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Valda and her husband owned and operated thriving excavation company. During the housing boom prior to 2007, the company grew quickly. To keep up with the demand they acquired more equipment and hired more employees.
Then the housing crunch came and they found themselves struggling to make equipment payments and payroll. They began delaying payment of payroll taxes. But what they planned as a temporary solution, grew into a nearly $200,000 debt to the IRS.
“I felt paralyzed. The stress was unbearable. I couldn’t sleep, and I couldn’t see a way out of it. It was such a helpless feeling.”
The company eventually folded under the weight of the housing crash leaving them with no way to pay back the massive debt. To make matters worse, Valda’s husband injured himself, preventing him from working at this critical time.
Notices from the IRS started piling up.
Then one day in late 2010 there was a knock on the door. The visitor introduced himself as the IRS Revenue Officer assigned to their case.
Valda knew the situation had become desperate.
Their home already had an IRS lien filed against it, and she worried they would lose it.
Asked to describe how she felt at that moment, Valda said, “I felt paralyzed. The stress was unbearable. I couldn’t sleep, and I couldn’t see a way out of it. It was such a helpless feeling.”
Valda knew she needed professional help.
By the time Valda contacted Total Tax, their IRS debt had ballooned from $200,000 to $267,000 due to IRS penalties and interest.
And, because this was a payroll tax debt, the situation was even more complicated. The IRS has a “take no prisoners” attitude when it comes to collecting unpaid payroll taxes. To describe their tactics as aggressive is an understatement.
Undaunted, Tamar Johnson, CPA went to work on the case. “We knew the case would be a difficult one. We couldn’t promise Valda anything because we know how aggressive the IRS gets with payroll cases. But after she told us her story, we knew we had to help.”
Valda’s situation fit within the Offer in Compromise program, but the IRS rejected their first offer.
They knew the case was going to be difficult and losing round one just confirmed their suspicions.
Total Tax, Inc appealed the decision and pushed the offer to higher level decision makers where the case could be argued in more detail.
In the end, the IRS settled for an offer of $10,000, a savings of over $257,000! Valda and her husband were ecstatic to say the least.
Valda says the experience changed her life, “It may seem strange to people that paying my taxes actually feels good now. But when you’ve lived through what I did you never want to go through that again. They really saved us.”
It was a dream for Cathie and her husband to move to the mountains of north Idaho and transition from their busy careers to start a business as tree farmers. They purchased existing timberland, made improvements and organized their new venture.
But what started as a dream began to take on the characteristics of a nightmare when the IRS conducted an audit and denied the activity as a business. The impact was a tax debt of over $65,000.
“We had invested everything. We couldn’t afford that kind of loss. That was our dream, our way to retirement.”
Cathie contacted the company that had originally done her taxes and they agreed to represent her for the original IRS audit. Unfortunately, it was clear the situation was beyond the tax law many generalized tax preparers are prepared to help with. The audit did not resolve the issue and the IRS began the collections process.
Cathie was not giving up: “We had invested everything. We couldn’t afford that kind of loss. That was our dream, our way to retirement.”
She reached out to a reputable CPA firm in the area hoping they would have better answers. Turns out they did – they recommended Tamar Johnson, CPA. Tamar’s firm, Total Tax, Inc, had a long-standing reputation for working with similar small businesses in trouble with the IRS.
Cathie contacted Tamar and explained her situation. Tamar knew her case would be a challenge: “These cases are not straight forward. The IRS has considerable latitude in determining what is and what is not a business. It isn’t black and white like most IRS tax code.”
Tamar asked Total Tax Inc’s founder, Paul Jameson, EA to review the case as well, and the pair prepared to take on the audit findings. They found that the IRS was failing to consider established criteria specific to tree farm activities. After meeting with the IRS auditors, they also found that the agency lacked staff experienced with applying the criteria to determine when this type of activity rises to the level of a business. This became the theme as the case progressed.
Tamar and Paul escalated the case to IRS Appeals. Again, Appeals appeared ill prepared in many cases and unfamiliar with the facts surrounding the activity. Tamar requested supervisory intervention, but the IRS responded with court cases they argued were justification for their position; yet lacked facts and circumstances that aligned with the case at hand.
Paul summarized the IRS’s position: “We knew their reasoning was flawed, we were just dealing with representatives at the IRS who didn’t understand the activity and apparently too busy to look into it appropriately.”
So, to tax court they went. Tamar brought Tax Attorney, Steve Anderson on to the case. Steve took the evidence assembled and presented it to IRS appeals a second time as is required prior to the court hearing the case. This time however, a fresh pair of eyes at the IRS was able to see the “forest for the trees” and find in Cathie’s favor.
“We knew we were right, and those are the cases you push as far as they need to go.”
Tamar assessed the decision this way: “The evidence was clear; the IRS did not want this case to go to court. These are complex assessments and the IRS is a huge agency with differing levels of experience and knowledge. We knew we were right, and those are the cases you push as far as they need to go.”
Cathie and her husband Marcus were relieved the outcome was in their favor: “I highly recommend Total Tax to anyone needing not only Forestry and Timber tax help but tax help with any business or personal taxes. I fully trust Total Tax with all our tax issues. They earned our profound respect and loyalty.”