I was in a meeting recently with my clients and the revenue officer from the IRS who is assigned to their case. This client was primarily a business client meaning we were working on getting their business on the right track with the IRS when it suddenly turned into a personal client because of the Trust Fund Recovery Penalty and because the owner had 1040 tax liability. I must say that the owner of the company did a lot of things to take care of his business and really complied with all of the requests of the revenue officer. So far we have been able to save his business and try to keep them on the right track. Also, as an aside, I wanted to make sure to point out that these meetings have been ongoing for over a year – all of this did not take place at one meeting.
As we began through the meeting regarding the personal liability, the revenue officer began going through their personal form 433-A and I immediately noticed that we had problems. The clients did not tell me that they had multiple life insurance policies with a cash value. They did not tell me about several of their assets. Once the revenue officer started pulling out records from the Department of Motor Vehicles we knew that something bad was about to happen. Unfortunately, the clients lost a lot of good will they had built with this revenue officer. The Revenue Officer had allowed them a lot of "extras" including extra time and extra opportunities. I can guarantee that this won’t be given again.
The revenue officer was very upset that the assets were not listed on the Form 433-A. While I don’t think my client was trying to hide anything, it sure didn’t make him look good. I would also like to remind people that are trying to deal with the IRS on their own that when you sign a Form 433-A, or most any form that provides information about yourself to the IRS, you do so subject to penalties of perjury.
So, the point I was trying to make with this post is to put it all out on the line. It may not get you the best deal, but when you are caught lying to the IRS, you will have a whole lot more to worry about than oweing them a little bit (or a lot) of money.