Skip to Content

IRS Approves Installment Agreement for Large Industrial Contracting Company with $5,000,000 Employment Tax Delinquency


Our client was a large industrial contracting company that accumulated a $5,000,000 employment tax delinquency when an acquisition and slow paying clients created significant cash shortfalls for a number of consecutive quarters.


We started by gaining a thorough understanding of our client’s financial situation, including the extent of the cash crunch caused by the acquisition and slow paying clients, future projects in the company’s pipeline and expected profit margins on current and future projects. We reviewed expenses and overhead with our client and helped create a plan to reduce expenses without cutting into cash flow or profitability. We reviewed the various projects in process and in the pipeline and helped our client identify which types of projects had the highest profitability and lowest risk of slow payments.

As our client focused on reducing expenses and working on the most profitable lines of business, we negotiated with the IRS revenue officer assigned to the case. We explained that the company had an excellent compliance history prior to the events that caused it to become delinquent, was taking steps to reduce costs, improve profitability and increase cash flow, and was in a position to pay off the delinquent tax, penalty, and interest over a reasonable period of time.

Unfortunately, despite our best efforts to cooperate and reach a reasonable resolution, the IRS revenue officer handling the matter remained in hyper-aggressive mode. While we made multiple proposals and requests for installment agreements, the revenue officer levied our client’s bank accounts and accounts receivable. The levies adversely impacted cash flow and hut our client’s reputation and ability to secure new business.

Because of the IRS revenue officer’s aggressive tactics and unwillingness to stand down while we negotiated a resolution, we engaged bankruptcy counsel. We fully briefed the bankruptcy lawyers on background facts, our client’s financial position, and the history of negotiations with IRS and the current status of the case. We discussed various strategies, including the bankruptcy filing, and the pros and cons associated with each strategy.

We decided to have bankruptcy counsel take the lead in the negotiations with IRS, and we moved to a support role. Bankruptcy lawyers explained to the revenue officer that our client was willing to file in bankruptcy court if an installment agreement could not be reached and that the IRS stood to collect much less as a creditor in bankruptcy than it would on an installment agreement. The negotiations went on for a number of weeks, but the IRS levies stopped.


The IRS revenue officer agreed to an installment agreement that would allow our client to pay off the delinquent balance over seventy-two months.