IRS Installment Agreement help: A success story
BY: MICHELLE L. PALMERI
From time to time we like to share with our readers some of our success stories. True we are very proud of our work, but we also like to share these stories because it helps illustrate what can and can’t be done about a tax problem. The worst thing for a tax problem is ignorance. And here’s another story to help shine some light. While these are true stories we change names and geographic identifiers to keep out clients anonymity intact.
Tommy Nucci currently a W-2 employee who was previously self-employed. He recently received multiple notices from the IRS stating that he owed over $45,000.00 for tax years 2006 through 2009. He called us in a panic stating that he didn’t know where the IRS was getting these numbers from and that he needed help fast. Prior to contacting our firm, Tommy called the IRS to find out why he owed so much but the agent just tried to push him into a repayment plan for almost $900.00 per month! Thankfully, Tommy decided that it would be best to hire an experienced tax professional instead of dealing with this problem on his own instead of agreeing to something he knew he couldn’t afford.
After completing an investigation into his IRS account transcripts, we found that the IRS had prepared returns on Tommy’s behalf, using information reported to them others as Tommy never file his own tax returns. When the IRS files a return on behalf of a taxpayer, they do not take into consideration some deductions, credits or business expenses. We told Tommy that by completing his own tax returns, he may reduce or eliminate his balance. Fortunately, Tommy kept thorough records of his business expenses from the time he was self-employed, which ended up lowering his taxable income and decreasing the amount of tax the IRS was claiming he owed.
In this case, preparing unfiled returns was the right course of action because the client had the documentation to show the IRS that their version of his tax return was incorrect. After the client’s new tax returns were filed and processed, Tommy’s final liability was reduced to $17,000.00. He was able to qualify for an Installment Agreement he could afford to pay off the remaining balance.