This guy is a $175,000 a year income guy with a very big mortgage - $4000 per month and a few very large creditors that are mostly under control like a $70,000 credit card debt. This guy has owed taxes every year from 2006 to 2010, totalling $60,000.00. These are probably due to his high expenses taking priority over his tax bill.
So, there is not a great likelihood of an Offer in Compromise here. The guy pays a $4000 mortgage on 3 different mortgages (house underwater). The IRS won't allow for that large a payment when calculating an Offer. The penalty abatement will have to wait until he demonstrates compliance. The guy has been in two different installment agreements so he has a familiarity with the IRS and so you can't scare him into hiring your company.
With the big mortgage and the credit card debt, our instinct was to tell him to see a bankruptcy attorney to discuss a Chapter 13 payback for all creditors with perhaps some relief (or elimination (?) of the mortgages or debt). However, we gave him another option below (if he wanted).
What if tax resolution salespeople were doctors? How dangerous would their diagnosis be? Well here's what was offered:
Door number #1: Clear Creek Tax, (Colorado) $2500.00 to represent them and "substantially reduce the tax."
Door number #2: Instant Tax Solutions, (Idaho) $4000.00 -- Offered to represent him with no exact promises which was honest but, wow, expensive.
Door number #3: Ameriguard Tax, (Jacksonville, FL) $3500.00 -- Abatement of penalties and representation.
Door number #4: Jay Freeborne, Washington Tax -- This is isn't a magical case. If he didn't do bankruptcy, we have the following pieces of value to provide him through representation: buy him time so the 2010 debt can be addressed with all of the other years; take over the contact with the IRS, buying him some mental relief. Getting the penalties off later on. Our fee: $1500.00.
Looks like we were the only one to mention bankruptcy.
We think those larger fees are an insult, really. This guy has already dealt with the IRS. His chances of reducing what he owes are NOT great.
This person eventually hired a Bk attorney to pursue chapter 13 -- which isn't a bad decision. The selling point was to address all of his creditors including the taxes and specifically -- 70k in Credit Card debt and a 2nd and 3rd mortgage totalling $180,000 -- that might go away completely (his house is worth less than the three loans).
Our original instinct, frankly, was for this guy to see an attorney about Chapter 13. Looks like we were right. So, the moral of story IS salespeople and closers really don't understand the big picture like a licensed tax professional Watch out. If the above tax resolution salespeople were doctors, they WOULD BE GIVING SURGERY PEOPLE DON'T NEED FOR AN ABSURD FEE.
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