In these success stories the clients’ names have been left out and tax amounts rounded to protect confidentiality and attorney-client privilege. Also, in accordance with the California Bar Rules of Professional Conduct these success stories do not guarantee your case will have the same outcome.
Collection Statute Expiration Date (CSED) Overturned Saving $280,000
The IRS generally has ten years to collect taxes owed. In this case, the IRS claimed it still had the authority to collect back taxes that were 15+ years old, citing various tolling events (events that extend the statute). However, after Tax Attorney Shawn Spaulding reviewed the taxpayer’s account transcripts he discovered the reported tolling events were erroneous. He then supplemented his findings with a recent study that showed the IRS miscalculates CSEDs nearly 40% of the time (of the 40%, 86% of the errors favor the IRS). Mr. Spaulding then submitted a detailed legal brief to the Taxpayer Advocate Service and consequently the taxpayer was awarded a Taxpayer Assistance Order that overturned the IRS’s CSED calculations. If the IRS was not challenged on the CSED calculations it would have unlawfully collected the entire $280,000 from the taxpayer.
Success: The IRS can no longer collect approximately $280,000 in back taxes from the taxpayer. If the CSED was not overturned the IRS would have received the entire amount from the taxpayer.
Innocent Spouse Relief Granted Saving more than $50,000
The taxpayer was being threatened with enforced collections (levies, garnishments, etc.) by the IRS and California FTB for back taxes (over $50,000) incurred by the ex-spouse. Tax Attorney Shawn Spaulding immediately filed a request for innocent spouse and stopped the threat of collections while the request was being reviewed. In the end, the IRS and FTB accepted the innocent spouse relief request, which got the taxpayer off the hook for the ex-spouse’s back taxes.
Success: Protected the taxpayer from collections and saved them approximately $50,000.
Effective Tax Administration Offer in Compromise Accepted on Appeal
Generally, the IRS will not accept an offer in compromise when a taxpayer has income and/or equity in assets that exceed the amount of taxes due. In this case, the taxpayer owed just over $25,000 to the IRS. Moreover, the taxpayer had over $160,000 of equity in their house. Normally, the IRS would reject an offer under these circumstances. However, Tax Attorney Shawn Spaulding was able to successfully argue for equitable relief based on the taxpayer’s age and medical condition. Accordingly, the IRS accepted an offer of $200, which saved the taxpayer $24,800.
Success: The IRS allowed the taxpayer to keep their home and accepted a $200 payment to settle the entire debt. Approximate tax savings $24,800.
$167 Monthly Payment Plan to the IRS on a $440,000 Liability
Taxpayer owed over $440,000 for back income taxes and employment taxes. The assigned IRS Revenue Officer was threatening to seize the taxpayer’s primary residence to satisfy the liability. However, Tax Attorney Shawn Spaulding protected the taxpayer’s home and negotiated a partial payment installment agreement of $167 per month, which will effectively save the taxpayer hundreds of thousands of dollars.
Success: If the taxpayer’s income remains steady he will save $424,000 when the statute of limitations for collections expires.
FTB Wage Garnishment Released
The FTB does not usually release wage garnishments until the entire balance owed is paid in full. Instead, taxpayers are typically limited to a modification, which reduces the amount garnished to some amount less than the original 25%. In this case, the taxpayer owed back taxes to the FTB through a proposed assessment on a missing tax return. Consequently, the FTB issued a wage garnishment. Through zealous advocacy, and a conversation with an FTB Manager, Tax Attorney Shawn Spaulding was able to file an original return and get the wage garnishment released before the return had fully processed (which can take more than six months).
Success: Quickly filed missing tax returns, released IRS and FTB wage garnishments, negotiated a payment plan, and got over $7,000 of penalties abated.
A Battle of Frozen Refunds
For the most part, the IRS issues refunds to taxpayers within six weeks. In this case, the IRS froze refund processing for a taxpayer going all the way back to 2006. The taxpayer was owed approximately $30,000 but the IRS kept holding onto the refunds. After investigating the details of the issue Tax Attorney Shawn Spaulding was able to contact the correct department of the IRS and start advocating for a release of the refunds. In the end, the IRS placed erroneous verification holds on the account and within an eight month period the taxpayer was awarded the refunds with interest.
Success: IRS released 8 years of frozen refunds (plus interest) totaling more than $30,000.
Trust Fund Recovery Penalties Avoided
The IRS will assess the Trust Fund Recovery Penalty to responsible parties when a business entity (corporation or LLC) is behind on paying payroll taxes. Essentially, this creates joint liability for the trust fund portion of the balance owed which means the IRS can collect from the responsible parties (typically owners) as well as the business. For the past several years, the IRS has moved toward assessing the trust fund recovery penalty whenever a payroll liability arises. However, in a recent case, Tax Attorney Shawn Spaulding was able to negotiate an affordable payment plan for a corporation, while simultaneously convincing the assigned IRS Revenue Officer not to assess the trust fund recovery penalty to the owners.
Success: Avoided the assessment of the Trust Fund Recovery Penalty to the business owners for the corporation’s payroll tax liability.
Last Minute Tax Court Settlement
When taxpayers are audited and disagree with the IRS’s initial determination they have the right to petition the United States Tax Court. During that process the IRS will typically try to the settle the case through the IRS Office of Appeals. However, in this case, the IRS fell behind and was not able to process the substantiating documentation timely, which meant the case would likely end up at trial. However, less than two weeks before the case was scheduled for Calendar Call Tax Attorney Shawn Spaulding was able to settle the case with the Office of Chief Counsel (IRS Attorneys) and saved the taxpayer approximately $40,000 in taxes and additional trial costs.
Success: Saved the taxpayer over $40,000 during pre-trial settlement proceedings and avoided additional costly trial expenses.