local tax adviser(s) on his case - he definitely should not just do it himself and not expect some further issues down the road.
That being said, your friend should consider also filing his returns, and paying the taxes, penalties and interest on those returns, for the remaining 3 years before the 3 years he's already filed and paid (assuming that he did file his returns for the past 3 years as well as just paying the taxes). The reason for this is that, as a general matter, the IRS has an administrative policy of only requiring nonfilers to file the last 6 years of delinquent returns; there are exceptions and this is a discretionary policy so there are no guarantees that they won't go further back, but starting with the last 6 years is usually a good idea). Provided your friend's case is as simple as you describe and he didn't engage in any tax fraud or tax evasion, the IRS will in all likelihood only expect the last 6 years' worth of delinquent returns (and payment of the taxes, of course).
As for why the IRS hasn't come after your friend so far: who knows. Why the IRS comes after some people but not others, even when they're in similar situations, is one of the great mysteries of life. Rather than questioning that, however, your friend should be taking advantage of that fact to get his returns in and taxes paid before the IRS comes looking for him. Once the IRS has come looking for a taxpayer, it becomes harder to work things out with the IRS if, for example, a taxpayer needs a payment plan or wants to make an offer in compromise; the collections people at the IRS will also be less sympathetic.
So, bottom line: congratulations to your friend for starting to get his tax-house in order, but he needs to carry through with that momentum and finish things by, at the least, filing and paying for the other 3 years he didn't do already. Finally, your friend needs to make sure that he stays in compliance going forward and files his future returns on time and pays his taxes on time - including estimated taxes that have to be paid during the year - because the IRS will certainly monitor, and may audit, his returns for the next few years to make sure that he stays in compliance.
My answer does not constitute legal advice and may not be relied upon by anyone for any purpose and does not constitute an attorney/client relationship or an offer to form such a relationship. This disclaimer is intended to be fully compliant with the requirements of Treasury Department Circular 230 and the terms thereof are fully incorporated by reference. If you wish to consult with me please contact me at dwatchley@newyorktaxcounsel or visit my website at www.newyorktaxcounsel.com