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Tax Resolution Case - 2022

A new client approached me this year because he was getting Levi's notices from IRS. He had Civil penalties and IRS hold his Employee Retention credit to adjust against his bills with IRS. He was very upset. We step up and client interview to investigate the matter.

According to him, his accountant was filling all the required payroll tax returns and he has been paying payroll taxes on time. I requested him to provide me with all the 941s 940s and W2s filled since 2013 till date.

After I received all the documents, I approached IRS to figure out the problem. So We figure out he was missing 2 or 3 941’s from each year. Payroll Taxes were received but never applied as the old accountant never filled the returns. He has a civil penalty of approx $41,000 because his accountant failed to file W2 for two years. He had undue balances on 1040 ( personal returns) I figured out he made payment in installments but it was applied to the wrong years. After talking to IRS and sending all the documents, I was able to remove his civil penalty and reduced liability on 1040 after adjusting to approx to $2500. All this work took 2 months to clear his account. After all the adjustments he received all his 4 checks for employee retention credit in April 2022.

The client decided to move his monthly account to us.

Current Scenario he selling his existing business in AL and Buying a new business in GA. I suggested him for like kind of exchange so he can defer the capital gain. In the process of calculating his deferred capital gain and realized capital gain on goodwill. I found one more problem, I found his business building was depreciated for 15 yrs with bonus depreciation. Which is not allowed by IRS. It was supposed to depreciate for 39 yrs and there shouldn't be any bonus depreciation. Thank God we figure out this problem before it was caught by IRS.

So his Income was under-reported by close to $500,000 in the last 7 yrs… which could have gotten him a big bill tax bill with a fraud penalty.

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