Hi, I’m Jeff Fouts, a tax attorney located in metro Atlanta, with a nationwide law practice helping clients who have serious IRS problems. I’d like to share with you another client case study from the 1,000’s of tax clients we’ve represented.
Client age: 40’s
Total tax debt: $1,500,000 to the IRS. This amount only included two tax years.
Details of the case: Client was a non-filer for approx. 25 years.
The IRS filed substitute tax returns for him.
We were able to show the IRS they were wrong.
IRS resolution: We reduced the tax debt from $1,500,000 to $22,000.
A single man in his early 40’s from Dallas, Georgia contacted us because he wants to get back in to the tax filing system. He does not remember the last time he filed a tax return. In fact, he may not have filed a tax return since he was a teenager, about 25 years ago!
Our first step was to obtain signed Forms 2848 and 8821 from our client which allowed us to represent our client before the Internal Revenue Service and to request important information from them.
The IRS Account Transcripts indicated that our client owed over $1.5 million for substitute tax returns which the IRS prepared for him for tax years 2001 and 2002. The IRS has no record of receiving any other tax returns from our client. The IRS had the legal right to levy (garnish) on this tax debt and they had filed a tax lien. We requested Wage and Income Transcripts from the IRS for each year back to 2001.
The Wage and Income Transcripts for 2001 showed gross income of close to $2 million in stock sale and other income. Our client confirmed that he had spent that year day trading, but he did not think he had actually made any money. Once his original tax return was prepared, his income was only $26,000! And the tax he owed for 2001 decreased from $1.5 million to less than $200!
Prior to January 1, 2012, investment bankers and stock brokerage firms only reported the amount of stock sales to the IRS. So when the IRS prepared substitute tax returns based on 1099-B stock sale income, they had no idea what the taxpayer’s cost basis was in the stock so they ignored it. As of January 1, 2012, investment banker and stock brokerage firms are required to report both the stock sale price and the cost basis on Form 1099-B.
Once our client filed all of his returns, he owed approximately $22,000. He asked us to set up a monthly installment agreement for him which we did.
What’s the moral of this story? Even if you haven’t filed a tax return in decades, getting back into the tax filing system may not be as difficult as you thought – if you have an experienced tax professional helping you!
I hope this important client case study has helped you understand the IRS a little better and how tax problems are solved. Chances are you have questions or concerns about your own particular tax problem. I encourage you to pick up the phone and call me. I can answer your questions. Over the past 20 years I’ve represented clients in all 50 states and 29 foreign countries, and I welcome your call. You can reach me at 1-888-995-6785 or by email at firstname.lastname@example.org. I’m Jeff Fouts and thanks so much for watching. Have a wonderful day.
TaxHelpAttorney.com Tax Law video No. 140743