Bob & Randi were early clients of Equity Search. When we met them, they were in a Chapter 13 Bankruptcy trying to pay off a 10+ year old $30,600 IRS tax debt by making monthly $800 plan payments (which they could not afford). They had 4 payments left and had already paid $29,600.
As a result the family flooring business was strapped for cash and in order to make the required plan payments they were unable to make their post-petition estimated tax payments and owed the IRS and additional $70,000 ($50,000 in post-petition taxes plus $20,000 in penalties and interest, which the IRS was now trying to collect. Enter Equity Search.
What Bob & Randi had not been told by either their CPA or their bankruptcy attorney was that the original $30,600 tax debt was dischargeable had the bankruptcy been properly filed and that the $800/mo they had been paying could have been used to build the cash flow in their business and enable them to pay their post-petition taxes. In fact, they said their attorney had told them the taxes were not dischargeable. They even spoke with their attorney during the initial meeting with Equity Search and the attorney reiterated his position that “taxes were not dischargeable”.
For nearly 3 years the Equity Search team fought and negotiated with the IRS, the Department of Justice, the Bankruptcy Court and Bob and Randi’s former Attorney and CPA.
When we were done… the IRS forgave the $30,600 pre-petition taxes…giving Bob and Randi credit for the $29,600 they paid in the bankruptcy against the $50,000 post-petition tax debt…forgave the $20,000 penalty and interest on the post-petition tax debt… and waived $10,000 of the remaining $20,000 tax obligation.
So instead of coming out of bankruptcy owing $70,000, Bob and Randi paid $10,000.
Total IRS tax bill pre & post-petition $100,600 ($30,600 + $50,000 + $20,000 = $100,600)
Total Paid $39,600 ($29,600+$10,000)
Good Story, right?
IT GETS BETTER… The attorney’s malpractice insurance carrier paid Equity Search’s fee.
While we’d always like to be the 1st place you call when dealing with tax problems, we are also very good at cleaning up someone else’s mess.