Stewart’s story – a young family on the brink of losing their home

I first spoke with Stewart and his wife in mid-2018. They had been through the wringer with an ATO debt and had lost hope. They reached out to me as a last effort to get everything sorted.

In the 3 years before calling me, the ATO pursued Stewart for an unpaid debt of almost $200,000. This tax debt had resulted from some issues with his previous accountant. When Stewart and his wife explained everything to me, I could see how a series of errors and mistakes had led to the tax debt growing out of control.

They also told me that in 2015, they had entered into a Deed of Agreement with the ATO. In this Deed, Stewart agreed to make regular payments to the ATO. The couple had also given the ATO a second mortgage over their home (which was in joint names). This meant that if Stewart didn’t pay what he promised, the ATO could force the sale of their family home.

When they entered the Deed with the ATO, they were sure they could sort everything out. They started making payments and chipping away at the debt for the next couple of years.

Unfortunately, they then fell on hard times. Stewart’s business lost a major client and work dried up. His wife also suffered some health issues and wasn’t able to work for about a year.

Stewart fell behind with his tax debt, and the ATO started to chase him again. The ATO filed court papers to collect the debt, and Stewart hired a local lawyer to help with this. Many months passed and Stewart and his wife started to wonder if they had the right lawyer.

This is what led them to call me (even though I am based in a different State to them). They had read on my website that I can help with tax debts and thought maybe I could help them too. They were at their wits’ end. They were both suffering from enormous stress and there was a lot of strain on their young family.

The strategy

After listening to their story and talking about their options, we came up with a plan. A major part of this plan was to ask the ATO to remit all of the general interest charge and penalties that had accumulated in the past.

Over the next several weeks, we worked on this plan. I wrote a long and detailed letter to the ATO. It explained how the tax debt had arisen and all of the things Stewart and his wife had done to try to pay the tax. The letter also explained that the couple could borrow a small amount of money from a family friend to allow them to pay the remaining ‘real’ tax debt.

We went back and forth on the draft letter, and had a few more conversations, to make sure everything was clear and accurate. I also set Stewart and his wife to work on gathering supporting documents for the letter.

I also spoke with the other lawyer that the couple had engaged for the ATO’s court proceedings, to make sure he could keep those proceedings under control, whilst I worked on the new strategy.

Warning
Once the ATO starts legal proceedings, things can happen very quickly. Whether you are able to defer proceedings in order to negotiate with the ATO (as in this scenario) will depend on the exact nature of the proceedings and the Court that is considering those proceedings.

If the ATO ever sends you court papers, you should always seek legal advice as soon as possible.

Once everything was ready, I sent our letter to the ATO officer dealing with the case. I then followed up with another letter as more information became available.

Then we waited.

The result

Right before Christmas 2018, we got the good news. The ATO agreed to everything we’d asked for – all of the GIC and penalties were remitted (around $90,000). All they needed to do now was to pay the small remaining balance using the money their friend was going to lend them.

This meant that the legal proceedings would be discontinued and the mortgage removed from their home. The family could move on.

Stewart and his wife went from having very little hope to the issue being resolved within less than 6 months. Of course, they still have to repay their friend the loan – but this is a much less stressful situation than they had been in, when they believed they were only a short time away from losing their family home to the ATO.