A couple in their 80’s owed the IRS in excess of $250,000. They were both in poor health and under constant care of doctors. Both were eventually unable to care for themselves and required constant daily care by private caregivers in their home. Although both were on Medicare, their caregivers, and other needs that they had, were not covered. Their monthly medical and living expenses were very costly. They did have life savings in excess of a million dollars, but needed their money to provide for their exceptional needs. The IRS wanted their money.

Attorney Sheldon Lazarow filed a rare type of Offer in Compromise known as an Offer for Effective Tax Administration. This is one of three types of Offers in Compromise available to delinquent taxpayers. In this type of Offer there is no doubt that the tax owed is correct and that there is potential to collect the full amount of taxes owed, but an exceptional circumstance exists that would allow the IRS to consider an OIC. To be eligible for compromise on this basis, a taxpayer must demonstrate that the collection of the tax would create an economic hardship or would be unfair and inequitable. It is extremely rare that the IRS accepts this type of Offer in Compromise.

After over a year of negotiating with the IRS Offer in Compromise unit and the IRS Office of Appeals, Mr. Lazarow was successful in getting the IRS to accept a lump sum payment of approximately 10% of the tax that was owed.

Due to an embezzlement of business funds by a Tucson couple’s business manager they were not able to pay their employment taxes to the IRS. They accumulated a tax debt, including penalties and interest of $535,000. The IRS was closing in on the couple’s business when they hired the Lazarow Law Firm to help them resolve what was turning into an ugly situation. Attorney Sheldon Lazarow interceded on behalf of the business and kept the IRS from closing it. When the IRS Revenue Officer refused to approve any reasonable resolution of the matter, Mr. Lazarow took his case to the IRS Office of Appeals. After lengthy negotiations he obtained a partial pay installment agreement for his clients. The IRS agreed to let them pay a total of $30,000 over five years in settlement of their $535,000 debt.

Mr. Lazarow also got the state Department of Revenue to hold the couple uncollectible on their state income tax debt that was accrued as part of their business problems.

Tucson tax attorney, Sheldon Lazarow, represented a Tucson, Arizona couple before the IRS Appeals Division for a past due income tax debt of $88,000 plus accruing interst. The IRS was ready to levy money from the couple’s sole- proprietorship business and their various bank accounts.

Attorney Lazarow stopped the IRS levies and presented the couple’s case to an IRS Appeals Officer. After lengthy negotiations, Mr. Lazarow was able to get the IRS to agree to a partial pay installment agreement for $200 per month for a period of 5 years (60 months). If the couple pays their monthly payment for the 5 year period they will have paid a total of $12,000 to settle a debt that will be in excess of the original $88,000 because of daily accruing interest added by the IRS. This amounts to paying off the original tax debt at less than 14 cents on the dollar.

The tax debt relief remedy in this case, a partial pay installment agreement, turned out to be a cheaper remedy than an Offer in Compromise for these taxpayers. The reason for this is that the Offer in Compromise remedy takes into account the couple’s asset equity when the partial pay installment agreement does not. If they wanted an Offer in Compromise, the amount they would have had to pay would have been much more.

This case is a reminder that all remedies must be thorougly examined in each case to determine which one would be better for the taxpayer involved.

After being audited three years ago, the IRS showed up on a long-time real estate investor’s doorstep again. The IRS was now going to audit one of the tax returns filed after the previous audit. The IRS was interested in looking at all of the income and the expenses that were claimed on the investor’s tax return for the many residential rental homes and apartments that he owned and managed.

The investor’s accountant had carried forward losses from his previous years tax returns and applied them to the return year that the IRS was auditing. The investor hired Lazarow Law Firm, PLC to represent him during this audit. Attorney Sheldon Lazarow of the firm dealt with the IRS field auditor and arranged to have him come to his office to go over the investor’s books with him.

The investor was not able to produce complete records for all of his expenditures so Mr. Lazarow had to work with him to reconstruct some of the financial aspects of his business for the year being audited. On the first day of the audit, the auditor was not happy with the amount of information that the investor had produced. Mr. Lazarow explained the investor’s reasons for not having all of his records and negotiated an agreement between him and the auditor to arrange to have certain other records reconstructed. The auditor agreed to continue the audit for a couple of months so that the records could be reconstructed. (The investor was not present at the audit.)

On the second day of the audit, Mr. Lazarow met with the auditor who still was not completely satisfied with the records. Mr. Lazarow went through the records with him and persuaded him that not only did he have enough to look at, but that even if he disallowed a negotiated portion of the loss-carryforward it would not affect the investor’s tax return enough to cause him to be taxed further. The audit was concluded with the auditor finding that the amount of the tax on the return would not be changed.