How a Small Business Owner Settled $84,000 in Back Taxes

The situation

Daniel ran a one-person contracting business in Texas. Like many self-employed people, he never set aside enough for taxes, and a few lean years turned a few thousand dollars of unpaid tax into an $84,000 balance once penalties and interest were added. When the IRS sent a Final Notice of Intent to Levy, he came to us worried he would lose the equipment his livelihood depended on.

What we did

1. We pulled his IRS account transcripts to confirm the exact balance per year and verify all required returns were filed.
2. We ran the same reasonable collection potential calculation the IRS uses, documenting his modest income against allowable living expenses and the limited equity in his work vehicle and tools.
3. Because the numbers showed a genuine inability to pay the full amount, we prepared and submitted an Offer in Compromise on the basis of doubt as to collectibility.
4. While the offer was pending, we kept collection paused and responded to every IRS request for documentation so the package was never returned as incomplete.

The outcome

The IRS accepted an offer of $6,200 to settle the full $84,000 liability. Daniel kept his tools and his truck, and once the agreed amount was paid the remaining balance was permanently wiped out. We also helped him set up quarterly estimated payments so he would not fall behind again.

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