IRS Notice Contested for Online Payments Client

Successfully contested a notice of deficiency from the Internal Revenue Service for an online payments provider. The notice stated the client owed taxes and penalties in excess of $1 million.

Because the client often holds money in escrow for its clients and then disburses the funds, the IRS misinterpreted that money as actual income. We submitted a letter to the IRS notifying them of their error and began preparing a Tax Court petition. In the end, the IRS responded and ultimately closed the case with no additional tax liability.