How I Got a Mercedes as a Fee

Car driving on road on pillars through Swiss mountainsA true tale of the IRS being helpful.

By Ed Mendlowitz
Call Me Before You Do Anything: The Art of Accounting

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 in which the two partners could walk away broke but without being in debt to the IRS for unpaid withholding taxes.

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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 in which the IRS got everything, except for one exception, 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!