A Tale of IRS Audits & Business Betrayals

When clients come to us with their IRS problems, we have to wear various hats. Sometimes, we’re a therapist, sometimes a mediator, and other times a friend. Tax issues are often never easy and sometimes involve many people who get caught up with one rotten egg.

That was the case for one of our clients, a husband and wife who the IRS was after for $65,284. Their whole issue stemmed from a business deal gone bad with a rogue ex-business partner, and they wound up owing the full amount themselves. It was bad enough that they had to close their business down after the actions of their ex-business partner, but it became much harder when they found out they owed over $60,000. The worst part is our client wasn’t even aware an issue existed until the IRS audited them — another gut punch.

We immediately got to work on the case and took it all the way up through Tax Court and the IRS appeals process, pushing through two IRS independent office of appeals officers before finding ourselves before the general counsel. Throughout the process, we got a lot of pushback from the IRS, and they certainly didn’t want to play fair. We had trouble getting them to do the simplest tasks to move the case along. Much of that had to do with the fact that in a complicated case like this, they don’t have an easy answer in their manual, so it’s our job to work hard and blaze new trails.

Another thing with unique cases like these is while we know the IRS was wrong and the case is good, sometimes the IRS can be hard to read. We won’t lie — we were nervous with this one because we weren’t sure if they’d view our evidence on their situation as relevant to their case. But after months of negotiations, the IRS finally relented to a “no-change determination,” which, in IRS speak, means we won.

Essentially, they decided to drop the case — free of charge. We resolved the case for our clients for $0 out of their pockets. Now that’s a deal gone right!