IRS Addition of Payroll Tax Liability That Was Subject of OIC to Going Concern Value of Business Was Not Reasonable
In the case of W. Zintl Construction, Inc. v. Commissioner, TC Memo 2017-119 the taxpayer in question was a corporation with a rather significant unpaid payroll tax liability ($6,563,263 to be exact). The corporation was seeking an offer in compromise with regard to these taxes. The IRS settlement officer (SO) determined that the offer was not to be accepted. In doing so he considered the going concern value of the business as a whole and then added back the underlying payroll tax liability.
The taxpayer took its case to the Tax Court, arguing that a going concern value should not be used against the business itself, as opposed to that of the owner of the business. The Tax Court disagreed with this view, but also determined the settlement officer had improperly computed the going concern value when he added back to that value the payroll tax liability.
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