Mrs. M. was referred to us by a local attorney. Her husband had recently passed away and, shortly after his death, she became aware of an outstanding IRS tax liability in the amount of an astonishing $1,200,000.
Mrs. M. had had no knowledge of this tax debt before her husband’s death. A few months later in our initial meeting with her, we learned that her personal tragedy was even worse than the death of her husband and realization of this massive IRS debt. She informed us that she had hired a very large tax settlement firm to resolve the issue and had already paid them a whopping $25,000. She came to us after six months, when she had no indication that the tax settlement company she had employed was making progress towards resolving the issue. Now skeptical that a firm might really be able to help, she did her research and read all of our credentials and reviews before arranging our initial meeting.
We immediately started working on her case and during our initial conversation with the IRS Revenue Officer assigned to Mrs. M’s file, we were brought up to date on the details of the case. Unfortunately due to the inaction of the previous tax settlement company, the IRS had already levied the client’s insurance and financial accounts. Even more alarming was the fact that the IRS was also in the process pursuing other aggressive collection techniques to the extent that Mrs. M actually risked the immediate seizure of her additional assets to settle the outstanding liability. After assuring the revenue officer that we were working towards a resolution, we were granted a 90 day hold. This time interval gave us the opportunity to resolve the case in manor that was acceptable to the IRS and still allowed Mrs. M to keep her assets.
After reviewing all of the relevant information and consulting with our client, we felt that she qualified for Innocent Spouse Relief. Innocent Spouse Relief is an IRS tax settlement option available to taxpayers who owe the IRS for tax amounts incurred by their spouse. While it is an excellent tax settlement alternative for a spouse who meets the qualifying criteria, it is definitely not a blanket solution for anyone with a marital tax debt. The acceptance criteria for Innocent Spouse Relief are very explicit and must be well documented. After careful analysis, we determined that Mrs. M’s situation met these criteria and felt that her application would be accepted by the IRS
After gathering all of the relevant information and documentation, we were able to prepare and file the application for Innocent Spouse Relief. Although there was a wait of several months after the request was submitted, the IRS granted the Innocent Spouse Relief for our client’s half of the $1,200,000 tax liability.
This was excellent news. However because the husband was deceased, this is not the end of the story. While this was the best result that anyone could have hoped for, the IRS did not relieve the husband’s estate for its share of the outstanding tax debt. Therefore to complete the resolution process, we continued our efforts. We were able to negotiate a settlement contract for the estate with the IRS. The terms were that Mrs. M. would sell one of her residences and whatever the sale of the home produced as an asset, the IRS would accept 50% of the net equity from this sale as a final settlement of the debt.
This is truly a remarkable success story and Mrs. M. is finally able to move on and heal after a tumultuous year.
Here is a Recap:
- Total Deceased Husband/Wife Total IRS liability $1,200,000
- Wife’s portion of this liability $600,000
- Wife’s liability after Innocent Spouse Relief Ruling $0 a 100% Reduction!
- Husband’s Estate IRS Liability $600,000
- Tax Settlement (50% of Net Equity from Home Sale) $300,000 a 50% Reduction!
This example is an excellent illustration of how Innocent Spouse Relief can be used to settle large IRS tax debt. In Mrs. M’s case the joint $1,200,000 tax debt was settled for just $300,000! The wife’s personal liability was reduced by 100% and the total estate settled for just 25% of the original liability!
If you have an unresolved tax debt, visit us today at www.professionaltaxresolution.com for more information about our customized tax settlement assistance. The CPAs and tax professionals at Professional Tax Resolution use their extensive knowledge of the tax code to provide taxpayers with the best settlement option available. Contact us by phone at (877) 889-6527 or by email at info@protaxres.com to learn more about our services and to receive a free, no obligation consultation