Case Study: Saving Mr. B $28,000 in Tax Debt

example of a tax relief client

Throughout my many years of working with clients that have profoundly serious situations with the IRS, I have met many different types of people.

For example, I have been contacted by people that owe small balances and call immediately after they receive their first letter from the IRS. They insist on hiring representation to make sure that they are in the best program possible with the IRS and want some tax education so they never find themselves in that situation again. I would describe these people as being very proactive. As much as they are already in a tough situation owing money to the IRS, they hired us at a point that we know we can keep them protected and work at their pace and our pace to fix the situation.

Then you have the person that has let their situation with the IRS get so bad that their back is against the wall and time is not on their side. One client that comes to mind when I think of the person that really came to us with their back against the wall is a client that I will call Mr. B for his privacy.

This was a case that many times during representation we were fighting the IRS AND our client to provide us with the information we needed to get him into the best situation possible with the IRS. This was also a case where time was not on our side.


Ignoring the IRS & the Notice of Intent

This client had come to us owing about $13,000 to the IRS from the tax years 2007-2013. While that is not a huge amount to owe relatively speaking, Mr. B also had not filed his taxes for a few years and assumed he would owe the IRS more. He admitted that he had been just trying to ignore the situation in hopes that it would go away. Unfortunately, with the IRS, if you do nothing, the situation only gets worse.

He contacted us at this point because he had received the dreaded Notice of Intent to Levy from the IRS. The IRS was making him aware that unless he paid the balance in full within 30 days, they would begin garnishing his income to recover the debt. 

He originally contacted us right after he received that letter and we had a great conversation about how we can help him if he allows us the time to get representation on file and get him protected. He wanted to take his time and investigate us to make sure he was hiring the right company. I absolutely encouraged him to do this. We have worked extremely hard to maintain the amazing reputation that we have and always want our clients to feel confident about who they are hiring. I did let him know that the Notice of Intent to Levy was a serious letter and that he needed to get back to me as soon as possible so that we can get him into a protected status with the IRS.

The next time I heard from Mr. B was 30 days later. He was now in a panic hoping that it was not too late to do something. I explained to him it would have been preferable to have more time to work on his case but we would be able to rush the file and get him protected.


We Start Helping Mr. B

We began his process by first doing a Tax Investigation to get all the facts from the IRS first. This is where our agents put representation on file with the IRS and then the IRS provides us with tax transcripts of everything that needs to be dealt with. We were able to complete this within a few days which is lightning fast when dealing with the IRS.

The IRS made us aware that the situation was a lot more serious than the client thought. To start with, based on the years in which he had filed he owed almost $20,000. His debt came from the tax years of 2007-2013. After 2013, he had stopped filing. 

One big thing that he did not make me aware of is throughout recent years he had taken large early withdrawals from his 401k without the proper withholdings. Once these years were filed, his IRS tax debt would significantly increase. It’s important to note that in order to qualify for any of the programs available from the IRS, you absolutely must be filed up-to-date with your tax returns. So that would be the first step in Mr. B’s case.

To file these overdue tax returns, Mr. B was assigned a case manager to help facilitate the process. The case manager explained all of the information we need directly from Mr. B so that the filings could be completed. We sent him all of the information via email. This is where the uphill battle began. 

A lot of clients, once they know they are protected, go back to their old ways. Luckily for him, our case managers take these cases very seriously and after about a month of chasing him, he finally started sending over the information we needed. Our agents were able to file all the required years and they used everything within the tax law to keep the tax debts as low as possible. But he ended up owing another $28,000 from the lack of withholdings. Between the previously accrued tax debt already owed and this new amount, he collectively owed $48,000 to the IRS.

At this point, there is nothing more that can be done but wait for the IRS to assess these tax years. This typically takes a few months. During this time, our agents leave representation on file and monitor collections so that we immediately know once these debts are assessed. Once these debts are assessed, we begin the process of enforcing the client’s right on the repayment of the tax debt.


Our Persistence Pays Off

Just like the filing process, our case managers and Enrolled Agents do most of the work but the client must be involved as well. Mr. B’s case manager began trying to reach out to him but got no response whatsoever. Because of the persistence of the case manager and a month of emails, texts, and phone calls, Mr. B finally responded and began providing the information needed to get him into the best program available to take care of his tax debt.

The main qualifier for all of these IRS programs is a client’s ability to pay the debt back. Mr. B had gone through some tough times in years past but at this point he was doing better financially but he still could not pay that debt back in full. The next part of the process was proving this. 

In some cases, this part of the process can take a few months but sometimes the IRS will very closely scrutinize the taxpayer’s financials and ask for resubmission of the proof month after month after month. This was one of those cases. 

When the IRS decides to do this AND you have a client that is not quick to respond, this can become a very difficult task. Fortunately, our case managers are very serious about helping our clients and in many cases want to get great results more than it seems the client does. With the persistence of our case managers, we were able to jump through the hoops the IRS provided and come to a final resolution.


A Low Payment Plan & Tax Debt Reduced by $28,000

The final determination, in this case, ended up saving Mr. B almost $28,000. This was largely based on the fact that he had gone through very tough times financially and he also had no savings set aside to be able to pay the lump sum. The great news was that we were able to get him into a payment plan and he would be able to pay his tax debt through payments of approximately $200 a month. 

After a long uphill battle, Mr. B was ecstatic not only to finally have the IRS off his back but that he was also going to be able to afford the payments without falling behind on any of his other monthly bills.

But our job was not done yet. From here we explained to him that moving forward he must do the right thing with the IRS. To keep these benefits including his payment plan, we explained to him that he must file his taxes on time every year and cannot accrue any further tax debt. If he does these things, he will remain in this program until the debt is gone. 

A few days later, Mr. B called us. He wanted to make sure that everyone here knew how great his case manager was. He admitted that without the persistence of the case manager, he knows that he would never be in the good spot he is in now with the IRS. I explained to him that we know this is a big part of our job. A lot of people that get themselves into situations like this need to turn the reins over to tax professionals to make sure things are done and done right.

If you can relate to Mr. B and have either accrued a tax debt with the IRS, have unfiled taxes, or are ignoring your tax situation in hopes that it will go away (it won’t), contact us for a free, no-obligation tax relief consultation and let’s start eliminating your tax problems today.


Ozzie Gomez is a Senior Tax Settlement Agent and the owner of Innovative Tax Relief which holds business licenses in Tax Resolution, Tax Audit Representation and Tax Preparation.  With almost 10 years of experience in the tax resolution industry, he has personally helped more than 4,000 individuals and businesses resolve their tax issues.

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