01 The problem
When Jason’s father passed away, he inherited the family business, and discovered a family member had been embezzling from it. Jason was left holding the bag: the IRS wanted taxes on profits that had actually been stolen by someone else.
02 What made it complex
To get relief, we had to prove genuinely unusual circumstances: that Jason had no knowledge of the missing funds and was not at fault for his inability to pay.
03 What we did
We gathered the proof, police reports he had filed, evidence of the stolen funds, and his attempts to recover them, and prepared Form 843 penalty abatement requests. The case was reviewed and supervised by the Tax Law Advocates attorney team.
04 Options evaluated
For-cause penalty abatement, as well as a special-circumstance Offer in Compromise for the portion of the debt caused by the embezzled funds.
05 The strategy
For-cause penalty abatement, because the documentation showed clearly that Jason was not at fault.
06 Timeline & outcome
Over roughly nine months, we paused pending collection activity and Revenue Officer assignment, eliminated $36,491.22 in penalties for the year, and eliminated the principal tax debt generated by the stolen funds.