IRS BACK TAX DEBT REMOVAL CASES
Call us Now for Free
Consultation and Case Analysis
These are actual back
tax debt cases that TAX REP PROS LLC resolved for
clients. We used our unique ability to gather information from multiple
sources to develop creative tax strategies for these clients. This case also
required steady persistence. We omitted names and locations to protect the
confidentiality of our clients.
IRS BACK TAX
DEBT REMOVAL – INDIVIDUAL CASE
Problem
The client owed $100,000 of IRS and State back tax debt over four years. The
taxes are eight years old, and the client believes they are incorrect. Several
years ago, the client hired an accountant to fix the problem by filing an
amended return, but the IRS never processed the amended return. Eventually, the
client stopped trying and let the problem go. As a result, the IRS started
levying the client’s paycheck to collect on the IRS back tax debt. The client
decided to hire TAX REP PROS LLC because of an
inherited home the client wanted to sell. The client could not sell the house
because all proceeds would have been applied to the IRS and Michigan back tax
debt.
Relief Steps
1. We removed the IRS tax
levy on the client’s wages by setting up an installment agreement.
2. We gathered
documentation from the client, accountant, and IRS and determined that the
client, accountant, and IRS had all made mistakes. The client didn’t respond to
the IRS promptly. The accountant made a significant error on the amended tax
return. The IRS made an erroneous adjustment to the client’s tax account.
3. In response to a new
tax lien filed by the IRS, we filed 12153, Request for a Collection Due
Process or Equivalent Hearing.
4. We prepared a case to
prove the client should owe zero taxes. We could establish a $19,000 IRS tax
refund. We knew we could wipe out the client’s taxes by filing an Offer in
Compromise, but then the client
would not get an IRS tax refund, so we decided against this.
5. After repeatedly
calling the IRS and being bounced between different departments, we decided to
open up a case with the Taxpayer Advocate. We submitted our case to both the
IRS Underreporting Department and Taxpayer Advocate.
6. The IRS Underreporting
Department agreed with our position and made all adjustments for the first
year. The account now showed a $19,000 IRS tax refund for the first year and
$10,000 of IRS back tax debt for the following three years.
7. The IRS did not
correctly apply the $19,000 refund to the $10,000 in back taxes and informed
the client that the refund had expired, so we got the case reassigned to a
Taxpayer Advocate.
8. The client’s IRS tax
account was fully adjusted. The client received an IRS refund check and owed
zero IRS back tax debt. The IRS also released the tax lien on the inherited
home.
9. We finalized the
Michigan tax lien removal. The client sold the inherited home, and a portion of
the proceeds from the home sale paid off all to his State’s back tax debt.
Results
This client was
delighted with the outcome and wished this had been resolved years ago. The client
no longer owes IRS or Michigan back tax debt, received an IRS tax refund, and
was able to sell the inherited home. We were happy to resolve this case for the
client. Please
Note: It can take 6
months to a year to fully fix complicated tax problems. This can be due to
several factors, such as the tax relief strategy or IRS delay.
IRS BACK TAX
DEBT REMOVAL – SELF EMPLOYED CASE
Problem
The IRS Revenue Officer contacted the self-employed client. The client was
informed that $130,000 of taxes were owed. The client couldn’t phantom why the
taxes were so high. The client never made that much income in a year. The IRS
filed tax returns for the client because no tax returns were prepared. When the
IRS files a tax return for you, the IRS doesn’t give you any deductions. As a
result, the IRS prepared return will result in the highest tax possible.
Relief Steps
1. We contacted the IRS
Revenue Officer and filed a Power of Attorney. The IRS Revenue Officer provided
gave us 30 days to file all missing tax returns.
2. Working with the
client, we prepared the missing tax returns. The returns showed that the
client would owe the IRS less than $15,000, including penalties and interest.
3. The IRS processed all
tax returns prepared by us. The IRS reduced the $130,000 tax balance owed to
about $15,000.
4. A 72-month payment
plan for $200 per month was set up to pay back IRS taxes.
Results
The client was pleased
with the result. The IRS Revenue Officer was also happy as the case was closed
and off his desk. We continue to help this client by preparing yearly tax
returns.
IRS BACK TAX DEBT
REMOVAL – BUSINESS CASE
Tax Problem
The client’s business
was struggling financially, so the business owner decided not to file and pay
IRS payroll taxes. Eventually, it was unsustainable to continue to operate the
company at a loss. The owner decided to close the business and sell the
business assets. The business owed more than $35,000 in back IRS payroll taxes.
The business owner was afraid to be personally responsible for the payroll
taxes owed by the company. An IRS Revenue Officer was assigned to the case.
Relief Steps
1. Our goal was to pay
off the trust fund portion of the IRS payroll taxes with the sale proceeds. The
business owner can be held personally responsible for the trust fund portion of
the payroll taxes. The business owner could not be held personally responsible
for the non-trust fund portion, penalties, and interest.
2. We informed the IRS
Revenue Officer that the client would be selling the business assets and using
the proceeds to pay off the trust fund portion of the outstanding IRS payroll
taxes. The IRS Revenue Officer allowed us time to coordinate the sale.
3. The business assets
were sold, and we worked with the IRS Revenue Officer to pay the trust fund
portion of the payroll taxes.
4. The IRS Revenue
Officer closed the case on the business.
Results
The business initially owed about $35,000 in IRS payroll back taxes. The client
sold the business assets and paid about $20,000 towards the IRS payroll taxes’
trust fund portion. The client had money left over from the sale, which was
used to pay off other business debts. We continue to work with the client as
the tax accountant, preparing yearly personal income tax returns.