June 2021: In-Business Installment Agreement
Dan Randall and Associates was retained by an in-business entity in January 2021 that was currently assigned to a field Revenue Officer for collection action. This Revenue Officer had been working the case for approximately 12 months and would periodically request lump sum payments from the client for application to the “trust fund” portion of the outstanding employment taxes owed by the client. At the request of the Revenue Officer, the client had provided a business financial statement approximately six (6) months prior to our involvement in the case.
Our first order of business was to confirm that all payments made by our client were appropriately applied to their account. In addition, it was determined that the Trust Fund Recovery Penalty Assessment had been made against the principals for several of the earliest unpaid quarters. We confirmed that the client was current on its employment tax obligations, and we then prepared a new Form 433-B, Collection Information Statement for Businesses, along with supporting financial information.
During our initial work on this case, the Revenue Officer was interested in securing additional lump sum payments from the client, although no formalized installment agreement had not been secured, as yet. We discouraged our client from making such payments. Instead, we continued to negotiate with the Revenue Officer towards a workable, formalized installment agreement. Our negotiations resulted in a monthly payment agreement the client can financially manage, remain current on all employment tax obligations, and resolve all trust fund and non-trust fund taxes due by the business entity in less than 18 months.
May 2021: Resolution of Mother’s Taxes
Two sisters contacted our business regarding taxes owed by their mother and now deceased father. The sisters had no information as to the status of the taxes owed by their parents and they were also busy caring for their mother who was disabled and no longer able to care for herself.
Unbeknownst to the sisters, before the father’s sudden death, he had previously negotiated an installment agreement with the Internal Revenue Service (IRS) and monthly payments were being debited from the parents’ joint checking account. The two sisters were unaware of these arrangements with the IRS; they were concerned the IRS would take enforcement action (e.g., issue a bank levy) against their mother’s bank account which contained funds necessary for her medical treatments and living expenses. After we were retained by the sisters, one of the sisters went to court and obtained guardianship of her mother. In turn, we attached the court-ordered guardianship documents to the Form 2848, Power of Attorney, so that we could represent the mother through her court-appointed daughter. Once the IRS recognized our Form 2848, Power of Attorney, we were able to contact the IRS and determine the current status of the mother’s tax situation.
The case was further complicated when a new bank account needed to be secured, and the direct debit installment agreement previously negotiated by the sisters’ father needed to be updated. With the proper Form 2848 authorization for the mother, we were able to revise the installment agreement to the mother’s new bank account thereby ensuring no default of the direct debit installment agreement.
April 2021: Penalty Abatement
To best serve this client, we first negotiated an installment agreement with the Internal Revenue Service (IRS) so he would not face potential collection action (e.g., levies against his bank account). Once the installment agreement was in place, we submitted a written narrative to the Ogden Campus requesting the abatement of the assessed and accrued penalties for the Failure to Pay, Failure to File and Failure to Make Estimated Tax Penalties for the tax years at issue.
Our client had faced a series of debilitating health issues over the years in which the tax liabilities had accrued. We were able to document his increasing health problems with doctors’ statements, medical records, and medicinal treatments. We supplemented our narrative with applicable court cases supporting the abatement of these penalties under these circumstances.
As these actions were taken during 2020, the IRS was not able to promptly respond to our request for abatement. The pandemic had closed many IRS offices, furloughed employees and/or had employees working at off sight locations. Many campus employees were assigned to work in other functions due to Congressional mandates involving the Economic Impact Payments and Recovery Rebate Credits or they were involved with the challenges or dealing with an influx of unprocessed tax returns and/or correspondence to the IRS from taxpayers and tax practitioners.
After approximately nine (9) months, we contacted the IRS Taxpayer Advocate who resubmitted a copy of our original Penalty Appeal request to an IRS Campus for consideration of the penalty abatement. In less than 30 days later, the request for abatement was approved, abating nearly $20,000 in assessed and accrued penalties on this client’s account.
February 2021 Installment Agreement
This case initially involved the taxpayers’ failure to file several years of Forms 1040 as well as the Franchise Tax Board. Once the returns were prepared and filed, the IRS rejected one of the returns due to an illegible signature. The taxpayers re-signed this tax return, and it was resubmitted for processing. The actual posting of this return by the Service on the taxpayers’ account took several additional months due to the pandemic.
Also, during this time, the Franchise Tax Board (FTB) had levied one of the taxpayer’s wages; therefore, we were able to negotiate a payroll reduction levy for the client. We were also able to negotiate an installment agreement for the taxpayers with the Internal Revenue Service which included a lump sum payment that precluded the need for the Service to file a Notice of Federal Tax Lien (e.g., the remaining balance of tax owed to the IRS was < $50,000). So long as the clients remain current with the payment agreement, and do not incur additional tax liabilities, a Notice of Federal Tax Lien will not be filed against them.
December 2020: Offer in Compromise with Special Circumstances
This client came to us with several years of unfiled tax returns. We referred him to a local tax return preparer; once the returns were completed, we found that he owed approximately $180,000 in tax, penalties, and interest. Our client had been an extremely productive citizen who had retired several years before. Most recently, he found himself dealing with several health issues. He had also depleted his retirement savings while trying to deal with his health issues. We filed an Offer in Compromise based upon Doubt as to Collectibility with Special Circumstances (DATCSC) due to his current physical condition and limited financial reserves. Documentation concerning both of our client’s current issues was included in the Offer package.
