Penalty Abatement Saves Retiree $22,000

SITUATION:

A retired client preparing to move overseas owed $250,000 in tax liability due to an early 401(k) withdrawal, resulting in substantial penalties. Despite making regular payments, the penalties caused his balance to remain high, creating financial stress during an already complex transition. The client did not qualify for any hardship programs due to his income and equity in assets, so penalty abatement was the best option for relief.

INVESTIGATION PHASE:

Upon taking the case, we carefully reviewed the client’s payment history, tax filings, and account statements to identify opportunities for relief.

Key actions included:

• Account Review: Analyzed the tax account to determine the source and amount of penalties.
  
• Penalty Abatement Strategy: Identified grounds for removing penalties based on reasonable cause, timely payments, and unique circumstances.
  
• Documentation Preparation: Collected supporting records to demonstrate eligibility for penalty relief.

Throughout the process, we kept the client updated, explaining what documentation was needed and how the abatement request would proceed.

COMPLIANCE PHASE:

All required tax returns were filed and up to date, ensuring compliance and strengthening the request for penalty abatement.

RESOLUTION PHASE:

We submitted a formal request for penalty abatement, which the IRS approved, removing $22,000 in penalties. This resolution provided the client with immediate financial relief and a smoother transition overseas.

Total Amount Owed: $250,000 (pre-abatement)
Resolution: Penalty Abatement
Penalties Removed: $22,000
Phases Worked: Investigation & Resolution

This outcome allowed the client to focus on his move abroad without the burden of unnecessary penalties, providing peace of mind and financial freedom.

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DISCLAIMER:
This example reflects a real client outcome. Every case is unique, and results may vary. Enrollment in our program does not guarantee a similar resolution. Our experienced tax team—which includes former IRS employees, enrolled agents, tax attorneys, and CPAs—works diligently to achieve the best possible outcome for each client. Our goal is to ensure you pay the lowest amount legally required based on your individual circumstances, finances, and allowable deductions.