Tax Debt of $22,476 resolved with a Offer in Compromise In 5 Installments of $579

SITUATION:

A woman reached out to us thinking she had an IRS tax debt of approximately $8,000. She knew she owed back taxes from years 2013 – 2017. When she enrolled, she was paying towards an Installment Agreement with the IRS, but she was not clear how long she would need to make these payments before her tax debt was resolved and completely paid off. This situation is common – where a taxpayer is trying to solve issues as they arise, but not going anywhere, and without a clear plan to resolve the entire issue. An investigation was necessary to confirm the amount she owed, the years, the reasons that caused her to owe back taxes, and to identify a complete solution in place for all her tax issues.

INVESTIGATION PHASE:

During our tax investigation phase we requested a stay of enforcement to put a halt to expandended collection measures. Next, we sent the power attorney and reached out via our special line to the IRS to request the master file. Our tax team carefully reviewed the tax transcripts to discover that the only amount pending and considered tax debt at that time was $427.17 for tax year 2015, this included penalties and interest. After reviewing each year carefully it was determined that there were a total of 5 unfiled tax years that she didn’t know about. She was never made aware by the IRS nor did she know how this could affect her negatively down the road. The Installment Agreement that she had set-up was only applied towards the 2015 balance and there were risks that required immediate action. When there is a resolution set up and you have not filed all tax returns, the IRS may revoke the resolution and collection activity becomes aggressive, liens and/or levies can quickly be filed placing income and assets at risk. The IRS could have also processed a substitute for return (SFR) for these years. When this happens the IRS will only register the income received and not take into account expenses or deductions. This would have resulted in a much greater tax liability. Our team quickly identified what forms and schedules were needed to file for each of the years and she agreed to having us file on her behalf before we could move forward with a final tax resolution. This was handled in our compliance phase.

COMPLIANCE PHASE:

During this phase, we prepared the 1040 forms for each of the unfiled years. We also made sure to use all allowable deductions on the returns so that she would legally be liable for the lowest amount of tax. After we filed the pending tax returns, the total tax balance including penalties and interest was actually $22,476.21. This balance was for tax years 2012 – 2017 and was due to not having enough tax withheld for all of these years. With an accurate balance posted, we continued to work on the investigation by reviewing her financial situation. After an extensive financial analysis where we ensure that all the legally allowable expenses are taken into account, her hardship, and other factors that benefit the client, it was determined that the best option was to submit an Offer in Compromise (OIC) to the IRS.

RESOLUTION PHASE:

She agreed to have us move forward with the recommended OIC. We requested supporting files such as bank statements, proof of expenses, a hardship letter to build a strong case. We prepared the OIC application for her and once we had the OIC package ready we submitted the offer to the IRS. The IRS reviewed the initial offer and responded with a counteroffer which she immediately accepted. The $22,476.21 of tax debt was completely resolved with $2,316. In addition to this, the IRS allowed her to pay the offer amount within 5 months after acceptance. She paid the OIC offer within the 5 months resolving her tax debt completely which gave her peace of mind. She expressed how grateful she was to have enrolled in our tax program.

OIC was applied for and accepted with the IRS as follows:

Total amount owed: $22,476
Resolution: Offer In Compromise – 5 Installments of $579
Phases worked: Investigation, Compliance and Resolution

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DISCLAIMER:

This example is an actual example of a client who enrolled in the tax program. Every case is unique and this is not an extension that you will receive the same resolution as they will. Your situation is unique, as are all tax cases. The team has extensive experience, has former IRS employees, special officers, enrolled agents, tax attorneys, and CPAs. Our tax team will work diligently with a flat fee to solve the tax issue you have for the best possible resolution for you. That means doing all possible to ensure you pay the lowest amount of taxes legally required based on your situation, allowable deductions, finances, and other factors.

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