Initially, the Memphis Campus responded back with an Offer calculation that our client could fully pay. In response, we summarized the legal basis for a DATCSC Offer and reiterated the specific health and financial reasons which qualified our client for such consideration. Our client’s Offer was approved approximately two (2) months later.
September 2020: Proposed Changes to CP 2000
The client came to us in January 2020 with a CP 2000 notice from the Ogden Campus concerning several proposed changes to a joint tax return for 2017. The primary issues involved the proposed assertion of a penalty for the substantial understatement of income tax [Internal Revenue Code 6662(d)], as well as clarification concerning distributions from the clients’ Health Savings Account. The clients provided documentation concerning both issues and a letter of explanation was prepared and forwarded to the Ogden Campus prior to the required due date on the CP 2000. Due to the Pandemic, no response was received for several months. However, a in late September 2020, the Campus determined that the information provided resolved all issues and the proposed assessments resolved in a “no change” for the clients.
May 2020: Offer in Compromise
The client came to us owing close to $1.3 million on tax years dating back to the early 2000s. Several of the outstanding tax periods were IRS-prepared returns because the client had not filed returns for these tax periods. An Offer in Compromise, doubt as to collectibility, was submitted by our office on behalf of this client. During the Service’s investigation of our client’s Offer, the investigating Offer Specialist identified potential real property ownership by our client (who had worked 20+ years ago as a real estate agent). We were able to successfully prove our client no longer owned ANY of the suspect properties for 15-20 years and negotiate an Offer in the amount of $55,197.
February 2020: Offer in Compromise
Our client was a self-employed businessman who owed outstanding tax liabilities for Forms 1040 for eight (8) years. We worked to bring him into “compliance” by ensuring that he was making proper estimated tax payments for the current tax year. An Offer in Compromise was filed on our client’s behalf; once his case was under consideration by the Service, we assisted in submitting the required substantiation to the Service regarding his business expenses and negotiated acceptable Offer terms. Our client’s tax debt of $50,000+ was settled for $4,446.00.
December 2019: Offer in Compromise
We previously negotiated an acceptable Offer in Compromise for our client in 2015. Due to business reversals, she was unable to maintain five (5) years of subsequent compliance, and her Offer was defaulted in 2017. Our office filed a second Offer in Compromise on her behalf in November 2017. The Offer was initially considered by the Collection function but as an acceptable agreement could not be reached, the case was appealed to the Office of Appeals. Acceptable Offer in Compromise terms were reached in December 2019.
Abatement of Accuracy-Related Penalty
The client received a proposed audit deficiency that included an accuracy-related penalty in the amount of $4,327. We were successful in getting the accuracy-related penalty abated, and the client full paid the remaining balance on the account.
Offer in Compromise
A small business owner came to us after an audit by the IRS; he was unable to full pay the outstanding liabilities due. We negotiated an Offer in compromise to settle all outstanding liabilities.
Discharge of the Notice of Federal Tax Lien
In a case worked earlier this past year, we handled an issue involving the sale of real property encumbered by a notice of federal tax lien. By submitting an Application for Certificate of Discharge of Federal Tax Lien, with supporting documentation, we were able to facilitate the sale of the property to the new buyers and ensure that any realizable funds were remitted to the Service for payment of our client’s outstanding tax liabilities.
Offer in Compromise
A client in the entertainment field owed more than $750,000. This case was eventually resolved in the Office of Appeals with an Offer in Compromise in the amount of $195,000 along with a Future Income Collateral Agreement.
This client came to us after she initially attempted to negotiate an installment agreement with the IRS herself. The IRS proposed a monthly payment of $1,400. We reviewed her financial situation and renegotiated the terms of her installment agreement down to $686 per month.
Offer in Compromise
Initially, our client owed more $1.7 million along with her then husband. Prior to our involvement in the case, the IRS seized both cash and assets, and continued to investigate our client’s pre-petition (bankruptcy) assets once she received a discharge from the bankruptcy court. Once the client retained us, we conducted a comprehensive review of her financial situation and submitted an Offer in Compromise commensurate with her current income and expenses (e.g., < $20,000). The Offer was accepted by the IRS.
Unfiled Returns/Installment Agreements on Balances Due
We have handled several clients in the Las Vegas area with unfiled returns. We refer these clients to a qualified local tax return preparer after we have assisted the client in securing ALL their wage and tax statements from the IRS. If the client(s) have outstanding tax liabilities on the recently filed returns, we will negotiate a collection alternative (e.g., installment agreement, Offer in Compromise, or a temporary uncollectible determination) on their behalf.
Substitute for Return (SFR) Assessments by the IRS
The IRS has the authority to file a tax return when a taxpayer has not taken the appropriate action to file and report his income in a timely manner. In such situations, we have assisted clients with such assessments (commonly known as “substitute for return” or “SFR” assessments) with obtaining any available information used by the IRS to make such assessments and/or taking the action to see that an actual return is filed to replace the SFR assessment. In a recent case, the information used by the IRS to make the SFR assessment was not available/provided by the IRS, so an Offer in Compromise, Doubt as to Liability, was filed, in order to address the outstanding liabilities.