Resolved: $3 Million Liability for Law Firm Published June 1, 2020

Tax Guard successfully resolved an IRS liability of $3 million for a law firm on the West Coast through an installment agreement with an initial payment of $9,000 per month. As a result, the firm was able to continue factoring its receivables. The firm fell behind on its federal and state taxes when it experienced problems with cash-flow due to unpaid receivables from a number of its largest clients as well as a civil lawsuit. A Tax Guard Associate successfully:

  • Prevented the IRS from levying bank accounts and accounts receivable,
  • Negotiated a tiered installment agreement with a payment of $9,000 per month for the first six months, increasing to $45,000 per month thereafter once the legal settlement was paid in full (the revenue officer originally requested $75,000 per month),
  • Secured a lien-deferred agreement (no federal tax lien will be filed so long as the firm fulfills the terms of the agreement), which protects the attorneys’ licenses and allows the firm to continue practicing,
  • Handled the trust fund recovery penalty investigations for the owners such that so long as the firm fulfills the terms of the agreement, the IRS will not pursue collection from or file federal tax liens against the individuals, personally.
  • Secured another lien-deferred installment agreement of $12,000 per month on a $250,000 liability with the State of California Employment Development Department, and
  • Coordinated with Tax Guard’s Abatement team to abate (remove) over $300,000 of penalties based on the IRS’s “reasonable cause” criteria.

“We’re a firm of practicing attorneys, so we are experienced in complex negotiations,” said the firm’s owner. “But the IRS is another matter altogether, essentially a different language. We wanted to work with an expert, someone who specializes in these issues. Tax Guard was great – they explained how the IRS works, provided us with options, and met our expectations by securing an agreement we can afford. Then, the Tax Guard Abatement team exceeded our expectations by securing an abatement of more than $300,000 in penalties.”

Posted By: Jason Peckham