Case Study
Case Study
Retirement Withdrawal, Property Payoff, and Escalating IRS Collection Notices
Problem
Solution
We evaluated the client’s financial situation and determined they did not qualify for an Offer in Compromise because of the value of their assets, even though their cash reserves were depleted. We discussed realistic options, and the client ultimately chose to sell certain assets to satisfy the tax liabilities, preventing more serious consequences.
Outcome
We successfully secured penalty abatement and helped the client avoid liens on their property and levies on their financial accounts, enabling them to resolve their liabilities without forced IRS action.
Lesson Learned
IRS notices should never be ignored. As the IRS follows its structured escalation timeline, options become more limited the further the process advances. Major financial decisions, such as retirement withdrawals, should always be reviewed with a tax professional beforehand. DIY tax resolution often leads to avoidable complications, while experienced representation ensures taxpayers understand all available options and the consequences of each path.
After losing a job, a client withdrew their entire 401(k), paid off their home, and lived on the remaining funds without paying the required federal and state taxes. As a result, the client received escalating IRS notices, including lien and levy warnings. The client was hoping for an Offer in Compromise but became overwhelmed.