Client Saves $6,000 in Tax Penalties Following Omni Appeal
A business owner, who had operated her designer jewelry wholesale and consulting firm for over 35 years before reorganizing under Chapter 13 bankruptcy, recently contacted Omni for help with her tax debt.
While she owned her company, she always filed her tax returns and paid her payroll taxes and unemployment taxes on time. However, when she filed for bankruptcy, she was improperly advised by her tax adviser that she should not bother to file her 940 or 941 returns until she was able to fully pay the taxes that were due. The client unnecessarily incurred non-filing penalties and interest. Because she was also improperly advised that she should not make partial payroll deposits when she could afford to, she incurred unnecessary failure to pay penalties and interest.
The client eventually learned that the IRS penalizes taxpayers who fail to file returns even if the taxes cannot be paid. As soon as she learned this, she terminated her tax preparer’s services and, while working with Omni Financial, started to file her returns on time.
Then, as soon as she began to improve the cash flow of her business, she became current with her payment of taxes and eventually arranged to fully pay all of her past due taxes, penalties and interest. She then asked Omni to assist her in pursuing an abatement of the tax penalties that she had paid.
The IRS initially denied the client’s tax abatement request on the grounds that reliance on another person for tax advice does not justify an abatement of tax penalties. Omni decided to appeal the IRS’s abatement denial.
After hearing Omni’s argument that the client was not liable for mistakes her paid tax advisor made, the IRS Appeals Officer reversed the prior complete denial, granting her relief for all late filing penalties, while upholding the denial of her late payment penalties.
This result, although not granting the complete tax relief requested, still resulted in a refund of over $6,000. The refund exceeded the client’s total payments to Omni and gave her a “stimulus payment” that assisted in getting her business back on its feet.
Request a free consultation to learn how Omni Financial can settle your tax debt.
