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Dallo Law Group successfully negotiated two IRS installment agreements without tax liens for two business partners, preserving their financial stability and protecting their business operations!
The partners operated their small business with minimal shareholder distributions and officer compensation and invested 100% of the remaining proceeds into business operations. Long after a particularly high-revenue tax year, the partners were shocked to realize that their flow-through, taxable income resulted in over $1M of combined state and federal tax liability for both of them! They did not have personal funds available to pay the taxes and the business did not have enough operating capital to pay the taxes while keeping up with their ordinary and necessary monthly business expenses.
Each partner’s tax balance exceeded IRS streamline standards. The default rule at IRS for taxpayers in this situation, even with a full-pay installment agreement, is to record a tax lien on the partners. For small business owners, this has a direct impact on their business, which is often based on trust from customers and requires business loans during slow times which must be personally guaranteed by the partners. Many businesses in similar situations resort to taking out operating capital or maxing out their lines of credit to avoid these liens, often at the expense of their long-term financial health.
Dallo Law Group took a determined and strategic approach to this case. Understanding the critical importance of avoiding tax liens, the team engaged persistently with the IRS Automated Collection System (ACS). They successfully persuaded two separate IRS ACS representatives to agree to installment agreements without imposing tax liens, a rare and difficult achievement given the high balances involved.
Outcome Achieved and Its Significance
The outcome was a significant victory for our client. By securing the installment agreements without tax liens, Dallo Law Group enabled the partners to maintain their operating capital and line of credit. This, in turn, allowed the business to continue its operations without disruption, protecting jobs and preserving the company’s reputation. Avoiding tax liens spared the business from the financial and operational hardships that often accompany such actions.
Key Takeaways and Lessons Learned from the Case
This case underscores the importance of persistence, expertise, and strategic negotiation in legal matters, particularly in complicated tax cases. It shows the value of having a legal team that understands the nuances of IRS procedures and can advocate effectively on behalf of clients to secure favorable outcomes. Businesses facing similar challenges can take heart that there are legal avenues to protect their financial health and operations, even in seemingly dire circumstances.
How Dallo Law Group Can Help
The successful resolution of this case is a testament to Dallo Law Group’s expertise and dedication. Our ability to secure two IRS installment agreements without tax liens is just one example of how we deliver results that protect our clients’ businesses and livelihoods. If you’re in need of expert legal representation, contact Dallo Law Group today. Let us put our experience and commitment to work for you.
Contact: (619) 795-8000