Case Study: Completely Eliminating IRS Payments

an older female tax relief client

Throughout my years in this industry, it is always tough speaking to people in awful situations with the IRS. When someone’s financial situation is so tight, I always try to steer them to try to contact the IRS directly first in hopes that the IRS would see how bad their situation really is and try to help them. The programs that companies of our nature utilize are programs that all people have the right to. 

I can understand the cases where people are making good money but have large tax debts and of course, the IRS being a debt collector will try to get as much money as quickly as possible. But when a client clearly has no ability to pay the tax debt back and the IRS still forces them to pay hefty amounts every month, it bothers me. This has happened many times over the years but there was one client that will always stick out when I think of these situations. For her privacy, we will call her Ms. B.


Small Tax Debts That Kept Getting Bigger

Ms. B reached out to us a few years ago and explained her situation to me. She owed about $14,000 to the IRS. Compared to a lot of other cases that I have handled, this is not a huge amount of money to owe the IRS. I may have even told her that she might want to try to contact them directly and they should be able to work with her. She explained to me that she had tried that and then told me her experience dealing with them. 

Beginning in 2006 when she accrued a tax debt, she worked with the IRS in setting up payment arrangements to try to pay her debt. Now though, she was getting older and was not able to work as much as she used to, so her income was decreasing each year. 

Every time she spoke to the IRS, the only remedy they offered was payment arrangements that consisted of high payments she felt she could not afford. She said that they were very intimidating when she spoke to them and she was afraid to fall behind so she would accept their payment terms. She did without many times in order to make those payments but in doing so failed to set aside money for taxes for the present tax year because she simply could not afford to do both. She explained to me how the tax debt balance was barely going down but year after year she ended up owing the IRS more.


Forced to Give the IRS 30% of Her Social Security

In 2010 she was forced to retire for health reasons. At this point, all she had was a small amount in savings and a social security income of $1200 a month. She described her situation to me as being in quicksand with the IRS. Things had gotten so bad that she defaulted on her payment and was barely able to pay her living expenses with the money she had leftover. 

She was not a bad person trying to avoid paying the IRS back; she just truly could not afford to do so. She tried to contact the IRS many times for help but they always only wanted a payment. At this point, she figured the only thing she could do was ignore all of it because the stress had been eating her alive.

She was able to stay under the radar for a few years but then one day she received a letter from the IRS stating that they were going to garnish her social security if the tax debt was not paid. She contacted the IRS again and it was the same story–all they wanted was a payment that she could not afford. Knowing that she would not be able to survive if she lost her social security each month, she agreed to a $350 a month payment. This payment very quickly ate up the remainder of her savings and so she was forced to pay this amount out of the $1200 a month she received from social security, leaving her with only $850 a month to survive. Knowing she could no longer go on like this, she reached out to us at Innovative Tax Relief.


Ms. B Reaches Out to Us for Help

All I could think about when hearing her explain her situation is that she should not have to hire representation. She was so obviously qualified for one of the many hardship programs the IRS offers that I was shocked that the IRS would not just put her into one. I also wished we had spoken many years ago because if everything matched up with what she was telling me, we could have saved her years of anguish and struggling to make that high payment.

I explained to her the first thing we needed to do was get the facts from the IRS. We started off the case by doing a Tax Investigation for her. When we received her transcripts from the IRS, everything matched up with what she had told us. We could see these were all originally small tax debts that had gotten larger because of penalties and fees. We could also see her best attempts to make the payments over the years. 

Through her wage and income reports, we could also see that her income had reduced over time to the point that it was amazing she was even able to make a payment! Now that I had the facts, I was able to put her at ease and explain her rights in this type of case. The biggest right she had was the right to pay her monthly expenses prior to paying the IRS.

This would not be an overnight fix but I assured her that we could get her into a program where she would not be required to pay the IRS back because of what they call a hardship. She had stopped making her monthly payment to the IRS, so we kept our representation on file so that we could monitor collections, making sure that the IRS did not proceed with any type of the threatened involuntary actions. From here we began the process of presenting her financial situation to the IRS. 


IRS Payments Completely Eliminated

Through this process, we were able to prove that after allowable expenses there was simply nothing left over to afford any sort of payment to the IRS. As a result, she was officially put into a “currently non-collectible status” which is a hardship program that protects a person from the IRS’ involuntary collection actions when they have proven that they cannot afford to pay the tax debt back.

After years of anguish, Ms. B was ecstatic that she could finally stop worrying about the IRS on a daily basis and lose sleep. She was even happier when I explained to her how the IRS only has 10 years to collect on a tax debt. In her case, this is probably the reason why the IRS had been demanding such high payments–they were trying to get as much money as possible from her while they had the right to collect on the debt. 

I explained to her how in just a few more years, based on the statute of limitations, the tax debts would start to be forgiven year after year until they were all gone. Unless she had a big jump in income or won the lottery, she would not have to make any sort of payment to the IRS ever again and it would soon all be forgiven and wiped away. I gave her all the information and dates, so she finally had an end date to this situation that had plagued her for so long.

The very next day Ms. B contacted me just to thank me again and to let me know she had the best night of sleep she had in years since her troubles with the IRS began. I still hear from her every so often with more thanks as her final IRS debts are getting close to expiring. 

I will never try to tell somebody that they must get representation such as from us. In fact, I advise so many potential clients in situations like hers to try to deal with the IRS on their own first. Unfortunately, there are too many stories like Ms. B’s. 


We Protect Your Rights With the IRS

It is so important for people to know their rights when it comes to owing money to the IRS. If the IRS is not willing to work with you and you are falling behind on other bills and debts, please reach out to a true tax professional. We will do everything possible to make our process affordable for you and do everything legally possible to get you into an affordable situation with the IRS where you will most likely save a lot of money not to mention eliminate the stress from your life.

If you have been losing sleep worrying about your tax problems, we can help. Contact us for a free tax relief consultation 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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