Tax Resolution Success Show

The Tax Resolution Success Summit Virtual 2020 is the country’s only direct response marketing, sales, and business mastery event that’s 100% devoted to starting or scaling a lucrative tax resolution business. This is a full-on live studio production where we’ll do everything we planned to do in-person. Many of our expert speakers will be in studio with me to deliver high-value, actionable content that you can implement immediately. We will have a vibrant, FUN, educational, and interactive networking event including a Virtual Exhibit Hall with all our great sponsors too. You’ll get your questions answered live, by me, and our other experts, as if you were right there in the room with us.

Check it out here www.rozstrategies.com/virtual

The godfather of tax resolution is the featured guest of the podcast today. Robert McKenzie is the guy that leading attorneys and CPAs turn to when they have criminal tax defense cases they need help with. Robert has a unique perspective into the IRS since he worked as a collections officer and literally wrote the book when it comes to representation before the IRS.

[4:15] Robert started his career as a revenue officer of the IRS. While working at the IRS, Robert completed his law school education and immediately went into his own practice doing tax resolution which he’s been practicing for the past 40 years.

[6:00] While at the IRS in 1976, Robert was incentivized to seize 30+ businesses and homes because that was how success was measured by the IRS before reforms were passed. Since 1998, the number of seizures has drastically decreased.

[9:15] In the last 8 years, the IRS has had its budget and headcount decimated, particularly in the enforcement area. This has lead to fewer enforcement actions and less revenue officers in total.

[13:00] This is a little counterproductive in terms of government revenue because a skilled revenue officer generates $11 in revenue for every $1 spent. Right now it’s a good time to be a tax cheat in this country because the odds of being caught have never been lower.

[13:50] The IRS received a 2.6% increase in budget in 2019 which means they can now bring on some new people. The new commissioner, Charles Rettig, is one of the first tax lawyers to get the job.

[17:35] Levies were up 8% in 2018, the first increase in over a decade. Robert believes that this indicates a trend of increased enforcement in the near future. The IRS is taking revenue officers from underutilized states and placing them in other areas that are lacking staffing to help go after higher dollar actions.

[21:00] The reality is the IRS has a lot of cases in queue that are just waiting to be assigned to someone in the field and they are not having liens filed. The more they can have people to receive cases out of the queue, the more liens we’re going to see.

[24:30] Sometimes it can be hard to change someone’s attitude if the IRS hasn’t started looking at their case. If you want to be delinquent in this country, you would want to live in a big city where the staff to enforce is at the lowest point. In Dallas, the IRS wasn’t going after anyone that owed less than a million dollars.

[27:50] There was a study released earlier in 2019 that shows about 83% of Americans comply with their taxes, but we are auditing 0.58% of all tax returns filed. They estimate that the government is losing over $300 billion in revenue from people not properly reporting their income.

[30:40] Over 43% of all the 1040 audits in 2019 were done on low dollar amounts returns. These were automated audits because auditing a high net worth individual requires a person to handle the task. Overall, 97% of people who are making over a million dollars a year will never see the IRS.

[33:40] Who cut the IRS budgets? Politicians. Who donates the most to politicians? Rich people. Who has the most to benefit by an IRS that’s not properly funded? Rich people. They cheat more and have more money they could be forced to pay if they were ever audited.

[34:10] The IRS has been engaging in a series of summons with the clearing houses that deal with cryptocurrencies and have been looking more closely at people making those transactions. For some people, that could mean potential criminal prosecution if the numbers are large enough.

[37:30] The statute defining an employee at the federal level has been established since the 1970’s. Congress is not likely to pass legislation dealing with the gig economy similar to the one recently passed in California, since industries have varying definitions as to who qualifies as an employee.

[41:45] Customer service from the IRS has improved in recent years. Their answer rate is only around 70% and even when they do connect with someone, the IRS only answers around 70% of those questions correctly. The FAIR Act is an effort to improve the IRS’s customer service but we’ll see how it goes.

[45:00] Now is a good time to get into the tax resolution business. There is going to be more audits and collections in the coming years which means more potential customers for your business. You will require proper training and an understanding of how to market your business if you want it to last.

[50:45] The IRS has said that they are coming after syndicated conservation easements. Conservation easements have become a scheme that some people have used as an abusive tax shelter and the IRS has made it known that they are going after those people.

[52:35] Captive insurance companies are another target of the IRS, particularly where something is insured against a risk that will never happen.

[53:30] Employme...

Ben Golden lives in Thomasville, Alabama, which is a town of only 1800 people. He sold his practice in Florida five years ago and purchased a construction company, but he wanted to get back into the business, just not the compliance side. He saw Michael’s program, but had some major concerns about living in a rural area.

[4:00] Ben’s original practice did the things that a traditional accounting firm would do other than auditing. Buying the construction company was a lucky move for Ben but he couldn’t get away from his love of helping people with their taxes, he just wanted to get out of the compliance game.

[5:45] When Ben got out of college he worked for a regional firm in San Francisco for a few years before moving back to Alabama and buying his first accounting practice. He grew that business pretty quickly, but the trouble came when he agreed to sign a client’s payroll account.

[6:50] The client didn’t pay his payroll taxes and the agent at the IRS failed to follow procedures correctly and started chasing Ben to cover the $170,000 in taxes the client owed. Ben looked into the procedures and learned that she had acted inappropriately, which led him to push back on the IRS and speak to the agent’s territory manager.

[10:00] The final result was that the agent was pulled off the case and given a 30-day suspension. The client subsequently went out of business and only paid $35,000 of the total amount. Ben didn’t have to pay anything that he was originally assessed for.

[11:30] If we see something that’s not fair, we stand up and fight. What the IRS tried to do to Ben was criminal and is an example of what makes tax resolution and IRS representation so important.

