Below is a list of some of my success stories and some interesting scenarios from clients. These stories are all from new clients who came to me for tax services.
Saved Client $43,183 in taxes
I obtained a new client whose tax return was fairly complicated compared to prior years. The accountant who prepared the return made several material mistakes that resulted in the taxpayer owing the IRS and NCDOR $32,311. After reviewing the return, I noticed significant errors and decided to amend the return. My changes not only eliminated his balances due, but gave him a refund of $10,872, thus saving the client $43,183 in taxes.
Valuation of Client's Company - $105,000 increase in payout
I obtained a new client who was a 25% owner of a company and the managing partner was forcing him out. The original partnership agreement stated how the company's value would be determined if one of the owners were to leave and that the company's CPA would perform the calculation. The other CPA calculated my client's share of the company to be worth $95,000. My client thought it was rather low and engaged my services to double check the work. After asking various questions to the managing partner and the CPA who performed the calculation, I reworked the numbers and determined that my client's share of the business was worth about $200,000, a $105,000 increase from the other CPA's calculation.
$200,000 Tax Lien reduced to $20,000
A client came to me with a $200,000 IRS Tax Lien. His current accountant, who had been doing his taxes for years had decided to file an Offer-in-Compromise and they did it incorrectly and so the Offer was returned to the client as being Incomplete. I met with this client for the first time and reviewed his past tax returns as well as the correspondence he had received from the IRS. After obtaining authorization from the client to speak with the IRS on his behalf, I called the IRS to discuss the Tax Lien. It only took me 15 minutes on the phone with the IRS to realize that the Tax Lien for $200,000 had a typo and that it should have been only $20,000. The client did owe this money, but the fact that the other Tax Accountant did not take the time to properly assess the situation and perform the necessary Due Diligence to plan a proper course of action cost the client a lot of anxiety and money.
The Marijuana Tax
I had a prospective client call me and tell me that their 30 year-old son was growing Marijuana in the back woods of their house without their knowledge and the police arrested the entire family of 3. The elderly parents were released on bail until the matter was straightened out while the son remained in jail. The NC Department of Revenue assessed an $11,000 Controlled Substance Tax on the Marijuana Plants and put a Tax Lien against all 3 family members. Unfortunately the family had contacted me a few weeks to late and I was unable to contest the Controlled Substance Tax. Had they appealed the assessed tax within 30 days of the assessment, they may have been able to release the Tax Lien from themselves, but they would have had to push the blame to the son, which would have had not just a tax impact, but a criminal impact as well. This is not exactly a success story, but definitely one worth talking about.
$53 Million Dollar Tax Lien reduced to $17,000
I had a client come to me with a $53 Million Dollar IRS Tax Lien. I thought it had to be a typo. Sure enough, that was the correct amount the IRS was assessing my client over 5 years of not filing his tax returns. I consulted with my client about his situation and proposed different scenarios to either reduce or eliminate this tax assessment. Through proper planning, we were able to take this $53 Million Dollar Tax Liability down to about $17,000 through effective tax strategies. The returns are still with the IRS in review, but we did not take any aggressive positions. The late filings may negate some of our elections, but that's for the IRS to determine.
$1.5 Million Dollar Tax Lien reduced to $1,800
I had a client who came to me with an IRS Tax Lien for $1.5 Million Dollars. He hadn't filed his taxes in several years. I was able to file all of his back taxes and reduce his federal tax liability to $25,000. Since he was going back to school to get his Master Degree, we were able to put him on Uncollectible Status with the IRS so they would not empty his bank accounts. We also decided to file an Offer-in-Compromise with the IRS to try and reduce that $25,000 tax liability to $1,800. I told the client that the likelihood of getting the Offer accepted by the IRS was slim, but the costs of filing the Offer were worth the rewards and so the client decided to pursue the Offer-in-Compromise. The client did actually receive acceptance from the IRS in August of 2011 and was able to pay off his $1.5 Million dollar liability for only $1,800.
I have a non-US client in Hong Kong who hadn't paid US taxes related to stock option income from a US assignment dating back to 2002 and 2003. He came to me in mid 2009 as a referral from another client. The IRS had put a lien on his US bank account and seized $105,000 from his account for back taxes due.
I immediately filed the appropriate returns and contacted the IRS agent in charge of the case. Initially, we were able to get $35,500 back from the IRS, but were still out of pocket almost $30,000 in penalties and interest.
I drafted a letter to the IRS to send along with a request to abate Penalties arguing that the taxpayer did not realize he had an obligation to pay taxes and that his frequent moving did not allow for constructive receipt of the IRS's letters.
The IRS accepted our appeal and granted the taxpayer a refund of $26,500 of assessed penalties and interest.
A new client had several rental properties outside the US and did not realize they were subject to income tax in the US. His previous accountant did not understand the rules surrounding foreign properties or international tax treaties.
I consulted with this client and explained to him the US tax implications of having rental properties outside the US as well as the tax implications if these properties were ever sold.
I amended his 2005, 2006, 2007, and 2008 returns, which gave him a net refund of $10,856. The 2005 return is currently being pushed back by the IRS stating that the 3 year statute of limitations applies and thus the amended return is too late, however, I am currently investigating IRC 6501 to have the 6 year statute of limitation apply to get the 2005 return process and then amend the 2004 return as well for an additional refund.
I obtained a new client who was living overseas and used to have his income tax return prepared by a Big 4 accounting firm as part of an expat agreement. After he was off of this expat package, the taxpayer sought me out by referral.
I noticed that the Big 4 firm that prepared his 2006 tax return left off his eligible Foreign Housing Exclusion of $38,343 and did not calculate a cost basis for stocks that he had sold in 2006.
I worked with this new client to determine his eligible Foreign Housing Exclusion and worked with his broker to determine the cost basis of the stocks sold in 2006 and was able to amend his 2006 tax return to get him a $3,160 immediate tax savings and a carryforward savings on future returns of $11,730.
I obtained a new client by referral in 2008 who had immigrated to the US in 2006. After reviewing her 2006 tax return, which was prepared by a Big 4 firm, I investigated if the best positions were taken to reduce her US tax liability as much as possible.
I found that the sourcing of foreign income on the Non-Resident return (form 1040NR) was incorrectly calculated, which over-stated the taxpayer's income effectively connected with the US. I also found it to be more advantageous for the taxpayer to file a Dual-Status return since there was mortgage interest, real-estate taxes, and state & local taxes that were deductible on schedule A.
Even though the appropriate returns were filed in March of 2008, there were several communications going back and forth from myself and the IRS, who did not want to honor the positions I had taken on the taxpayer's return. As a result, I contacted the Taxpayer's Advocate and worked with them to get my client the well deserved refund that was received in March of 2009 (1 year later).