How Client 1 Saved Over $15,000 with Strategic IRS Negotiation

Introduction
Client 1, a self-employed graphic designer, found themselves in a financial bind after failing to file tax returns for three consecutive years. They owed the IRS over $25,000, including penalties and interest, and had received a Final Notice of Intent to Levy. Understandably, they were overwhelmed and feared losing their bank accounts and business assets.

Our Approach

1. Initial Consultation and Financial Assessment:We conducted a thorough financial review to understand Client 1’s income, expenses, and overall financial hardship.
   It became clear they could not afford to pay the full amount owed due to irregular income and necessary living expenses.
   
2. Filing Back Taxes:We prepared and filed Client 1’s unfiled tax returns, ensuring accuracy and claiming all available deductions.
   This reduced the total liability from $25,000 to $20,000.
   
3. Offer in Compromise (OIC) Submission:Based on their financial situation, we submitted an OIC to the IRS, offering $5,000 as a settlement for the tax debt.
   We provided detailed documentation proving Client 1’s inability to pay the full balance.
   
4. Penalty Abatement Request:Additionally, we requested a First-Time Penalty Abatement, reducing penalties by $3,500.
   

Outcome
The IRS accepted the OIC, reducing Client 1’s liability to $5,000. Combined with the penalty abatement, Client 1 saved $15,500. Today, they are back on track, filing taxes on time, and running a successful business without fear of IRS collections.

How Client 2 Eliminated $12,000 in IRS Penalties

Introduction
Client 2, a small business owner operating an LLC, faced over $30,000 in tax debt due to underreported income and estimated tax payment penalties over two years. They had ignored IRS notices, hoping the issue would go away, until their accounts were garnished.

Our Approach

1. Immediate Action to Halt Collections:Upon engagement, we filed a request for a Collection Due Process hearing to stop the IRS from levying their accounts.
   This gave us time to address the underlying tax issues.
   
2. Correcting Past Returns:After reviewing Client 2’s records, we identified missed deductions for equipment purchases and business travel.
   Amending their tax returns reduced the liability from $30,000 to $22,000.
   
3. Penalty Abatement Based on Reasonable Cause:Client 2’s financial struggles stemmed from a family medical emergency, which we documented thoroughly.
   We submitted a penalty abatement request under the IRS’s “Reasonable Cause” provision, explaining how the emergency impacted their ability to comply.
   
4. Installment Agreement Negotiation:For the remaining balance, we negotiated a manageable installment agreement of $300 per month, preventing further garnishments.
   

Outcome
The IRS approved a penalty abatement of $12,000, leaving Client 2 with a reduced balance of $10,000. The installment agreement gave them breathing room to rebuild their business and financial stability.

How Client 3 Resolved a $50,000 Tax Debt for $8,500

Introduction
Client 3, a retired individual living on a fixed income, received a notice of tax deficiency for over $50,000. The debt stemmed from a miscalculated capital gain on a property sale combined with IRS penalties for underpayment and late filing.

Our Approach

1. Reviewing IRS Records:We immediately requested Client 3’s tax transcripts to verify the IRS’s calculations.
   It became apparent that the IRS had failed to account for the property’s adjusted cost basis, overstating the capital gain by $40,000.
   
2. Correcting the Tax Liability:We prepared an amended tax return, accurately reporting the sale and including all allowable deductions.
   This reduced the original liability from $50,000 to $12,000.
   
3. Submitting an Offer in Compromise (OIC):Given Client 3’s fixed income and lack of liquid assets, we submitted an OIC, offering $8,500 as full payment.
   We emphasized their inability to pay the balance without significant financial hardship.
   
4. Appealing Penalty Assessments:We also appealed the late filing and underpayment penalties, arguing that Client 3 was unaware of the filing requirements due to their age and reliance on incorrect professional advice.
   

Outcome
The IRS accepted the OIC, and the penalties were waived after the appeal, saving Client 3 over $41,500. They now have peace of mind knowing their financial future is secure.

Closing Thoughts

These real-life success stories highlight the power of strategic negotiation, accurate tax filings, and expert guidance. If you’re struggling with tax debt or IRS penalties, our firm is here to help. Reach out today for a consultation and take the first step toward financial freedom.