Success Stories

$275,000 IRS Debt Settled for $25,000

Situation

The client came to us after filing several bankruptcies and carrying an IRS debt of $275,000.

Resolution

Through the Offer-in-Compromise program, we successfully resolved the liability for $25,000.

Overcoming Compliance Challenges: Successful Resolution of IRS ESRP Assessment for Nursing Home Group

Situation

The IRS proposed to assess over $1.2 million of Employer Shared Responsibility Payments (ESRPs) against our client, a group of nursing home facilities, for failing to offer minimum essential health coverage to at least 95% of its full-time employees under the employer-shared responsibility provisions of the Affordable Care Act.

Resolution

Our office was able to successfully show the IRS that the proposed ESRPs were triggered as a result of reporting errors and not an actual failure to comply with the requirements of the Affordable Care Act. As a result, the IRS closed all of the ESRP cases with nothing owed.

Victory Against the IRS: Saved Client Hundreds of Thousands in Unwarranted Penalties

Situation

Our firm filed an Offers in Compromise on behalf of our client, a group of nursing home facilities, to resolve unpaid payroll taxes the facilities had deferred under the CARES Act during the COVID-19 pandemic. During the examination of the Offers, the IRS opened Trust Fund Recovery Penalty investigations to pursue assessing personal liability against the owners, even though all trust fund taxes had been paid in full. The IRS also attempted to incorrectly return the Offers based on the open Trust Fund Recovery Penalty investigations.

Resolution

Our firm pointed out to the IRS that the correct action under the Internal Revenue Manual is to hold the Offers open while the Trust Fund Recovery Penalty investigations are completed, and the IRS agreed to do so. Our firm also argued to the IRS that all trust fund taxes had been paid in full and, therefore, there was no basis to assert Trust Fund Recovery Penalties. The IRS accepted our argument and closed the Trust Fund Recovery Penalty cases with no penalties asserted against our client. As a result, this saved our client hundreds of thousands of dollars in penalties, and the examination of the Offers was able to proceed.

Felony Charges Reduced to Misdemeanor

Situation

The client came to us post-indictment from the Public Defender’s Office. The Department of Justice had charged the client with two felony counts of filing a false tax return, alleging over $1.6 million in unreported income over the related conduct periods. If convicted, the client faced a statutory maximum of three years in prison. Upon review, it became clear that the government misunderstood the client’s business and had not reviewed previously provided documentation.

Resolution

After significant work by Senior Associate Michael Arnold and Legal Assistant Rebecca Kiesel, the underreported income was shown to be far less than alleged. The client pled guilty to one misdemeanor count of filing a fraudulent return and was sentenced to probation instead of the three years in prison originally faced.

$330,000 Tax Liability Settled for $50,000 through Offer-in-Compromise

Inaccurate IRS Liability Successfully Written Off

Situation

The IRS has a limited time to collect upon a tax liability. However, in this case, the IRS improperly calculated the collection statute and was actively collecting from the client, even though the liability should have been discharged.

Resolution

Through a Taxpayer Advocate Service request, we were able to get the IRS to correct its internal records, which resulted in the IRS writing off the client’s $96,500 liability.

$230,000 Tax Liability Settled for $35,000 through Offer-In-Compromise

$85,000 in Outstanding Liability Resolved for $10,000

$300,000 Tax Liability Settled for $45,000

$135,000 Tax Liability Settled for $30,500

Long-term Tax Debt Settled for Far Less than Owed

Situation

Over a period of nine years, a client was followed by a debt accrued from unpaid income taxes totaling $210,000. 

Resolution

In April of 2019, with the expertise of Robert J. Fedor, the client's tax debt was reduced to just $6,500.

$140,000 Failure to File Penalties Settled for $10,000

Situation

Since immigrating to the United States in 2008, the client failed to timely file FBARs with the IRS to report their Swiss and other foreign accounts. The IRS initially determined that the clients should be assessed a penalty of $140,000.  

Resolution

Through our firm’s involvement in the matter, the IRS ultimately settled on a penalty of $10,000.

