The American Bar Association (ABA) Tax Section hosts a pro bono event series, “Virtual Settlement Weeks,” a joint effort with the IRS to amicably resolve tax controversies between low income taxpayers and the IRS. Through this program, Bass, Berry & Sims attorney Will Gebo represented a client in March 2023 facing a claimed tax deficiency from the IRS for $6,000. The alleged deficiency related to an unreported income issue due to the receipt of settlement funds in 2020 from a multi-district class action lawsuit. That settlement compensated the client for the loss of her home, which was one of many homes that became uninhabitable due to the widespread use of defective Chinese-manufactured drywall in new construction post-hurricane Katrina.
The IRS sent a deficiency notice claiming that the entire amount of the settlement should have been reported by the client as ordinary income. Following a settlement conference with the lead IRS counsel on the case, an agreement was reached to exclude the settlement funds from the client’s taxable income, reduce the taxable percentage of her social security income, and eliminate the claimed tax deficiency.
Upon receiving confirmation of the settlement agreement, Will said, “It was wonderful to participate in this event. I was able to meet a number of individuals from the ABA’s Tax Section, spend a few hours discussing tax issues with other interested lawyers, and secure a positive result for someone who simply could not afford representation. It is clear that this settlement result meant the world to our client.”
“Our firm dedicates thousands of hours each year to supporting individuals and organizations who need pro bono assistance, and Will’s experience and success in this case are a good reminder of the difference we can make,” stated Doug Dahl, a member of Bass, Berry & Sims and head of the Employee Benefits/Executive Compensation practice group.