Image ID TheftA fraudulent tax return was filed for a refund which created a conundrum for my client when he applied for a business loan. He owes what is considered a ‘’large dollar” amount to the IRS.  A fraudulent return was filed – IRS applied the amount to a prior year tax balance for which my client had an installment agreement.  The fraudulent refund was enough to pay off that year.  Subsequently, once the IRS realized the refund was fraudulent; the amount was reversed, and the original tax balance was restored.  Now, I understand this was the correct IRS procedure, but the IRS computer defaulted his installment agreement; although, he is paying back taxes through direct debit-an error admitted by the IRS.

 Why is this problematic? The lender was aware of his tax obligations but required assurance and proof that he was compliant and current with his IRS installment agreement. However, the IRS account transcript indicated that he was no longer in an installment agreement for that particular tax year. As a result, the lender would not make the loan unless the IRS corrected my client’s account. This only further delayed my client from receiving the loan he so desperately needed for his business. We can all understand how that feels when we have applied for a mortgage or another type of loan and encountered a setback.

 In order to resolve his dilemma and the lender’s request; I spent hours talking with the IRS Service Center only to learn we needed to contact the IRS Revenue Agent whom originally set up the installment agreement, and closed the case over a year ago to correct my client’s account.

 We ultimately satisfied the lender’s requirement and my client received his loan a week later.  But, I must add it was an extremely arduous undertaking and tough for my client to endure all because someone filed a fraudulent tax return.