$300,000 Employment Tax Bill Settled for $35,000

Situation

The Taxpayer-Business Owner had failed to pay payroll taxes for approximately four years, resulting in a liability of over $300,000. The IRS wanted to levy bank accounts and force the sale of business assets to pay the tax liability. 

Resolution

We used the IRS's Offer-in-Compromise Program to take the case away from the Revenue Officer and stop the levies and collection. With the Offer-in-Compromise program, all business tax liabilities were settled for $35,000.

$220,000 Tax Penalty Settled for $20,000

Situation

For over twenty years, the clients failed to timely file FBARs with the IRS to report their Swiss and other foreign accounts. The IRS initially determined that the clients should be assessed a penalty of $220,000.

Resolution

Through our firm’s involvement in the matter, the IRS ultimately settled on a penalty of $20,000.

Up to 30 Months of Incarceration Reduced to Just Probation

Situation

The client was indicted in the U.S. District Court, Northern District of Illinois (Chicago) for filing false and fraudulent tax returns. She had fraudulently obtained $600,000 in refunds. Plea agreement was executed in late 2016. The sentencing guideline range was 24–30 months.

Resolution

On January 17, 2017, the client was sentenced to three (3) years of probation. No incarceration.

$1.2 Million Tax Bill Settled for $75,000

Situation

As a result of criminal charges for failing to file his tax returns for three years, the IRS assessed the client tax, penalties, and interest in an amount exceeding $541,000. In addition, the IRS also assessed civil fraud penalties against the taxpayer for those same years in an amount exceeding $250,000. Lastly, the taxpayer failed to pay his tax liabilities for an additional four years, which amounted to an additional liability of more than $415,000.

Resolution

Through the IRS’s Offer in Compromise Program, the taxpayer’s total liability of more than $1.2 million was settled with the IRS for $75,000.

Successfully Negotiated Offer in Compromise

Situation

The taxpayer owed over $300,000 in personal income tax. The IRS wanted the taxpayer to pay the full amount in a payment plan over several years.

Resolution

We took the case away from collections by filing an offer in compromise to settle the debt for a lesser amount. Our firm settled the debt in an offer in compromise for $12,000.

Correcting IRS Mistake Saves Taxpayer $1,200,000

Situation

After the IRS examined the taxpayer’s returns in the early 2000s, the IRS assessed additional tax, penalties, and interest in an amount exceeding $1,200,000. The taxpayer took steps to resolve this tax liability by attempting to settle for $50,000. However, the IRS rejected his settlement offer, and the taxpayer was unable to pay the tax liability.

In general, the IRS has 10 years to collect any tax debt after it has been assessed. However, there are a few instances in which the time for collection can be extended by the IRS. In late 2013, the IRS began attempting to collect on his tax liability again. The IRS contended that it could collect from the taxpayer until 2018 because the settlement offer extended the time for the IRS to collect. However, the IRS did not correctly calculate this extension of time. Our office, working with the Taxpayer Advocate Service, argued to the IRS that the time to collect had already expired and, therefore, the taxpayer no longer had a tax liability.

Resolution

The IRS accepted our argument that the time for collection had expired and wrote off the taxpayer’s balance. As a result, the taxpayer did not have to pay any portion of the $1,256,228.94 that the IRS contended he owed.

Client's Unfiled Tax Returns

Situation

The clients had unfiled tax returns as far back as 1997. They owed over $40,000 in tax, penalty, and interest to the IRS.

Resolution

Our firm completed and filed all past due returns. We settled the tax due for $3,000 through the Offer in Compromise Program.

$475,000 Tax Bill Settled for $70,000

Situation

The taxpayer had a medium-sized business that had not filed or paid payroll taxes for 3-4 years. Its total IRS liability was approximately $475,000, with a substantial sum of interest and penalties accumulating daily. The taxpayer was concerned about staying in business, resolving its problems with the IRS, and avoiding criminal prosecution for its actions.

