IRS Innocent Spouse Relief – A $1,200,000 Tax Settlement Success Story

Posted on November 17, 2011 by Kursti Nakagawa

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

He Owed the IRS $80,000 in Back Taxes. We Reduced His Tax Debt to Zero!

Posted on July 20, 2011 by Kursti Nakagawa

Steve H. came to Professional Tax Resolution after receiving notice of a wage garnishment from his largest customer. Steve, a technology consultant, had failed to file tax returns for six years and, according to IRS calculations, owed over $80,000 in back taxes, penalties and interest. Tax settlement plans for taxpayers with numerous un-filed tax returns always begin with gathering the records necessary to prepare the un-filed tax returns. In this case, the taxpayer was able to gather some information from banking records and some from customers for which he had provided services. Fortunately for this taxpayer, his wife had worked for several years and had had federal and state taxes deducted from her paycheck. We were able to obtain and verify additional tax information by obtaining IRS wage and income transcripts.

After gathering all possible relevant information, we were able to prepare all of the outstanding tax returns. While balances were due in some years, refunds were owed in others. We were able to request that the IRS apply refunds owed to years where balances were due such that the net result was an outstanding tax liability of zero. It is never advisable to wait for a wage garnishment, tax lien or tax levy to resolve an outstanding tax issue. However, even when a tax issue seems practically unsolvable, there are tax resolution options available. Professional Tax Resolution always looks at all available tax settlement options and provides a tax debt resolution plan for even the most complicated cases.

Amazing Tax Settlement – $1,600,000 Tax Debt Reduced to Zero!

Posted on July 14, 2011 by Kursti Nakagawa

Karen M. was recently divorced and owed the IRS over $1,600,000 for a joint IRS liability she had incurred with her ex-husband. The debt had accumulated over many years and, as is usually the case, included a significant dollar amount of assessed penalties and interest. The taxpayer was newly single, lived on a modest income and had no possibility of settling the debt owed to the IRS. After looking at the taxpayer’s situation and all of the available tax settlement alternatives, we determined that filing for Innocent Spouse Relief gave the taxpayer the most realistic chance of one day being free of the tax debt.

Innocent Spouse Relief provides a taxpayer relief from tax debt if their spouse or former spouse failed to report income, reported income improperly or claimed improper deductions or credits. While the benefits from obtaining this tax settlement option can be significant, it is usually difficult to obtain. Generally, a taxpayer requesting Innocent Spouse Relief must claim and document that he or she had no knowledge of the unreported income and did not receive the benefits of that income.

In the case of Karen M., we were able to provide documentation demonstrating that our client had no knowledge of the unreported income and had limited involvement in the financial matters of the family. We were also able to prove that she did not receive the benefits of the income that was never reported and that the non-innocent spouse had a history of hiding income from both her and the IRS.

Professional Tax Resolution and the taxpayer were thrilled when a letter was received from the IRS indicating that the Innocent Spouse filing was accepted and that the $1,600,000 tax debt was reduced to zero. This is another good example of why CPAs, Enrolled Agents, and Attorneys are often so passionate about what they do. In most cases there are tax settlement options available even in the most complicated situations.

Complicated Tax Settlements and Returns Are Our Specialty. We Found This Client $75,000!

Posted on July 8, 2011 by Kursti Nakagawa

There are many types of accounting, tax and tax settlement service providers. CPAs and accounting firms typically provide tax preparation services to businesses and individuals but rarely devote much effort to actual tax settlements. On the other hand, tax resolution and tax settlement firms focus mostly on settling outstanding tax debt without ensuring that all available tax code benefits have been used on the original tax filings. Professional Tax Resolution combines the expertise of tax settlement professionals and experienced, licensed tax preparers. The first step in any tax settlement case should be to confirm that the reported tax liability is correct and that all available tax code benefits have been utilized. Following that, a tax debt resolution plan can be mapped out.

Jeff F. came to us shortly before the April 15^th filing deadline. A successful chiropractor, Jeff had made large tax payments for himself and his corporation for many years. However, he owed a large tax liability for the previous year and had failed to make estimated tax payments for the current year. We told Jeff that we would be happy to prepare his individual and corporate tax returns and suggest a tax settlement option for the balances owed. Although his original tax filings had been prepared by two well established CPA firms, we suggested that we would review them prior to recommending a tax settlement plan just to confirm that the balances owed were correct and that no tax code benefits had been missed.

After reviewing the most recent returns, it appeared that, as expected, the returns had been filed properly. However, one important tax benefit had been overlooked. Jeff’s business is located within an Enterprise Zone that offers specific state tax benefits for companies located within the zone. One of the benefits is a state hiring credit made available to employers meeting certain specific criteria. Companies who qualify but have failed to claim this credit are permitted to amend returns and claim missed credits providing the returns are filed within the statutory amendment period. The vouchering process to obtain these credits is fairly involved and takes several months to complete but we determined that the potential tax benefits were worth the time and expense.

After several months of reviewing employee qualifications we were able to obtain qualifying vouchers and identify over $75,000 in unclaimed state tax credits for prior year’s tax returns. The best news was that the returns fell within the statutory amendment period so the refunds could still be claimed. In addition, the credits would apply to subsequent years so the client would be able to claim as much as $15,000 in tax credits for each year going forward. While these refunds only applied to state tax balances, the client was able to use the past refunds to pay outstanding IRS balances.

Complicated tax settlements are what we do at Professional Tax Resolution. This is yet another example of how a qualified tax settlement firm can provide real solutions to taxpayers faced with a significant amount of IRS tax debt.

An Audit Reconsideration Success Story – A $26,000 Mistake Corrected Results in Zero Tax Liability

Posted on June 3, 2011 by Kursti Nakagawa

Professional Tax Resolution has successfully helped many clients find tax relief. Here is the story of a client who came to us in March of 2011.

Mr. and Mrs. M lived, worked and paid taxes in the United States from 2008-2010. In early 2010 both Mr. and Mrs. M moved out of the country and despite leaving a forwarding address, never received a notice from the IRS asking for supplemental documentation related to a 2008 tax return. Unfortunately more than a year passed before the taxpayers became aware of the problem and once they were informed, the IRS had moved on from their initial request for supplemental information and had both audited their return and disallowed more than $26,000 in deductions taken on their 2008 taxes. The result of the audit was a notice of deficiency for a sizable tax liability.

Now aware of their problem, Mr. and Mrs. M came to us asking how we could help. By examining the tax code, we determined that the original deductions were legitimate and we developed a tax settlement action plan. Professional tax resolution was able to request an audit re-consideration with the IRS directly. The IRS granted our request and re-opened the audit. During the re-examination period, Professional Tax Resolution Inc. was able to defend Mr. and Mrs. M successfully by providing all of the necessary documentation and evidence of the legitimate deductions in question.

In April 2011, just a few weeks after Mr. and Mrs. M hired Professional Tax Resolution; the client received final notice from the IRS that all adjustments and balances owed were reversed. No petition to the US tax court was required and a final “No Change” letter was issued closing the case.

Not only was their audit re-considered but by providing the correct paperwork and documentation, their entire liability has been eliminated. Professional tax resolution has another satisfied client and achieved an amazing 100% reduction in tax debt liability.