Meet the Columbus tax accountant who beat the IRS in court
Thirteen years. Two months. And one day.
That’s how long it took a local tax accountant to receive a $55,615 refund for his Westerville business from the Internal Revenue Service.
Ron Lykins says he beat the odds. It’s rare for a person to take on one of the most powerful agencies in the U.S. government and come out on top. People he talked to about his tax problems strongly encouraged him to settle when the saga began in July 2001 because they didn’t think he could win.
“A lot of people told me I was wrong, but I didn’t think so,” Lykins says. “I never lacked confidence. I had experience and knowledge. I wasn’t afraid of the IRS, but you can see why people are. They just flat out say, ‘No,’ no matter what you present.”
Lykins’ experience comes from his role as president and CEO of Ron Lykins Inc. CPAs in Westerville, where he’s navigated the tax process for his clients over the course of nine presidential administrations. He recently spoke with Columbus CEO about his long career and that battle with the IRS.
A life-changing decision
This year marked Lykins’ 50th season preparing tax returns for his clients. Back in 1969, he was finishing an MBA at Ohio University in Athens when he took on a few clients to make extra money. His goal was to earn a Ph.D so he could become a college president.
But a not-so-funny thing happened on Lykins’ way to the upper echelons of academia. He got fired. After earning his MBA, Lykins got a job as associate director of management improvement at the Ohio Board of Regents. But to become a college president, he’d need teaching experience, so he left after three years to teach accounting, taxation and finance at Ohio Wesleyan University in Delaware. It was 1974 and his income to teach would be cut in half. “The offer was $13,000 and I said, ‘Well, if you pay me $15,000,’ but they’d have to put me in the associate professor rank,” Lykins says. “I took it at $14,000, but I was too young to be an assistant proffessor let alone an associate professor, but they offered it to me.”
That didn’t sit too well with other assistant professors at the university, who protested. During the Christmas season of 1976, Lykins received a letter from the school’s president that said he wouldn’t be rehired because he had not been granted tenure. It created one of those life-changing moments where a person’s future hangs in the balance. Lykins had to decide whether he’d give up his academic dreams to venture out on his own. “It was the right decision,” he says. “I decided I’ll go full-time on my business … and full-time meant trying to earn enough money to pay the mortgage. That’s how I got started and kept growing over the years.”
IRS comes calling
By 2001, Lykins’ business had grown to the point where it had 700 clients, $500,000 in annual revenue and about a dozen employees. That summer, the IRS started an audit of his corporate tax return for 1999 and then expanded it to include the year 2000.
In 2002, after making no changes to Lykins’ income or deductions for either tax year, the IRS asserted his company was a “personal service corporation” and subject to a flat 35 percent tax rate on all taxable income. Lykins says at that time nearly all corporations, including Fortune 500 companies, had a graduated tax rate schedule that started at 15 percent. The IRS claimed he owed additional taxes and penalties for the two years totaling $29,448.
Lykins immediately started appealing the case and lost at every level. He was being advised – but not represented—by Jeffrey Rich of the Rich & Gillis Law Group LLC in Dublin. “He’s tenacious,” Rich says. “When he called me the first time, he was being hassled by the IRS. I knew he was not going to be giving up easily. He believed what he had put in his tax returns was an accurate reflection of the law to which he was entitled. He felt he was being taken advantage of.”
‘Bit the tail of a tiger’
In 2005, a trial was held in U.S. Tax Court, where Lykins represented himself. While awaiting the court’s decision on the case, the IRS assessed additional taxes and penalties of $33,791 on top of the $29,448. In 2006, the court issued an opinion in his favor: “There is no deficiency on tax due for 1999 or 2000.”
But that didn’t settle the matter. The IRS raised an unrelated issue for those same two tax years to keep the matter going. In 2007, Lykins petitioned the court for the second time for the same two tax years. A year later, he again represented himself against the IRS in court. In 2009, the judiciary came back with a ruling that said Lykins could file a claim for a refund, but first he’d have to pony up $55,421.
Undaunted, Lykins again filed a notice of appeal so he could get that money back. “I have 14 volumes of documentation,” Lykins said. “Fourteen notebooks full of appeal after appeal after appeal.”
As the matter dragged on, the government objected to Lykins representing himself through a motion to dismiss. Then they poured more salt on the wound and audited his corporate tax return for another year— 2001—but again made no change to his income or deductions.
In early 2014, Lykins hired Rich to represent him in federal district court for the third lawsuit. That fall, an attorney representing the government agreed to refund Ron Lykins Inc. $55,615.
“It was a significant amount, but it was clearly something that shouldn’t have even gotten to this point in the U.S. Tax Court,” Rich says. “The government felt, ‘This guy’s going to give up.’ They fought him like they fight so many others. They didn’t realize they bit the tail of a tiger who was not going to give up because he knew he was right.”
The first inkling Lykins had that he could take on the IRS stemmed from the very first client he represented in an IRS tax audit, a well-known artist. The IRS wanted him to sign a statute of limitations to give it more time for the audit. Lykins pushed back and said, “No thanks. That’s not in my client’s best interest.”
“That began my differing with the IRS,” he says. “[The experience] gave me the knowledge that I don’t have to agree with them.”
No slowing down
Lykins is past traditional retirement but still remains active in his business. While he never achieved his dream job of college president, he did earn that doctorate degree, which allowed him to be an adjunct professor at Ohio University and Capital University where he taught accounting and finance. When he’s not working, Lykins enjoys traveling and playing tennis. He has nine grandchildren and keeps busy attending their basketball, soccer, lacrosse and field hockey games.
Bob Korb, who is retired and does consulting work, has known Lykins for 40 years and was one of his first clients. He also considers him a friend and the two spend time these days playing tennis and meeting for lunch. “He’s just a great guy and is such a good friend he let me pay for lunch today,” Korb joked of their salmon meal at Thai Grille in Westerville. “Professionally, he has mentored a great team of people in his organization, so there’s a lot of talent to be had.”
Lykins has no plans to retire anytime soon, especially with an election year coming up. When he got started 50 years ago, the Tax Reform Act of 1969 ushered in the controversial “Alternative Minimum Tax” that targeted high-income earners but, over the years, ensnared many taxpayers who weren’t considered wealthy. “Every time there’s a new president, I know my business is going to increase by 10 percent because when they say they are going to simplify the tax code, they never achieve it,” Lykins says. “Tax reform has always improved my business. We normally file 150 to 200 extensions each year. This year, (because of recent tax reform) we have filed 733 extensions.”
Today, Lykins’ firm brings in more than $1 million in annual revenue, a big leap from that side gig in 1969. “I had no intention of doing this for a living,” he says. “My net profit in that first year was $1.”
His advice to anyone who runs into trouble with the IRS is to stay patient, believe you can win and find the right representation. “Find someone with experience and knowledge,” he says. “Tell me your success rate. Ask them, ‘Have you ever taken on the Internal Revenue Service and won?’ ”
Laura Newpoff is a freelance writer.
45 W. Main St., Westerville 43081
Business: CPA firm offering tax services for small business owners, executives and professionals
CEO: Ron Lykins
2018 revenue: $1 million-plus