Resolution

We immediately acted to get the taxpayer in compliance with its payroll obligations. All past due payroll tax returns were filed, and the taxpayer began to make payroll deposits on its current payroll obligations. We then reviewed which options best suited the client. The options included bankruptcy reorganization, liquidating the business, paying the liability in full, or filing an offer in compromise.

Once we were able to keep the client "current" for six months, and based on its income, assets, and liabilities, we determined that the company was a good candidate for the IRS's Offer-in-Compromise Program. After approximately 12 months of careful planning and negotiations, our office was able to settle the tax debt for $70,000.

Business Owner Under Criminal Investigation Avoids Prosecution

Situation

The taxpayer/business owner had failed to file payroll tax returns or pay any payroll taxes for approximately eight years. Robert J. Fedor, Esq., LLC was consulted and developed a strategy to work with the IRS criminal investigation and also work toward bringing the taxpayer into compliance. All of the outstanding payroll tax returns were filed immediately. We retained a payroll service company to begin withholding and impounding deposits.

Resolution

After months of negotiations, we were able to convince the IRS Criminal Investigation Division that this particular taxpayer would not make a good criminal prosecution candidate. The business was ultimately sold prior to any tax liabilities being assessed against the corporation. To this day, the taxpayer himself does not owe the IRS anything. The taxpayer now collects a regular check from the sale of the business and remains in possession of his retirement income.

Expected Criminal Case Declined; $10,000 Due IRS

Situation

We were engaged by a business and individual in Houston, Texas, who had never filed a tax return, despite making approximately $450,000 per year for several years. The case was in the process of being referred to the criminal investigation division of the IRS. We met with the IRS and convinced the assigned agents that the subject case was not worth pursuing on a criminal level. We agreed to file all outstanding tax returns due and to pay the liabilities due, including penalties and interest.

Resolution

Originally, the IRS proposed a liability of approximately $500,000, excluding interest and penalties, because we had no documentation for any of the company's expenses. However, we persuaded the IRS Agents to extrapolate expenses/deductions from prior year returns and use approximately the same deductions for the years' outstanding. After all of the tax returns were filed and processed, the IRS accepted the returns as prepared. There was a balance due of approximately $10,000.

IRS Offer in Compromise Resolved

Situation

The client's income tax liability was in excess of $72,000. Our firm analyzed the client's income and expenses, as well as equity in assets, and approached the IRS with an Offer in Compromise.

Resolution

We worked with the IRS and the Offer Specialist and ultimately resolved the entire matter. Our firm resolved the case for $1,584.

Business Owner Avoids Prosecution Despite $200,000 Yearly Underreporting of Income

Situation

Our firm was approached by an accounting firm with a difficult case: a business owner and his company were under IRS examination. False returns were prepared and previously filed. Our preliminary analysis revealed that at least $200,000 of income per year over a period of several years was not reported to the IRS. We reviewed what defenses the client has available, prior accounting work, which was substandard, and went through the examination. The term for this is an "Eggshell Audit".

Resolution

We were successful in convincing the IRS that the issues outstanding did not rise to the level of a criminal investigation referral. While there may be significant tax due, it was our position that the client did not hold the requisite intent to criminally investigate the case. The examination was completed in 2009. The client, due to current year net operating losses, will be able to take advantage of net operating loss carrybacks and eliminate most, if not all, of his tax liabilities. He will also, of course, not be prosecuted.

Successful Offer in Compromise

Situation

The business owner was prosecuted for failure to withhold and pay over payroll taxes to the IRS for a period of several years. Owner was separately convicted of bank fraud and served three years in prison.

Resolution

Our firm submitted an Offer in Compromise in late 2010, offering the sum of $20,000 in full settlement of a liability to the IRS in the amount of $3,200,000. The $20,000 offer amount was accepted.

Business Closed by State Reopened

Situation

Business clients had been shut down by the state's Department of Revenue due to delinquent sales tax liabilities. Clients faced potential criminal prosecution if they attempted to operate their business despite the notice of closure. The Department of Revenue refused to let the client reopen their business unless the balance was paid in full.

