How $275K In IRS And State Tax Debt Was Settled for Just $336

When tax debt spirals into the hundreds of thousands of dollars, many taxpayers feel hopeless. 

One recent client came to The Law Offices of Sammy Kim facing exactly that: more than $249,000 in federal tax debt, plus nearly $26,000 owed to the State of Colorado. 

The client had actively traded stocks during the COVID period, which generated large taxable gains. Although he reinvested the proceeds rather than spending them, the subsequent market crash left him unable to cover the resulting tax bill.

Faced with a massive bill due to the IRS, he started doing some research.

The more he looked into it, the more overwhelming the situation felt. With the IRS closing in, he realized he needed guidance from an experienced tax attorney to find a way forward.

The Challenge: Federal And State Tax Debt Over $275K

The IRS had assessed over $249,000 in federal income tax against the client, while the Colorado Department of Revenue sought nearly $26,000.

These tax bills loomed large, creating a crisis that threatened his financial future.

The client recalled: “I felt like I was in a lose-lose situation. I did my own research, but I needed someone with a law degree who understood how to navigate the IRS.”

The Legal Strategy: Using IRS And State Offers in Compromise

After an initial consultation, Attorney Sammy Kim gathered the client’s financial information and stabilized the situation. 

The first step was placing his IRS account into “Currently Not Collectible” status, which temporarily paused collections and gave him breathing room while a long-term strategy was developed.

The client valued that clarity: “She was straightforward, explained her plan, and gave me a realistic timeline.”

Attorney Kim then applied for an IRS Offer in Compromise (OIC) which allows you to settle your IRS tax debt for less than the amount you owe. 

The process of negotiating an OIC required persistence, with appeals filed and disagreements between the taxpayer and the IRS, until the IRS finally agreed with the taxpayer’s position.

Once the IRS accepted the settlement, Attorney Kim leveraged that result to pursue a Colorado state OIC. 

After months of additional documentation and communication, Colorado also agreed to resolve the liability for a small fraction of the assessed amount.

The Results: Tax Debt Settled for Pennies on the Dollar

The results were significant:

• The client’s federal tax debt of $249,468 was settled for just $136.
• The client’s Colorado state tax debt of $25,744 was settled for only $200.

After nearly two years of persistence, appeals, and careful follow-up, both cases were resolved. The client’s overwhelming liabilities were eliminated, allowing him to move forward in his life and leave this tax problem in the past.

Reflecting on the outcome, he said, “What was important for me was getting great results, and I couldn’t be happier.”

Client Perspective: Relief After Tax Debt Resolution

Throughout the process, the client appreciated how responsive and professional the representation was at The Law Offices of Sammy Kim. 

“She was quick to respond and always had a clear direction,” he recalled. 

He also emphasized, “I knew this issue was forgivable, but I needed the right expertise to get it done.”

Tax Debt Settlement Can Be Possible

This case demonstrates the power of persistence, strategy, and deep knowledge of both federal and state tax resolution programs. 

Even when the numbers seem insurmountable, it is possible to secure life-changing results that lead to reducing, and sometimes eliminating, back tax debt.

Prior results do not guarantee a similar outcome. Schedule a consultation with Sammy Kim now to learn more about the options available for your specific case.

Frequently Asked Questions About an Offer In Compromise

Can an Offer in Compromise really reduce tax debt?

Yes, if the taxpayer qualifies. The IRS accepts an Offer in Compromise when they determine they are unlikely to collect the full debt. Financial situation, assets, income, and expenses are all considered. Many cases are denied, so proper preparation and documentation are essential.

Do I still need to stay current on my taxes while my Offer in Compromise is pending?

Yes. While your OIC is under review, you must continue to file all required tax returns on time and pay any current-year taxes owed. That includes quarterly estimated tax payments or payroll deposits if they apply to you. If you fall behind on current obligations, the IRS will automatically reject your offer, no matter how strong your case may be. Staying compliant during this period is essential to keeping your OIC alive and giving yourself the best chance of approval.

Do states like Colorado also offer debt settlement programs?

Yes. Some states, including Colorado, have their own Offer in Compromise programs. Each program has unique rules, but a successful IRS OIC can sometimes strengthen the case for state-level relief.