Accounting & Tax Case Studies: Cleanups, Resolutions & Outcomes

We help clients clean up books, get current with the IRS, and file with confidence. Here are real outcomes for business owners, contractors, and new LLCs.

Bookkeeping Cleanup & Tax Readiness

  • Client: Small business owner
  • Problem: Disorganized books, uncategorized transactions, unreconciled accounts
  • What we did: Reconstructed transactions, corrected categories, reconciled every account, delivered year‑end package
  • Outcome: 100% accurate books; smooth, stress‑free tax filing

Construction Contractor: Five Years Unfiled

  • Client: 1099 subcontractor in construction
  • Problem: 5 years unfiled, missing 1099s, mixed accounts, IRS non‑filer notices
  • What we did: Transcripts + deposit reconstruction, expense rebuild, sequential filings, penalty relief + installment plan
  • Outcome: Fully compliant; penalties reduced; no enforcement; peace of mind restored

New LLC: First‑Year Setup & Confidence

  • Client: New single‑member LLC
  • Problem: No bookkeeping system; confusion about estimated taxes & deductions
  • What we did: Clean setup + categories, estimate plan, mileage/receipt workflow, year‑end checklist
  • Outcome: On‑time filings; accurate books from month one; owner understands cash flow & taxes

Multi‑State Construction S‑Corp — Six Years of IRS, Payroll, and Nexus Errors

  • Client: Multi‑state construction firm (WI, IL, MI)
    Problem: Six years of incorrect filings, payroll tax issues, and IRS/state notices
    What we did: Rebuilt books, fixed payroll, corrected returns, resolved nexus, and negotiated with IRS
    Outcome: Payroll liability cut from $87k → $14k, penalties removed, compliance restored

Frequently asked questions

No—start with what you have. We’ll guide you step by step and help reconstruct what’s missing.

When taxpayers act voluntarily and promptly, outcomes are often more favorable, including reduced penalties and manageable payment plans.

Typically within a few business days; urgent cases are available when timelines are tight.

Let’s fix this together.

Bookkeeping Cleanup & Tax Readiness

from messy books to clean financials

Client profile

A small business owner managing books with a mix of bank statements, spreadsheets, and outdated software—overwhelmed and unsure about accuracy with tax time approaching.

The challenge

  • Uncategorized transactions over 12+ months
  • Duplicate entries from bank imports
  • Personal and business expenses mixed
  • Missing receipts; several unreconciled accounts

Our approach

  • Reconstructed and categorized all business transactions
  • Corrected misclassifications and missing income
  • Reconciled every account to statements
  • Separated personal and business activity
  • Implemented a clean chart of accounts and a year‑end package

Outcome

  • 100% accurate, fully reconciled books
  • Clear P&L and Balance Sheet delivered
  • Smooth, stress‑free tax filing

Client Testimonial

“This is the cleanest my books have ever been. I finally understand my numbers.”

Construction Contractor — Five Years Unfiled, Fully Resolved

judgment‑free catch‑up, start to finish

Client profile

A 1099 subcontractor in construction with five consecutive years of unfiled returns, mixed accounts, and multiple IRS non‑filer notices.

The challenge

  • No organized records or expense tracking
  • Missing 1099‑NECs and mixed personal/business spending
  • Elevated anxiety and avoidance due to IRS notices

Our approach

  • Judgment‑free consult and clear plan
  • Income reconstruction using IRS transcripts and bank deposits
  • Expense rebuild from statements, tool/material receipts, and mileage
  • Prepared and filed all five years sequentially
  • Secured penalty relief and an affordable installment plan

Outcome

  • All returns accepted; client fully compliant
  • Significantly reduced penalties; no enforcement action
  • Predictable monthly payments; peace of mind restored

Client Testimonial

“I thought I was too far behind. You handled everything without judgment. I can finally sleep again.”

New LLC — First‑Year Setup & Tax Confidence

simple setup, clear plan, no penalties

Client profile

A first‑time business owner who formed a single‑member LLC mid‑year and needed a clean accounting setup, clarity on estimated taxes, and confidence about what’s deductible.

The challenge

  • No bookkeeping system or chart of accounts
  • Uncertainty about quarterly estimates and deadlines
  • Confusion about what’s business vs. personal

Our approach

  • Set up simple accounting with correct categories
  • Quarterly estimate plan with due dates and calendar reminders
  • Deduction education for mileage/vehicle, home office (if eligible), phone/internet, tools, and subscriptions
  • Monthly habits + a year‑end closing checklist

Outcome

  • On‑time filings with no penalties
  • Accurate books from month one
  • Owner understands cash flow, deductions, and obligations

Client Testimonial

“It finally feels like there’s a plan. I’m not guessing anymore.”

Multi‑State Construction Firm — Six Years of Incorrect Filings, Missing Records, Payroll Errors, and IRS Debt

simple setup, clear plan, no penalties

Client profile

A mid‑sized construction subcontractor operating in Wisconsin, Illinois, and Michigan.

The company had grown quickly — from a single-member LLC to a 12‑employee S‑Corporation — but the accounting never kept up. After multiple bookkeepers, three payroll providers, and years of patch‑work tax filings, the owner realized the business was in serious trouble.

They contacted Jackson Titus & Associates after receiving:

  • An IRS CP2000 underreporting notice
  • Two state nexus letters (Illinois & Michigan)
  • A federal payroll tax delinquency notice
  • A request for substantiation on $480k of equipment purchases

The owner said:

“I don’t even know where to start. I think everything is wrong.”