Resolution

Our office identified that one major source of the problems was the accountant. On our firm's advice, our client immediately hired a payroll company to file and pay the required taxes moving forward. Our office then completed an Offer in Compromise application and negotiated a resolution to our client's delinquent sales tax liabilities. The state agreed to initially accept less than 1/3 of the total tax due and agreed to a payment plan over a period of 24 months. The business reopened within one week of hiring our firm.

Successful Offer In Compromise

Situation

The client had an original tax liability of $68,000. Our firm analyzed the client's income and expenses and approached the IRS with an Offer In Compromise.

Resolution

We worked with the IRS and successfully resolved this matter for $4,500

$6 Million Tax Liability Reduced to $170,000

Situation

The client operated a construction-based business in the New York City area with over $6 million in federal employment tax liability, as well as additional State of New York liabilities.

Resolution

Senior Associate Michael Arnold negotiated a final federal settlement of approximately $170,000 through the Offer-in-Compromise program. We also resolved the state Department of Labor and employment tax withholding liabilities through a combination of an installment agreement and penalty forgiveness.

Employment Tax Liability Reduced by Over Half

Situation

A business came to our office after not filing employment tax returns for several years. Much of the supporting documentation was lost, complicating the process. We worked with the IRS to obtain the necessary records and prepared and filed all outstanding tax returns.

Resolution

We submitted an Offer-in-Compromise to address the resulting liability. After negotiations, the IRS accepted an offer of $290,000 to resolve a $625,000 debt.

Nursing Home Group Reduces $700,000 Payroll Tax Liability to $120,000 with Expert Resolution

Situation

Our client, a group of nursing home facilities, came to us with a total liability of approximately $700,000 in unpaid federal payroll taxes that the facilities had deferred under the CARES Act during the COVID-19 pandemic.

Resolution

Through the IRS’s Offer in Compromise program, our firm was able to resolve the tax debt for a total of $120,000.

$200,000 IRS Penalties and Levied Medicare Payments Resolved

Situation

The client, a nursing home facility, was assessed over $200,000 of civil penalties by the IRS for failure to file and failure to furnish Form 1094-C and Form 1095-C. The IRS subsequently began levying the client’s Medicare payments via the Treasury Offset Program.

Resolution

Our firm was able to get the levied funds returned to the client and a collection hold was put on the client’s account to prevent future levies. Once we got the forms filed and processed, our firm’s penalty abatement request was granted, and the civil penalties were abated in full.

$600,000 Tax Liability Settled for $233,000 through Offer-In-Compromise

$55,000 Tax Liability Settled for $3,500 through Offer-In-Compromise

$135,000 Tax Liability Settled for $35,000 through Offer-In-Compromise

Ohio IRS Criminal Tax Investigation Declined

Situation

The client was under an IRS criminal tax investigation for unreported income and diversion of assets related to the family’s probate estate.  It was a four-year investigation with possible felony tax evasion charges to be filed.

Resolution

Our office gathered evidence from different attorneys and accountants, and successfully persuaded the IRS agents that this matter was not a criminal scheme or pattern of issues. The IRS declined to prosecute the matter shortly thereafter and issued its findings.

$140,000 Tax Bill Settled for $27,500

Tax Charges Reversed

Situation

The client was indicted for various payroll tax offenses. We took the case to trial in 2018, which resulted in a partial conviction and a partial acquittal of tax charges. Appeal was taken on all counts.

Resolution

The Court of Appeals reversed all of the remaining tax charges. The case was remanded back to the District Court. 

Offshore Tax Penalties of $200,000 Reduced to $41,000

Situation

For several years, the client failed to report his interest in a foreign corporation and its bank account. Due to the failure to report these interests, the taxpayer was subject to potential penalties in excess of $200,000.

Resolution

Through the Offshore Voluntary Disclosure Program, the IRS and the taxpayer ultimately agreed to a penalty of $41,000.

$130,000 Tax Bill Settled for $3,500

Situation

As a result of failing to properly account for and make estimated tax payments to the IRS for several years, the taxpayer’s liability with the IRS swelled to over $130,000. The liability became unmanageable due to the taxpayer’s financial difficulties following a divorce.

