Tax Guard Resolved an Abatement of $315,000 in IRS Penalties for Staffing Company

Tax Guard worked with a West Coast staffing company to successfully abate/remove over $315,000 in IRS penalties. The business fell behind on its taxes after several of its larger clients failed to pay on time, or at all. The issues with its debtors led to factoring fatigue and, ultimately, the loss of its factoring relationship, which further exacerbated the business’s cash-flow issues. The final blow was the money spent on attorney fees in an attempt to collect the receivables, which were never paid.   

In an effort to “catch up” on its past due taxes, the business mistakenly prioritized paying its past-due liabilities from previous quarters, instead of making its federal tax deposits in the current quarter in full and on time, resulting in substantial penalties and interest.   

Megan Harless, an Associate at Tax Guard, successfully:  

• Filed an appeal after the IRS denied the initial penalty abatement request prepared and submitted by the staffing company,   

• Drafted a narrative explaining the events that occurred were beyond the staffing company’s control, satisfying the IRS’s reasonable cause criteria,  

• Compiled and submitted hundreds of pages of supporting documents, including unpaid invoices, legal cost ledgers, and lawsuit documentation, and  

• Persuaded an IRS abatement coordinator to remove $315,000 in penalties.   

“After the IRS rejected our initial request, we figured that was the final decision and we were out of luck,” said the business owner. “Megan let us know that we could appeal, and it would take a while to get a response from the IRS (and it did). She also told us that the more supporting documentation we could provide, the higher the likelihood of success. After we provided the information, Megan kept grinding until the IRS agreed to abate the penalties. We are very happy with her efforts as well as the results.”