Louis Wooten recently won a rare abatement of the trust fund tax penalty from the IRS.
In the case, Wooten’s client was assessed as a responsible person for trust fund taxes accruing over several years, with the latest assessment being for the third quarter of 2000. When Wooten interviewed his client, the client advised that the client had very little involvement in the business and was an officer in name only. In addition, the client noted that while the client had check signing authority on the taxpayer/employer’s checking account, the client rarely, if ever, signed company checks.
Wooten obtained the IRS administrative file for the tax assessment through a freedom of information act request. His review of the file revealed that the IRS officer had failed to properly document many of the elements necessary to establish the taxpayer’s liability for trust fund taxes. In addition, Wooten obtained documentation from third parties (like banks and the North Carolina Secretary of State) that objectively established that several critical factual findings made by the agent were objectively wrong. Finally, Wooten obtained affidavits from third parties corroborating his client’s statements regarding her activity in the business.
After reviewing the information assembled by Wooten, the IRS agreed that the tax was not properly assessed and issued a full abatement of the tax. Indeed, Wooten’s client received a refund of several thousand dollars for taxes previously collected and applied to the trust fund tax assessment.
The abatement was rare because the IRS typically is reluctant second guess the determinations originally made by the agent almost ten years ago. This is particularly in the case of a trust fund tax assessment, where the IRS has traditionally steadfast in its assessment and collection efforts. Only because Wooten was able to assemble overwhelmingly compelling evidence was he able to achieve the positive result for his client. Wooten attributes his success on this and many other tax controversy matters to his clerkship on the United States Tax Court early in his career. There he learned from the best the art of presenting a case in its most compelling light. He also developed a passion for persuasive writing where the challenge is to present a credible position in a concise and cogent manner, which has served him well over the years as he advocates the positions of his clients.