Reading about the theories of the various aspects of tax debt resolution is one thing, but hearing how it actually works with a real client situation is entirely different. I want to start sharing examples of client cases that I have worked on with all of you and how we brought them to final resolution. This month’s case study surrounds a well-intentioned business owner, threats from the IRS and state for personal assessment of the trust fund portion of tax debts owed, and how we brought the case to a successful conclusion.

A business owner with a long-established printing company located in the Commonwealth of Pennsylvania hired us to address aggressive collection threats from the state. He was a great guy who leaned on his staff to tend to a lot of details, including having the finances overseen by his in-house accountant of fifteen years. Despite having checks and balances in place with the accountant, which included weekly meetings and him being the only person authorized to sign checks, she accrued a hefty sales tax debt by not sending in the checks she had him sign for the monthly tax payments.

Everything came to a head when a judgment was hand-delivered to the printing company along with a demand to appear before the commonwealth’s tax board for unpaid sales taxes accrued for the prior four years. This is when the client brought us into the mix. According to the story told to the business owner when everything came to a head, the in-house accountant liked him so much that she didn’t have the heart to tell him that the company wasn’t bringing in enough money to cover all the expenses, specifically the sales tax. According to his advisement at the beginning of our engagement, the sales tax debt was the only issue, and he confirmed he pressed her about any other issues multiple times.

As we began our representation before the commonwealth, we laid the groundwork to point the professional responsibility for the tax debt accrual firmly on the shoulders of the in-house accountant, with her complete agreement to the plan in place and confirmed in writing. However, as our involvement continued and we made headway with the commonwealth, my “Spidey senses” started to go off. Though the accountant was involved with our plans and communications, I felt we still weren’t being told the whole story. In a heart-to-heart call with the business owner, I secured his authorization to look into all the business's other tax obligations for the timeframe while the sales tax debt was accrued.

The next call with the business owner was one of the most challenging conversations I have ever had with a client and one that sticks with me to this day.

Between the Commonwealth of Pennsylvania and the IRS, the printing company owed over $400,000 in unpaid payroll taxes; when adding that debt to the unpaid sales taxes we were already aware of, the business owner had realized newly found debts amounting to over $580,000, which is a nail in the coffin for a small business. There was no way to lighten the blow. I’m unsure if it was a coincidence, but the accountant was out sick the week we realized the actual depth of the tax debt problems. Upon speaking with the business owner and disclosing the debts, it was agreed that his next calls would be to his lawyer and the police.

Because we had written confirmation from the accountant of her deceit when discussing the business’ financials with the owner, we relentlessly pursued and secured the commonwealth agreeing to record the personal assessment against the business owner and the accountant. Further negotiations leaned on the accountant’s repeated misrepresentations to the business owner, including the checks she had him repeatedly sign but she never submitted and the tax returns she consistently compiled for the business that showed zero taxes owed, which she also had him sign. We disclosed that one of the daily tasks she volunteered to do was to pick up the mail from the post office box, with her reasoning being it was on her way to the shop from her home; this unusual task for an in-house accountant let her interfere with all tax notices being issued to the business by the IRS and commonwealth. After disclosing the devastating financial impact her actions caused on the business owner personally, including having to decide to close the print shop that he had built over the prior 28 years, the commonwealth agreed not to pursue payment from the business owner and placed his case into a protected hold on collection actions status until the collection statutes were to expire.

The next big hurdle was dealing with the Internal Revenue Service. Upon filing my Power of Attorney, the Revenue Officer assigned to the case disclosed that due to a lack of response to his cooperation requests, he had already determined from summonsed bank records that the business owner was the sole authorized signatory on all the business bank accounts. Because the proposed assessment had already been issued, there was no way to stop the ball that had rolled halfway down the mountain, leaving our only option to appeal the determination of responsibility.

Armed with all the documents we had already utilized to defend the business owner before the commonwealth, we began the uphill battle of appealing the proposed trust fund assessment that amounted to over $220,000. We attached all the documentation displaying the business owner’s innocence and included several exhibits containing the commonwealth’s decisions not to pursue the debts from the business owner.

Once an appeals officer was assigned to the case, we spent no less than ten hours on the phone going over various records that displayed the accountant's nefarious actions, how the business owner was lulled into complacency over the years the printshop had employed the accountant, and the daily rituals that hid the accruing debts, despite the business owner doing everything he could have been reasonably expected to do to tend to his business obligations properly. Ultimately, I convinced the appeals officer to reverse the decision to hold the business owner personally responsible because we proved that his actions supported a lack of “willfulness or responsibility” for the accrual of the payroll tax debts.

Though the client’s business had to be closed due to the enormity of the tax debts he wasn’t even aware were accruing, we successfully defended his innocence surrounding the accrual and prevented the IRS and commonwealth from taking collection actions against him. It wasn’t easy, but it was a massive win on his behalf in the end.

If you or your client find yourself in a business tax debt situation that could lead to personal assessments to anyone involved, don’t wait another moment to get help! With over 24 years of experience handling trust tax debts, the Golden Lion Tax Solutions team has the firsthand experience and knowledge necessary to negotiate the best outcome possible.

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Your future and your family deserve the right protection. Golden Lion Tax Solutions will be your advisor and confidant throughout the entire journey. We guarantee to offer you or your business best-case solutions for your tax debt. We are by your side every step of the way. Start now and get your life back.

For help with your tax debts, email contactus@goldenliontaxsolutions.com or call 833-LION-TAX (833-546-6829)

Disclaimer: There are requirements that must be satisfied in order to qualify for some of the tax solutions we discuss on our website. Not all of our services will be suitable for every client. Golden Lion Tax Solutions is here to help you find the most appropriate solution to fit your situation.