21 Century•Tax

Client examples

A partner firm sells the services it offers. Most clients need more than that. These examples show the original engagement, what a 21 Century review found, and the added services that resolved the case and kept it resolved, for the client and the firm.

These are illustrative examples, not client stories. Each one is a composite of situations our team regularly sees in tax resolution work. Names, numbers and details are invented and do not describe any actual taxpayer. They show the kind of work involved, not a promised or typical result. Every case depends on its own facts, its documents and IRS decisions.

Tax resolution firm

The contractor whose payment plan never started

Illustrative example. Not an actual client.

The facts

The original engagement

A monthly payment plan with the IRS, which is the firm’s core service.

What the case needed next

Returns. The IRS won’t set up a plan until every required return is filed, and these returns needed books rebuilt first, which the firm doesn’t offer. A final notice of intent to levy had also arrived.

What a 21 Century review found
  • Two years assessed on IRS-prepared returns that counted every 1099 dollar and no expenses
  • A third year with no return at all
  • No profit and loss statement for any year, only bank statements
  • Nothing set aside for the current year’s tax, so a new balance was already building
Services 21 Century added (6)
  • Appeal Before a Levy (30-Day Hearing)
  • Rebuild Missing Business Records
  • Back Tax Returns — Personal
  • Fix an IRS-Prepared or Incorrect Return
  • Tax Set-Aside & Payment Plan
  • Monthly Bookkeeping
Resolution

Levy hearing filed on time. All three years filed, with accurate returns replacing the IRS-prepared ones. The firm’s payment plan is now in place.

Lasting result

Books kept monthly and current-year tax saved as he earns it, so no new balance builds.

For the partner firm

The firm’s case closed, and it offered six services it doesn’t provide in-house, two of them monthly.

The story

He fixes furnaces and air conditioners, and he’s good at it. Work comes by word of mouth, customers pay by card or check, and everything lands in one bank account that pays the truck, the parts, the mortgage, and the groceries.

He stopped filing when a slow winter left him short, and each year it got harder to start. When the IRS filed returns for him, the bills counted every dollar he was paid and none of what he spent. The balance was more than he could believe, and it was mostly wrong.

He signed up with a resolution firm for a payment plan to make the letters stop. The plan couldn’t start until the returns were filed, and the returns couldn’t be filed until someone rebuilt three years of books. Then the levy notice came.

CPA or EA firm

The consultant whose payment plan was about to default

Illustrative example. Not an actual client.

The facts

The original engagement

A payment plan on two years of unpaid tax, set up by the firm along with her returns.

What the case needed next

Planning. The plan covered the past, but a new year’s balance was building. When it posted, the agreement would default.

What a 21 Century review found
  • No estimated payments for the current year on income of about $750,000
  • Penalties on both years that may qualify for relief
  • A clean history before these two years
  • All income on Schedule C, with no retirement plan and a business structure worth reviewing
Services 21 Century added (5)
  • Tax Set-Aside & Payment Plan
  • Penalty Removal
  • Should I Be an S-Corp?
  • Owner Salary Study
  • Retirement Plan for Business Owners
Resolution

Current-year estimates paid on schedule, so the agreement stays in good standing. First-time penalty relief requested for the earliest year.

Lasting result

Quarterly estimates set aside automatically, and a business structure and retirement plan that lower future tax.

For the partner firm

Five planning and compliance services for a client the firm already served, and a payment plan that stays in good standing.

The story

She left a large firm to consult on her own, and three clients followed her. The checks were bigger than her old paychecks, and nobody was withholding anything.

The first April she owed more than she had in the bank. The second April it happened again. Her CPA filed both returns on time and set up a payment plan.

The plan covered the past, but nothing was being saved for this year. In a few months a third balance would post, and the agreement would default.

Tax resolution firm, field case

The restaurant that kept falling behind on payroll tax

Illustrative example. Not an actual client.

The facts

The original engagement

A payment plan on the business’s unpaid payroll tax.

What the case needed next

Field representation and cash flow help. A revenue officer was assigned and wouldn’t discuss an agreement until current deposits were made. Two more quarters had been missed, and the owner’s personal liability interview was on the calendar.

What a 21 Century review found
  • Payroll tax deposits still missed, so the balance was growing faster than any plan could pay it
  • About $1 million in steady sales, with vendors paid first when cash ran short
  • An owner who had taken almost no pay in a year
  • A personal liability interview ahead, which needed preparation
Services 21 Century added (6)
  • IRS Field Agent Representation (Business)
  • Personal Payroll Tax Liability Defense
  • Payroll Tax Catch-Up
  • 13-Week Cash Flow Plan
  • Profit & Owner Pay Reset
  • Payroll Tax Deposit Watch
Resolution

Deposits brought current, a representative at every revenue officer meeting, and an agreement on the business balance. The owner went into the personal liability interview prepared.

Lasting result

Every deposit checked monthly, cash planned 13 weeks out, and the owner on a regular paycheck.

For the partner firm

A field case covered in an area where the firm has no representative, and six services offered in its name.

