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Case Settled, Payroll Taxes, Civil Penalty, Individual Income Taxes

I apologize for not updating the blog, but I have been really busy.

I have settled a very very large case. I have settled a case that started in 2007. The client had not filed an income tax return, or for that matter, any tax returns in a number of years. The client owns a small business that had not filed any payroll tax forms, nor sales tax forms in a number of years. The business writes thousands of checks per year. This is the worst case scenario.

We dug into the project. The project started with a “coming to Jesus” meeting. This is the meeting where I explain to the client that there is going to be a substantial investment in accounting costs. Furthermore, there is going to be a bunch of representation hours, and that I don’t think the small business has any chance of surviving. The client owed about $1.2 million in total debt. The debt included credit cards, sales tax, payroll taxes, income taxes, penalties and interest.

The State of Indiana requires every small business to renew their retail merchant’s certificate every two years. We had to start the project by getting a trial balance for every year that the business had been open. Then we had to file the sales tax and Indiana withholding taxes. The client established an Installment Agreement with the State of Indiana, and over the course of 3+ years, he fully repaid the State of Indiana.

The client still had an IRS problem. While he may have satisfied his obligation to the State of Indiana, he had not dealt with the IRS. He was making a voluntary payment, until the IRS levied his wages. A little over a year ago, the IRS assigned his case to a local Revenue Officer. She requested financial information sufficient to complete a Form 433A. After providing the information, the IRS has granted a monthly payment of $326.

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