Art of Accounting: How I Got a Mercedes as a Fee
IMGCAP(1)]At one point we had a client that was going out of business and they asked us to negotiate a final settlement with the IRS where the two partners could walk away broke but without being in debt to the IRS for unpaid withholding taxes.
Neither my two partners nor I had experience at that time in this. I suggested that we bring in an expert, and I would ask my MBA tax professor if he did consulting. He said he did, but when I told him the issue he looked down at it. He said that wasn’t real tax work and he didn’t get involved in that sort of stuff. We told this to our client and offered to try to help them but said if we couldn’t we would not charge anything.
I met with the IRS revenue officer and explained the situation. He was very understanding and helpful. We worked out an allocation where the IRS got everything, except for one, with our help and cooperation (which made the revenue officer’s job much easier), and the officer would apply the money first to wipe out the withholding tax liability.
The one exception was a six-month-old Mercedes that one of the partners bought in Germany, drove around Europe and brought to the U.S. We took that as our fee!
Edward Mendlowitz, CPA, is a partner in WithumSmith+Brown, PC, CPAs. He has authored 20 books and has written hundreds of articles for business and professional journals and newsletters plus a Tax Loophole article for every issue of TaxHotline for 27 years. Ed also writes a blog twice a week that addresses issues his clients have at www.partners-network.com. He is the winner of the Lawler Award for the best article published during 2001 in the Journal of Accountancy. He has also taught in the MBA graduate program at Fairleigh Dickinson University, and is admitted to practice before the U.S. Tax Court. Ed welcomes practice management questions and he can be reached at WithumSmith+Brown, One Spring Street, New Brunswick, NJ 08901, (732) 964-9329, email@example.com.