Resolved: $2.5 Million Liability for Delivery Service Published March 9, 2020

Tax Guard successfully resolved a $2.5 million IRS liability through an installment agreement of $75,000 per month for a West Coast contract delivery service. As a result, the business continued funding with Meritus Capital and 1,200 employees kept their jobs. An invoicing system error with the company’s major account led to significant delays in payment and caused the business to fall behind on its federal tax deposits for two quarters. Despite the business attempting to make good-faith payments on its own, the revenue officer was extremely aggressive upon assignment to the case. He rejected the initial proposal, demanded payment in full, and threatened to take enforced collection. A Tax Guard Associate successfully:

  • Prevented the IRS from levying bank accounts and accounts receivable;
  • Worked with an IRS appeals officer to defer the filing of federal tax liens until an installment agreement was in place and reduced to writing;
  • Worked with another IRS appeals officer to secure an installment agreement of $75,000 per month for six months increasing to $120,000 per month thereafter;
  • Secured a payment the business can afford – the revenue officer demanded a monthly payment substantially larger than $120,000; and
  • Obtained a subordination of federal tax lien to protect Meritus Capital’s security interest in the receivables.

“We tried to do the right thing on our own by getting compliant with the federal tax deposits, contacting the IRS, and making good-faith payments. But, the IRS misapplied our good-faith payments and the revenue officer was unreasonable from the start, despite the fact that we tried to be proactive,” the business owner said. “The revenue officer was so difficult – we would have been in trouble without Tax Guard. Whether it was the IRS trying to file a lien or rejecting our installment agreement, Tax Guard explained the situation, told us what to expect, provided us with options, and got the job done with an agreement that works for us.”

“When a business is working with a factor or asset-based lender and has an IRS liability, the level of complexity is compounded because of the federal tax lien and priority concerns. In our experience, business owners and local attorneys or accountants generally cannot address both the IRS issues and lenders’ concerns given the time constraints. Tax Guard understands these issues and the sense of urgency, keeps us informed, and, in this instance, resolved the issue so we could continue funding a valued client,” said Paul DeLuca, President of Meritus Capital.

Posted By: Jason Peckham