Tax & Accounting News

TaxBuzz Spotlight: The perils of DIY tax preparation and how Spencer Wilson, EA used an IRS Offer in Compromise to save the day.

by
Lee Reams II
on
3/10/2016
TaxBuzz Spotlight: The perils of DIY tax preparation and how Spencer Wilson, EA used an IRS Offer in Compromise to save the day.

TaxBuzz.com works with some of the best tax professionals on the planet. We believe that like dental work, tax preparation shouldn’t be a do-it-yourself activity.

Almost daily, reviews are posted by DIY taxpayers who have used TurboTax or another brand name to “file” their own tax returns only to find out they include significant errors. Tax laws are complicated, and just because the software can calculate a result does not mean the return is accurate.

One of our TaxBuzz verified professionals, Spencer Wilson from Long Beach, CA, shared with us a similar DIY horror story. This one, however, has a happy ending.

Client Background:

A couple contacted Spencer Wilson in March 2015 to prepare their 2014 tax return and look over their previous tax returns. The couple had self-prepared these returns and unfortunately were audited to the tune of $70k owed to the IRS.

The taxpayers’ troubles stemmed from an obvious misunderstanding of the Internal Revenue Code. The taxpayers had prepared their own returns using a very popular consumer tax software, and it had calculated losses to which they were not entitled. When Spencer reviewed the issues with the clients and asked whether they understood the error, they answered no. The taxpayers had been assured by customer support over the phone that if the software said they could do it, they should go for it.

Upon learning that they were under an IRS examination for the years in question, the taxpayers solicited the services of another IRS tax problems firm to represent them. Apparently, the other firm botched the representation and never bothered to tell the taxpayers. The taxpayers didn’t know who was their point of contact, nor did they get any feedback from their representative.

Unfortunately, notices of deficiency, liens, levies, etc., began to fill their mailbox, even after they paid a rather large upfront fee to the “IRS tax problems” firm.

This is when the taxpayers came to Spencer Wilson, EA to ask for help. They were frustrated and confused on how to proceed with the IRS. Spencer looked through the stacks of returns, reports and notices to find that the statute of limitations for appeals, or any other action for that matter, had expired.

To compound the problem, the primary taxpayer’s employer had just downsized, and the taxpayer was on the receiving end of a pink slip. You can imagine the dread of facing the IRS with no discernible income to speak of.

The entire situation was a real shame. The primary taxpayer was a mild-mannered professional with a family to support. It was never the taxpayers’ intention to try to evade their tax liability; they had simply misinterpreted the IRS code in their initial filings.

Digging out of the IRS hole with an Offer in Compromise

After looking through past documents and getting a handle on their current situation, Spencer explained the procedures behind an Offer in Compromise. The taxpayers understood their options and were ready to proceed.

In fact, they were surprised their previous representative had never broached that subject. It was simply overlooked. Once the process started, it took about two weeks to get the final package together. The rest was just a matter of speaking with the IRS case agent, submitting requested info and keeping the taxpayers informed of what was going on. 

These taxpayers lucked out by finding Spencer Wilson, EA. They didn’t even know an Offer in Compromise was available to them. After being burned by the tax software’s advice and a big-box IRS tax help mill, they found it refreshing to be able to work with a qualified, independent professional. The stress was overwhelming, and the “positive outcome” resulted in the taxpayers settling for $500 (from a $70,000 original liability).

The taxpayers sent Spencer a glowing testimonial letter. “Thank you for gracefully taking us through one of the most stressful situations we’ve encountered. We will forever be grateful. 

This is why working with the likes of Spencer Wilson, EA brings such great outcomes. Trustworthy, responsive and ethical are all terms that sum up how Spencer’s clients think of him.

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Lee Reams II

Lee Reams II

CEO

I am a tax and business news junkie who has spent the last 20 years developing and executing "best in class" word-of-mouth marketing campaigns for tax and accounting professionals. With TaxBuzz and CountingWorks we have taken that same commitment to quality content directly to the consumer. Keeping you up-to-date with the latest tax law changes, business growth tips and planning strategies to help you reach your best financial outcome.

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