IRS Penalty Abatement Saves Over $40,000!!

We had a client who came to us this past month with an IRS tax liability for 1 tax year. She owes over $150,000 for 2014, form 1040.  When she sat down in my office, her presence weighed heavy upon me. She claimed the tax debt stemmed from her ex-husband, who cashed in several IRA accounts without her knowledge. He then filed married filing separate, to attempt to hide the transaction and the tax debt. However, she was listed on the account, as was he. Therefore, the tax burden was split between the two of them, give or take a few thousand. Unfortunately, she was left without a husband, and a large tax bill she didn’t know anything about until she went to file her return. Furthermore, there was neglect, financial abuse, emotional abuse, and cheating involved in the relationship. He left her with virtually nothing but, a $150,000 tax bill. Our overall goal is to settle the debt, however to build some moral with our client, and get some information to the IRS, we decided to pursue an IRS penalty abatement, immediately upon the client hiring us.


A few days in, we figured out what the balance dues were, to the penny, we also figured out what the penalties were, and the IRS penalties totaled over $40,000. We also confirmed her case was still in appeals, as she filed for innocent spouse previously, along with appealed the IRS action to file a lien. This was was done prior to our involvement unfortunately. However, seeing as the case was in our hands now, we decided to call the IRS penalty abatement hotline. As in the interim, we could at least apply for an IRS penalty abatement.

Once we called, we needed to let the IRS know how the debt was accrued, we firmly believed it was not our taxpayer’s fault, nor was she aware of the potential liability, nor was she aware her estranged husband filed the return as married filing separate. We also had several records from the client, as she was being treated for mental illness, and was actually away during the time the filing was due,in a mental well being treatment facility. We also have reports of the abuse that took place while she was married, as well as a testimonial from several mental health professionals, attesting to the abuse she endured during, and after marriage. We had to provide some of this documentation to the IRS by facsimile, while on the phone, in order to back up the fact we were asking the IRS for a penalty abatement.

After about an hour on the phone, including hold time, the IRS agreed to abate all penalties associated with the 2014 tax year. This IRS penalty abatement totaled over $40,000! The IRS sent out a letter to this effect a few weeks after the fact. We are still working to secure another resolution on the case, and this will be a post for another day. For now, our taxpayer was tickled to learn we reduced the account by $40,000, just 5 days after hiring our services!

Until then, if you have tax liability, you feel you weren’t responsible for, and are fighting on your own, please do not hesitate to call us at 720-398-6088. We would be happy to see if you qualify for an IRS penalty abatement.