Key Takeaway
IRS enforcement actions can feel overwhelming, especially for small business owners already struggling with declining income and financial stress. In this case, strategic financial analysis and direct negotiation with the Revenue Officer allowed Andrin Tax Relief LLC to protect the client from escalating collection activity and secure breathing room while his business stabilized.
After cleaning up the client’s financial records and demonstrating his true cash flow limitations, Andrin Tax Relief LLC negotiated a favorable resolution that halted collection pressure and placed the account into Currently Not Collectible status.
Client Profile and Background
Client Profile
- Single man
- Small business owner (consulting)
- Sole financial provider for household of him and his mother
Background
- Total IRS liability: $30,000
- Prior Installment Agreement in default due to insufficient cash flow. After he defaulted, IRS assigned case to revenue officer who wanted to double his payments due to the IRS having incorrect financial data on the taxpayer.
- IRS escalated case to a Revenue Officer (RO)
- IRS threatening to issue lien on home
- Significant financial and emotional strain
Client contacted Andrin Tax Relief LLC after enforcement actions and threats from IRS intensified.
Financial Condition at Intake
- Business had particularly great year prior, but then significantly declined. IRS was basing his ability to pay on the prior year, which is not his typical income.
- Prior monthly agreement payments bouncing
- Limited disposable income despite steady employment, due to decline in business projects
Although the client earned enough income in his consulting business to pay his bills, his monthly obligations and accrued tax debt made full payment impossible. To make it more stressful, the IRS wanted to double his monthly payment from $400 to $800.
Tax Liabilities
- Federal balance due: $30,000
Resolution Strategy and Actions Taken
- Restored Compliance
- Eliminated IRS compliance barriers
- His business financial records needed to be cleaned up substantially to show compliance and ability to pay
- Positioned case for negotiation with assigned Revenue Officer
- Strategic Negotiation with Revenue Officer
- Conducted full financial analysis and documentation review
- Demonstrated limited ability to pay despite income level and uncharacteristic spike in income year prior
- Negotiated Currently Not Collectible Status
- Negotiated for him to be in Currently Not Collectible (CNC) is a temporary status in which the IRS will temporarily stop collection activity. The debt is still there, but he doesn’t have to pay unless he earns more money.
- So he went from being required to pay $800 to $0.
Outcome
- Essentially what is above in #3. Additionally, we cleaned up his business financial documents and provided recommendations for better bookkeeping going forward.