Resolution

Through the IRS’s Offer in Compromise Program, the taxpayer’s total liability of more than $130,000 was settled with the IRS for $3,500.

Client's Lawsuit Settlement Classified as Nontaxable

Situation

The taxpayer won a civil lawsuit against her former employer for over $425,000. The IRS claimed this amount was taxable, and they attempted to assess more than $250,000 in taxes.

Resolution

We worked with the client to prepare and defend her tax return. In filing the return, we found an exception that allowed all of the $425,000 damages to be exempt from income tax. We successfully classified the income as nontaxable and defeated the IRS in their attempts to assess more than $250,000 in tax. The client paid zero taxes on the $425,000 in damages.

$85,000 Tax Bill Settled for $9,000

Situation

After the IRS examined the taxpayer’s returns for three years, the IRS assessed additional tax, penalties, and interest in an amount exceeding $63,000. The taxpayer also filed a return with an additional $18,000 in tax due. After penalties and interest were calculated, the taxpayer's total liability with the IRS was over $85,000.

Resolution

Through the IRS’s Offer in Compromise Program, the taxpayer’s total liability of $85,000 was settled with the IRS for $9,000.

$1,200,000 IRS Liability Settled for Approximately $300,000

Situation

The taxpayer is a physician who had accumulated liabilities with the IRS and other taxing authorities over a period of about 15 years. Our office reviewed the issues outstanding, made some strategic planning decisions, and ultimately filed for bankruptcy under Chapter 7 of the U.S. Bankruptcy Code. Our office, on behalf of the taxpayer, brought suit against the IRS in bankruptcy seeking to discharge most of the tax liabilities at issue.

Resolution

The taxpayer received a discharge of his debts through the Chapter 7 filing. We ultimately negotiated a settlement with the Internal Revenue Service wherein approximately $900,000 of the IRS liability was discharged, and the remaining sum due was paid interest-free through a payment plan. On behalf of the taxpayer, we were also able to amend several years of the tax returns at issue and bring to the client an additional $100,000 in tax savings.

$125,000 Tax Bill Settled for $10,000

Situation

The taxpayer was a small business owner. Her income and expense records for several tax years were destroyed. Shortly thereafter, she received notice that the IRS planned to audit her records for the same years. The taxpayer had no records to substantiate her business expenses, and as a result, all expenses were disallowed. She received a bill from the IRS in excess of $125,000. Before arriving at our office, the taxpayer met with another tax professional who told her she had no choice but to pay the bill in full.

Resolution

Based on her income, assets, and liabilities, our office determined that she was a good candidate for the IRS's Offer-in-Compromise Program. After approximately 7 months of careful planning and negotiations, our office was able to settle the tax debt for $10,000.

The OIC program was developed by the IRS in order to assist taxpayers who will not be able to pay the full amount of their tax liabilities within the requisite time frame. Both individuals and businesses may qualify for this program. Our office will review monthly income and expenses, as well as the value of your equity in assets, to determine if you are a good candidate for the program. Not all taxpayers qualify, and beware of tax resolution services that make promises to the contrary! But for the select group of taxpayers who do qualify, the savings can be substantial.

Successful Offer in Compromise

Situation

The client was in the midst of a Chapter 13 bankruptcy in 2008, wherein he was spinning his wheels on a five-year payment plan with the IRS and his other creditors. He retained the services of our firm, and immediately we advised him to convert his case to Chapter 7. Thereafter, we filed an Offer-in-Compromise with the IRS.

Resolution

His tax liability was in excess of $106,000, and the case was settled for $8,050.

Physician Business Owner Ends 10 Year IRS Battle

Situation

In the early 1990s, a physician/business owner had deducted several hundred thousand dollars on his tax return related to farming and other business expenses. The IRS conducted an audit and determined that the taxpayer owed several hundred thousand dollars in additional tax, penalties, and interest.

The taxpayer sought legal representation and tried the case before the United States Tax Court. After spending tens of thousands of dollars in legal fees, the Tax Court held in favor of the IRS.