They were right — but everything was fixable.

The challenge

This was one of the most complex cases we’ve ever handled, involving six years of layered issues:

1. Multi‑State Nexus & Apportionment Errors

  • The company was performing work in WI, IL, and MI.
  • They never filed in IL or MI, even though they exceeded economic nexus thresholds.
  • Gross receipts and payroll apportionment were incorrect on every return.

2. Entity Classification Confusion

  • Formed as an LLC in Year 1 →
  • Filed as a partnership accidentally in Year 2 →
  • Elected S-Corp in Year 4 but the IRS never processed the late election →
  • Bookkeeper continued filing as S‑Corp anyway.

Result:
Four years of tax filings were filed under the wrong entity type.

3. Payroll Errors & Missing Forms

  • Three different payroll companies created:
    • Duplicate EIN-level filings
    • Missing 940/941s
    • Incorrect state withholding registrations
    • Wrong classification of two workers (W‑2 vs. 1099)
  • IRS showed $87,000 in unpaid payroll tax liabilities, most caused by misapplied or duplicate filings.

4. Equipment & Depreciation Issues

  • Purchases included excavators, trailers, trucks, and skid-steers.
  • Assets were:
    • Incorrectly expensed
    • Misclassified
    • Depreciated twice
    • Or never capitalized at all

$480,000 needed to be reconstructed and re‑depreciated.

5. Six Years of Books in Disarray

  • QuickBooks had:
    • Mixed personal/business transactions
    • Negative asset accounts
    • Vendor balances lingering from years prior
    • Bank accounts unreconciled for 30+ months
  • Loan proceeds were recorded as income.
  • Loan payments were coded as expenses.

6. IRS & State Notices Already in Motion

  • IRS CP2000 for unreported income
  • IRS CP501 & CP503 notices (intent to levy)
  • IL Department of Revenue nexus questionnaire
  • MI Treasury assessment for unfiled corporate returns

This was the kind of case where one wrong move triggers audits in three states.

Our approach

We built a multi‑stage recovery plan that addressed immediate threats first, then worked backward.


Step 1 — Immediate IRS Damage Control (72 Hours)

We contacted:

  • IRS Automated Collections
  • IRS Business Accounts
  • IL DOR
  • MI Treasury

We successfully:

  • Placed all accounts on hold (no levies, no liens)
  • Requested transcripts for 6 years (Wage & Income, Account, Return, and AUR)
  • Requested reasonable cause consideration pending cleanup

This stopped the bleeding.


Step 2 — Entity Cleanup & Correcting Six Years of Filings

We:

  1. Filed a Late S‑Corp Election (Form 2553) under Rev. Proc. 2013‑30
  2. Corrected prior returns:
    • Year 1: Schedule C (sole prop) amended
    • Year 2–3: Partnership returns amended/voided
    • Year 4–6: S‑Corp returns filed correctly
  3. Filed Protective Claims for Refund where necessary
  4. Ensured shareholder basis was recalculated & restored (was severely negative)

This established the correct filing position for all six years.


Step 3 — Payroll Reconstruction

We:

  • Retrieved payroll history from all three providers
  • Rebuilt 940/941s
  • Corrected Form W‑2/W‑3 mismatches
  • Reclassified two workers properly
  • Filed missing IL & MI payroll returns
  • Matched payments to IRS accounts to eliminate duplicate penalties

The original $87,000 payroll tax “liability” dropped to $14,300.


Step 4 — Multi‑State Apportionment & Nexus Fix

We:

  • Registered in IL & MI
  • Filed three years of back returns
  • Correctly apportioned revenue, payroll, and equipment
  • Filed Voluntary Disclosure Agreements, reducing penalties significantly
  • Eliminated two years of Michigan non-filer estimated assessments

This prevented the states from initiating audits.


Step 5 — Depreciation Rebuild

Using transcripts, invoices, and bank records, we:

  • Reconstructed the fixed asset schedule
  • Removed duplicate assets
  • Corrected prior depreciation methods
  • Applied Section 179 and bonus depreciation correctly
  • Filed Form 3115 (Change in Accounting Method) for depreciation corrections

This adjusted corporate income downward across multiple years.


Step 6 — Full Bookkeeping Cleanup (Six Years)

We:

  • Reconciled every bank, credit card, and loan account
  • Removed personal transactions
  • Corrected income misstatements
  • Rebuilt A/R and A/P ledgers
  • Reclassified loan proceeds and payments correctly
  • Ensured officer compensation and distributions matched IRS requirements

Once the books were clean, we re‑ran all tax calculations.

Outcome

✓ IRS Accepted the Late S‑Corp Election

No penalties. No audit. Entity type aligned correctly.

✓ Corrected 6 Years of Tax Returns

All accepted. All penalties removed or reduced.

✓ Reduced IRS Payroll Liability from $87,000 → $14,300

✓ Eliminated $22,000 in Michigan estimated assessments

(VDA approval.)

✓ Illinois penalties waived

Filed under reasonable cause.

✓ Recovered $38,600 in federal tax refunds

From depreciation corrections and amended returns.

✓ Clean, reconciled books for the first time in six years

The owner finally understood the company’s real cash flow.

✓ No liens. No levies. No audits.

All accounts closed as compliant.

Client Testimonial

“I thought this was the end.
You rebuilt six years of my business and dealt with the IRS, Illinois, and Michigan like it was nothing.
This is the first time I’ve slept in months.”

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