Case Study: $319,000 in IRS Tax Debt Settled for $6,700
Our client, a self-employed individual, owed the IRS $319,000. Through the Offer In Compromise program Attorney Adam Brewer was able to settle the debt with the IRS for $6,700.
Obligatory Disclaimer: Every tax case is different. The following case study is presented because we are proud of the result and it serves as an example of what is possible through an Offer In Compromise. There are a lot of misconceptions about resolving tax debt. If you have tax debt contact us for a free evaluation of your tax case.
Our client had income tax liability from 2008 through 2017 totaling 319,000. The income tax liability resulted from self-employment income with little or no estimated tax payments each year.
Our client had only enough self-employment income to cover necessary living expenses.
Our client had few assets — a vehicle, business and personal bank accounts, a brokerage account, personal effects, and office equipment. The value of these assets was considered by the IRS, but only a small amount of equity in the vehicle and the brokerage account factored into the settlement amount.
This case had a number of complicating factors.
First, the taxpayer created a new tax liability after the offer was submitted. Attorney Adam Brewer cited applicable IRS regulations that allowed the additional tax year to be included into the existing Offer.
Second, since our client was self-employed maintaining current tax deposit compliance through estimated tax payments was an ongoing issue.
Lastly, our client had substantial income in a very lucrative profession in prior years. The IRS considers income history when determining whether the income level is likely to increase in the future. Fortunately, in this case the IRS did not require a collateral agreement which could have required additional payments towards the debt should income increase in the future.
After submitting the Offer to the IRS’s Brookhaven Campus our client's case was assigned to an Offer Examiner in the San Bernardino office. The Offer Examiner requested an updated profit and loss statement, brokerage statement, and bank statements.
After a review of the documents, the IRS agreed to accept $6,700 in exchange for discharging $319,000 in tax debt. The end result was a savings of $312,300 (a 97.9 percent discount) for our client.