Resolution

A year later, he sought out our team. We analyzed the case and determined that a Chapter 11 plan of reorganization (bankruptcy filing) could eliminate ninety percent of the tax liabilities, and the remaining ten percent could be paid through a plan over five years.

The case was a success because our office took the time to analyze the case properly, examine the options available to the client, and, ultimately, help the client decide what the best course of action would be.

State Offer in Compromise - Significant Discount

Situation

State tax liability for the client was $435,100.53, composed of prior years' withholding tax, sales tax, and income tax. We approached the State Offer group, with which we are in constant contact and have a great working relationship with, and provided the State with an analysis of the client's income and expenses, as well as equity in assets.

Resolution

We settled the matter for approximately $36,000. We also negotiated a 36-month no-interest payment plan (typically it is 24 months).

Corporate Payroll Tax Liability Successfully Resolved

Situation

A landscape company had a state payroll tax liability. The liability was approximately $100,000.

Resolution

Our firm settled for $28,946. We also negotiated a 40-month no-interest payment plan (typically it is 24 months).

Successful Offer in Compromise

Situation

The taxpayer was an insurance salesperson who had federal income tax liabilities spanning over a period of ten years. The taxpayer's liability was approximately $62,000.

Resolution

Our firm negotiated a settlement with the IRS through the Offer-in-Compromise program. The taxpayer's liability was resolved for $4,000.

Successful Offer in Compromise

Situation

An Insurance Agency Owner was referred to our firm in 2009 with an IRS liability of approximately $55,000. We met with the client and developed a plan to get the client in compliance with the IRS, including beginning to pay estimated taxes and timely filing returns. Once in compliance, our office submitted an Offer in Compromise to the IRS. We offered to pay the IRS $1,500 in full and final settlement of the liabilities.

Resolution

The Offer was accepted in May 2010. The client paid the settlement immediately and in full.

Potential Bankruptcy Case - Successful Commercial Lease Negotiation

Situation

The business-owner client was facing a significant increase in monthly lease payments. The client was prepared to throw in the towel after former counsel was unsuccessful in negotiating an amendment to the lease agreement. The client initially consulted with our firm to discuss filing a Chapter 7 bankruptcy. This would have resulted in the total liquidation of the business assets and the loss of over 100 jobs.

Resolution

Our office immediately began negotiating with the landlord, using the possibility of a bankruptcy filing as leverage. The landlord agreed to a three-year reduction in lease payments and CAM expenses. The client was able to avoid bankruptcy, save over 100 jobs, and use the amended lease agreement to refinance and consolidate outstanding debt.

$640,000 Sales Tax Liability Settled for Approximately $545,000

Situation

The taxpayer underwent a sales tax audit that put its liquor license and business in jeopardy. The taxpayer's liability was approximately $640,000.

Resolution

Our firm was retained after completion of the audit and after the deadline for appealing any audit findings. Despite this, our firm negotiated a discount of the penalties and interest on the tax liability for a total savings of approximately $95,000 to our client. The client's liquor license was reinstated, and our client was able to continue to operate.

Successful Offer In Compromise

Situation

The client had an original tax liability of $110,000. Our firm analyzed the client's income and expenses and approached the IRS with an Offer In Compromise.

Resolution

We worked with the IRS and successfully resolved this matter for $5,000

Successful Offer In Compromise

Situation

The client had an original tax liability of $90,000. Our firm analyzed the client's income and expenses and approached the IRS with an Offer In Compromise.

Resolution

We worked with the IRS and successfully resolved this matter for $3,500.

Criminal Investigation Dismissed Against Business Owner

Situation

A Chicago business owner hired our firm in 2009 after being contacted by IRS criminal investigators. We represented the business owner in all facets of the investigation.

Resolution

In September 2011, the criminal investigation was dismissed, and the matter was referred to the IRS civil division.

Successful Criminal Tax Violation

Situation

The client, a financial professional, was charged with a felony: a criminal tax violation.

Resolution

We successfully negotiated the felony down to a misdemeanor charge and disputed a possible prison sentence. The client received 8 months of home confinement with work privileges.