The story

His parents opened the restaurant, and he took it over fifteen years ago. It’s busy most nights. When a cooler died or food costs jumped, he paid the vendor and told himself he’d catch up on the payroll deposit next month.

Next month never came. By the time the revenue officer called, three quarters were missed, and he was paying himself less than his line cooks.

No payment plan could work while new quarters kept going unpaid. And the revenue officer wanted to talk about making him pay the business’s debt personally.

Attorney

The divorce that came with a tax bill

Illustrative example. Not an actual client.

The facts

The original engagement

Divorce representation. Before the separation, the couple’s preparer had answered an IRS income notice, and the tax was assessed.

What the case needed next

Tax work. The client’s share of a joint refund had been taken toward the balance, and settlement terms were still open.

What a 21 Century review found
  • The unreported income came from the spouse’s side business, and the client had no part in it and no access to its accounts
  • She may qualify to request relief from her spouse’s tax debt
  • Her share of the seized refund could be claimed
  • The draft settlement needed accurate tax numbers
Services 21 Century added (3)
  • Relief from a Spouse’s Tax Debt
  • Recover Your Share of a Seized Refund
  • Divorce Tax Planning
Resolution

Spouse relief requested with supporting documents, and a claim filed for the client’s share of the refund. The settlement was signed with the tax debt assigned to the right person.

Lasting result

The client files separately, with withholding set correctly from the first year.

For the partner firm

The attorney stayed on the divorce and signed the settlement with real tax numbers.

The story

She found out about the side business the same way she found out about a lot of things that year: in discovery.

Her husband had been doing contract work on weekends and never reported it. When the IRS caught it, the tax was assessed on their joint return. Then her share of their refund disappeared to pay it.

She was about to sign a settlement that split everything down the middle, including a tax bill for income she had never seen.

Debt resolution company

Settled credit cards and a surprise IRS notice

Illustrative example. Not an actual client.

The facts

The original engagement

A debt settlement program on about $60,000 of credit card balances.

What the case needed next

Tax help. The program was nearly finished, but three Forms 1099-C had arrived, the return was filed without them, and an IRS notice proposed tax on the forgiven debt.

What a 21 Century review found
  • When the debt was forgiven, she owed more than everything she owned was worth
  • An older tax balance that was never set up on a plan
  • Withholding too low to cover her current tax
  • Program records that showed every balance, settlement date and amount
Services 21 Century added (3)
  • Income Mismatch Response (CP2000)
  • Tax Relief on Settled Debt
  • Monthly Payment Plan with the IRS
Resolution

The IRS notice answered by its deadline with insolvency documented. The older balance put on a payment plan.

Lasting result

Withholding corrected, so she doesn’t end up with a new tax balance, and the settlement program completed.

For the partner firm

The client finished the program, and the company had a qualified tax team to refer to without adding tax staff.

The story

She did everything the program asked. She stopped using the cards, made the monthly deposits, and watched the balances settle one by one.

Then the 1099-Cs came. She didn’t know what they were and filed her return without them. A few months later the IRS said she owed tax on the debt that had been forgiven.

Two years of work, and she was about to trade a credit card problem for an IRS problem.

Financial advisor or insurance professional

The retiree who paid the bills from an IRA

Illustrative example. Not an actual client.

The facts

The original engagement

Retirement planning. The couple were also paying on a plan for taxes left over from a small business they closed.

What the case needed next

Tax resolution. Two large IRA withdrawals with no tax withheld created a new balance, the old plan was about to default, and a notice warned that part of their Social Security would be levied.

What a 21 Century review found
  • A new balance from the withdrawals, which the existing plan didn’t cover
  • More withdrawals planned, with no tax planning behind them
  • Social Security levy notice already received
  • The advisor’s planning work on hold until the tax problem was settled
Services 21 Century added (4)
  • Levy & Garnishment Defense
  • Add New Tax Debt to Your Case
  • Before You Cash Out a Retirement Account
  • Retirement Income Plan
Resolution

Levy addressed before it began, and both balances combined into one payment plan they can afford.

Lasting result

Tax withheld on every withdrawal, and withdrawals timed with Social Security to keep tax lower and steady.

For the partner firm

The advisor got back to planning, and kept the whole relationship. We don’t sell investment or insurance products.

The story

They closed the shop when he turned sixty-six and set up a payment plan for the last of its taxes. It was manageable.

Then the roof needed replacing, and there were medical bills. They took money from the IRA twice, and nobody told them to withhold tax.

The next April they owed again. The old plan couldn’t absorb the new balance, and a letter arrived about taking part of their Social Security.

Full descriptions of each service are on our services page. This page is general information for tax and financial professionals, not tax or legal advice for a specific situation. Eligibility for any relief, including penalty relief, spouse relief and the exclusion of forgiven debt, depends on the taxpayer’s facts and IRS review.

Which of these is on your books?

Tell us about your firm and the clients you serve. We’ll show you which services we can add for them.

Request partner informationCall (714) 868-0887