Payment Plan Settles $62,000 Tax Debt – Allows $65,000 401(k) to Remain Untouched
Payment Plan Settles $62,000 Tax Debt – Ms. V, a middle-aged woman who suffers from chronic health problems, represents a rather unique tax settlement case. Through years of employment, she had accumulated a back tax balance of $62,000 but, at the same time, had managed to build up approximately $65,000 in a 401(k) plan. Because her savings was greater than her outstanding tax liability, she did not meet the eligibility criteria for several of the popular IRS tax settlement options including the IRS Offer in Compromise.
Having had a difficult time finding a tax settlement firm she could trust, Ms. V came to Professional Tax Resolution through a referral from a friend. Her overall aim was to reduce her tax debt, without dissolving her 401(k). After an initial consultation, our tax team immediately set to work creating a customized tax settlement plan that would fit her specific set of financial circumstances. While we would have liked to use an Offer in Compromise, we quickly realized that her petition would be denied because her monthly disposable income, together with the funds in her 401(K) plan, was sufficient to pay off her back tax balance within a reasonable time. As a result, we continued to explore alternative solutions.
After obtaining updated financial information and negotiating with the IRS, we were successful in resolving Ms. V’s back tax problem using an Installment Agreement. This was an ideal tax settlement solution for Ms. V because it gave her the opportunity to safely pay the IRS while leaving the funds in her 401(k) untouched. Another benefit of this agreement in Ms. V’s case was that the IRS agreed to accept a monthly installment of $200 which is lower than amount necessary to pay back the full balance of the tax debt before the statute of the agreement expires. This means that if the IRS never requests new financials, Ms. V will only repay about $22,000 of the original $62,000 she owed, a tax savings of over 64%!
Professional Tax Resolution puts forth the maximum effort for each client they serve. They understand that the best solution is not the same for every person and customize each tax settlement plan to meet the needs of the customer. In the case of Ms. V, our professionals created an affordable tax resolution plan that protected her 401(k) assets which was her primary aim. Our tax professionals always do the necessary research to design a tax settlement plan resolves each client’s back tax problem in a way that fits their particular set of circumstances.
