Mr. Brewer came to me in 2006 with more problems than you can imagine. His business was falling apart, his younger sister had embezzled money, and his business owed the IRS well over $1,000,000 in employment tax debt.
We had a lot of work to do before we could simply file and Offer to settle the debt for less than what was owed. We had to file multiple returns that were delinquent, shut down the business, make sure all debts that could be assessed against Mr. Brewer were in fact already assessed, and make sure the IRS stayed off of his back.
Further, we tried a few different paths prior to settling the debt under Doubt as to Liability. At first, we simply structured an installment agreement. Our client paid on this installment agreement for a little over a year. We then filed for abatement of the penalty, the debt was all Civil Penalty assessed to him personally. The penalty abatement was rejected and we lost in appeals as well. The IRS did not have any real concrete data other than the fact Mr. Brewer was an officer of the corporation and was responsible for the debts that faced him.
Back to the drawing board. . .
After much debate and thought, we decided to file for Doubt as to Liability. Doubt as to Liability means exactly what it says, knowing a liability exists, having the assets to pay the liability, but factually doubting the liability should have been assessed in the first place. We filed the Offer for $5,000 and some change, which equaled one period of liability for Mr. Brewer. Our offer was first rejected, indicating the IRS did not have enough factual data disproving the fact that Mr. Brewer should not have been assessed. We appealed this decision immediately.
After dealing with appeals for awhile, we ordered a new document. A document we had not had in the past but felt it would be helpful. We submitted an FOIA request. The Freedom of Information Act Request translates to information the IRS has but the client does not, nor does the practitioner. This was our key to success, the icing on the cake and. . . well you understand what I am getting at. After much debate, the IRS saw that Mr. Brewer's sister did in fact hide all IRS findings from Mr. Brewer, including visits by IRS personnel, IRS correspondence, and deadlines set forth. The client never signed a payroll check, a payroll tax return, or any other check of substantiative value. We received the acceptance letter a little over two months ago, the client paid the offer and the tax liens were released a few weeks back.
We can say proudly that our client was found innocent in a world where one is guilty at first glance.