Case 6: Audit Defense and Installment Agreement

Audit Defense and Installment Agreement Example

SITUATION:

A man called us to assist him with a solution to resolve about $30,000 that the IRS was coming after him for. During the initial consultation, the client informed us that he had been audited. He was also concerned about a Form 1099-C, which he had thought was not taxable, but the IRS has added that to the total liability. For tax years 2013 and 2014, the returns were examined based on the claim of potential overstatement of itemized expenses. He had also failed to include additional income that was reported to the IRS. The client’s case was assigned to a field examiner.

INVESTIGATION PHASE:

A power of attorney was completed and our tax professional made immediate contact with the IRS field examiner. Upon review of the initial audit report that was provided by the client and conversation with the Revenue Officer, we sent the client a request for documentation to substantiate the expenses that were claimed on the returns. We reviewed all documents as provided and completed a return analysis for each issue that was noted in the audit report. We also conducted research for proof of bankruptcy filing and creditor inclusion.

AUDIT DEFENSE PHASE:

The tax professional sent in a completed Form 982, Reduction of Tax Attributes Due to Discharge of Indebtedness along with a printout of the bankruptcy file as recorded in the PACER database which showed the Form 1099-C was not a taxable event.

We also reviewed all receipts that were provided. When completing the return analysis, based on the information that we had received, it was better for the client to take the standard deduction for both years. The itemized deduction was less than the standard deduction, according to the receipts that were provided.

When reviewing the dividend income, we determined that it was, in fact, a taxable transaction.

The Revenue Officer issued a revised audit report making the corrections as listed above. The initial audit report had a balance due of $24,986.29 for 2013 and $4,538.50 for 2014. With the revisions. The new balances are $7,643.55 for 2013 and $4,557.51 for 2014 for a total savings of $17,323.73.

The tax professional reviewed client’s financial position, transcripts, history, his unique situation and recommended that the best possible option, based on the client’s financial situation, would be a Fresh Start Installment Agreement of $170.00/month with the IRS, to be paid over a period of 72 months.

RESOLUTION PHASE:

During the collection hold period, the client decided to proceed with the Resolution Phase of the program. The tax professional contacted the IRS to set up the Fresh Start Installment Agreement.

Audit Defense was completed and the Fresh Start Installment Agreement was set in place with the IRS.

During Investigation total amount owed: $29,524.79
After completing the Audit Defense, the new balance was: $12,201.06
Resolution: Fresh Start Installment Agreement
Monthly Payment: $170.00
Phases worked: Investigation, Audit Defense, and Resolution

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DISCLAIMER:

This example is an actual example of a client who enrolled in the tax program. Every case is unique and this is not an extension that you will receive the same resolution as they will. Your situation is unique, as are all tax cases. The team has extensive experience, has former IRS employees, special officers, enrolled agents, tax attorney, and CPA’s. Our tax team will work diligently with a flat fee to solve the tax issue you have for the best possible resolution for you. That means doing all possible to ensure you pay the lowest amount of taxes legally required based on your situation, allowable deductions, finances, and other factors.