IRS Approves Installment Agreement for Hospital Group with $6,000,000 Employment Tax Delinquency

THE CHALLENGE

Our client was a hospital group that ran up a $6,000,000 employment tax delinquency over a number of quarters. By the time we were hired, the IRS had already employed its most aggressive collection tactics and was only days away from seizing the group’s assets and selling them at auction. There was very little goodwill or trust between our client and the IRS when we began our work in the case.

OUR APPROACH

As soon as we were hired, we met with the IRS revenue officer handling the case to urge him to hold off on seizing and auctioning assets while we worked to resolve the matter. We educated the revenue officer regarding the rural demographic served by the group of hospitals, explained that asset seizure would cause the hospitals to shut down and would cause lives to be lost because there were no other hospitals or emergency rooms in the areas that our client served. The revenue officer agreed to delay the asset seizure while we sought to resolve the delinquency.

We engaged a consulting firm that specialized in turning around struggling hospitals. The firm helped our client improve processes, reduce expenses, monetize previously dormant assets and improve cash flow. The firm also attracted investor capital.

While our client worked diligently with the consulting firm, we communicated regularly with the IRS regarding the consulting firm’s progress in turning around the hospital group. We provided weekly presentations that covered different improvements that were being implemented and how those improvements would positively impact cash flow and our client’s ability to pay off the tax delinquency. We were transparent with and responsive to IRS, and established a level of trust that had been absent from the communications between our client and IRS agents.

THE RESULT

The IRS agreed to a settlement that included a lump sum down payment followed by monthly installments. The investor capital created the available proceeds for the down payment, while the improvements implemented by the consulting firm created the cash flow from which the monthly installments were paid, and the hospitals remained open.