A hard-working small businessman was audited by the IRS for three tax years. He represented himself during the audit.

The IRS auditor merely looked at the business bank statements during the audit. She made the determination that the businessman owed a total of more than $90,000 more for taxes, penalties, and interest.

The Lazarow Law Firm came in after the audit and determined that the auditor did not allow thousands of dollars in expenses that were paid in cash even though the taxpayer had receipts for everything. He would take cash out of the business bank account to pay for materials and other business expenses.  This, of course, is not a good practice. After consulting with Mr. Lazarow, the taxpayer changed to paying everything by check or through his business debit card to track expenses.

All of the expenses paid by cash were matched up to the bank cash withdrawals and the receipts. The auditor still refused to change her audit result, so Lazarow appealed the case to the IRS Appeals Unit.

Mr. Lazarow argued the case to the IRS Appeals Officer. The result was that the auditor’s report showing the taxpayer owed over $90,000 was not only reversed, but the taxpayer wound up getting tax refunds instead.

TUCSON, ARIZONA. A medium-sized plumbing contractor owed multiple hundreds of thousands of dollars in unpaid payroll taxes to the IRS. The firm went through some bad economic periods and could not pay any of the past due taxes. The tax debt was accumulated over many years.

The IRS was intent on collecting taxes from this company. Sheldon Lazarow developed a plan to make sure that the company kept current on all of its payroll deposits and tax filings in the future.

A very detailed financial statement was prepared for the company. Attorney Lazarow used the financial statement to negotiate with the IRS Revenue Officer that was assigned to the case and was able to get her to agree to hold the company uncollectible. That means that the IRS has closed their case and is not now trying to collect taxes from the company. This has given the company some breathing room allowing it to do business unimpeded and to get back  on solid financial ground.

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.

 We just heard from an IRS Appeals Officer that she agreed to place a small corporation owned by a married couple into “Status 53” (Currently Not Collectible). The corporation was struggling due to health problems of one of the owners. The IRS Appeals Officer was presented with the Profit and Loss statement of the company, but would not believe the numbers she was provided. Although IRS appeals officers are not charged with the duty of auditing companies in a tax collection case, this one was improperly trying to do just that. We piled on the evidence so that she couldn’t question anything in the company’s books. Eventually she relented and put the company into uncollectible status. It is rare that the IRS is willing to hold an in-business company uncollectible. The IRS can come back later to collect if the business shows an ability to pay in the future. But, for now, our clients can have some breathing room to deal with other matters in their lives.