Unfortunately, taxpayers sometimes find themselves at odds with the IRS. While we stand behind every return we file, most of our advocacy work is for clients that had their tax returns prepared elsewhere. These clients are referred to Schulte & Company because of our experience and reputation for successfully and fairly dealing with the IRS and state agencies. (See Tax Services for more background on our tax advocacy expertise.)
The first step in resolving tax controversies is to completely understand all the facts and circumstances. Sometimes taxpayers create their own IRS problems. Sometimes a client’s financial or personal situation prevents them from being a good taxpayer. Once all the facts are gathered, S&Co develops a plan to resolve the tax issue, prepares a power of attorney and contacts the IRS on the taxpayer's behalf.
The following facts are from a case we recently resolved for a client.
The taxpayer was a well-to-do widow. Her husband managed all the financial affairs of the family until his untimely death; after which she relied exclusively on her investment advisor for both managing her financial affairs, as well as filing her tax returns. A few years later, the widow’s son was visiting and discovered that she had several notices from the IRS demanding payment of $515,595 and other notices from the state tax department demanding $18,994 for back taxes, penalties and interest. The son asked his banker what to do and the banker referred them to Schulte & Company.
Schulte & Company contacted the IRS and the state tax department and obtained transcripts of all information in the government’s possession. We discovered that the investment advisor had cashed in some of the taxpayers annuities, took the proceeds and, in an effort to conceal his embezzlement, never filed the tax returns that he said he prepared.
Schulte & Company prepared and filed the missing income tax returns. By taking advantage of available losses, matching cost basis against proceeds and utilizing available carryovers, the result was that the taxpayer did not have to pay any of the $534,589 that the government was trying to collect from them. The end result: the client was happy. The banker who referred the client was happy. The investment advisor was not happy; he subsequently became a defendant in criminal and civil litigation.