[12:20] The IRS essentially violated all of Ben’s privacy rights, which is why he was compelled to pursue the issue. Ben has also had experience having his tax identity stolen a few years prior.

[15:00] When Ben purchased the Tax Domination system, he wanted to plan and set his company up for the greatest amount of success he could. He studied the material in the program for several months before even starting his business.

[17:40] Ben landed his first client at the end of 2017 and it was a $25,000 case. That first client proved to Ben that he could make some real money in this business while also helping people who really needed it.

[19:30] This past August was Ben’s biggest month ever with over $100,000 in revenue. He projects that he will generate about $300,000 by the end of his second full year in business. Ben operates completely remotely so all communication with clients is done over the internet.

[20:50] Ben has been focused on the lessons in the Tax Resolution system and implementing them the same way as Michael said to do, with some minor modifications due to the nature of the remote work. For Ben, the number one thing is to take a proven strategy and replicate it.

[23:00] As an enrolled agent or a CPA, you don’t have to be licensed in all 50 states to operate all over the country. You just have to be in good standing in your home state. Ben currently has clients in Hawaii, California, and Alaska. The key is to have a good plan on how you want clients to come in.

[24:00] Pricing is very important, it should be done in a way that you show the value of what you do instead of billing per hour. The fee schedule is a major asset.

[26:30] Communication and setting expectations correctly are crucial to a positive customer experience, even if you can’t get that customer the greatest result. Clients feeling abandoned is a common problem in the industry. You need to communicate with your clients, especially when there is nothing going on with their case.

[28:30] Locate your bottlenecks and do your best to clear them away. Do your best to teach every client that you work with that you work hard for them. Being a specialized technician with specialized knowledge doesn’t guarantee success any longer.

[31:00] When Ben started his practice in Florida, he was charging $35 an hour for his work because he didn’t feel like he was worth more than that. Now the education he’s received has given him the confidence to charge higher rates that actually reflect the value of what he’s providing.

[34:30] There are so many people that need help. There’s enough business for everybody since everyone in this country knows someone with a tax problem. The business involves hard work so bring the passion and you will find success.

Mentioned in this episode: Golden Tax Relief Michael Rozbruch's Tax & Business Solutions Academy

Chris Micklatcher started off as a lawyer in Portland, Maine, focusing on estate planning and tax work. The transition to tax resolution came 30 years ago when a client came into his office that needed some help with his back taxes. Back then, it was very easy to find new clients, but now the market for the business has completely changed.

[5:40] There are around 3,300 counties in the United States, and for some of them, when the IRS files a tax lien, you will be able to find that info on their website. You can also buy a list from a list broker of federal tax liens.

[6:55] Chris met Michael and signed up to his Tax Domination program in Orlando. Prior to that, Chris did tax resolution work in addition to general law work, but it wasn’t a focus of the business. He wanted to do something he loved, and he found that people really appreciated the tax resolution service, which is very different from the experience of working with law clients.

[8:30] The tax resolution side of Chris’s business was around $5000 a month. After purchasing the Tax Domination program and coming into the mastermind group his tax resolution business has grown to $55,000 a month with additional deferred revenue each month as well.

[12:00] Chris has hired four employees to help with the workload and is now hoping to start retiring slowly, minimizing his work schedule over time. His team handles approximately $850,000 in yearly revenue.

[14:55] The first major lesson that Chris learned was putting the processes in place and understanding the value of his time. Before the program Chris never spent any time on marketing, he did most of that on the fly. Now he spends a minimum of half a day a week focusing on marketing and trying to think outside the box. Eliminating the deadwood in both clients and employees was the third major lesson. The concept of Chris’s employees selling his business for him changed the way he thought about hiring.

[16:45] When people call your office off of your marketing, the first impression they have is the person who answers the phone, and most practitioners don’t give that enough thought. Your front office people have to be very good. There is a big difference between a receptionist and an intake person.

[18:15] Non-Filers are some of the most common clients that Michael has been seeing, mainly due to the focus of his marketing efforts.

[20:35] This is the first time in seven years that the IRS has gotten over $300 million added to their budget from Congress. The pendulum is swinging back now to compliance enforcement.

[23:25] If Michael had to do it all over again, he would have set aside one day a week to plan his marketing strategy out. You also have to understand that you will be overloaded with business, so you need to be able to complete the business that comes into your office.

[24:30] Many practitioners believe that marketing is below them, and that once they open up shop, they deserve the business. For Michael, the problem was never marketing, it was delegating the work to an employee. The key thing is being able to hire the right people and being able to delegate in confidence.

[26:15] You want to put yourself out there as a tax resolution expert because everyone thinks an accountant is a tax resolution expert as well, but that usually leads to a bad experience for the customer. There are three distinct areas of taxes: tax planning, tax preparation, and tax resolution. You can do all three, but the way you present your business matters.

[27:45] You need to brand yourself because it will put you into a position of authority. Tax resolution in the only field of taxes where you are solving a big problem which is why it’s the most lucrative and profitable. Resolution is here to stay whereas planning and preparation are slowly being automated and commoditized.

[30:15] You can succeed as long as you like working hard. The ones that just want to get by are going to have a very tough time in this business.

[31:50] Most colleges teach branding and image marketing, but any business can be successful if they know how to do direct response marketing.

[34:05] Michael has a turnkey program that has been very valuable for Chris in his business and helped him understand the key areas that he needed to focus on to grow his tax resolution business.

Mentioned in this episode: Fresh Start Tax Solutions Michael Rozbruch's Tax & Business Solutions Academy

Jim Dew specializes in working with owner/founder entrepreneurs. Most financial advisors and wealth management people will work with anyone who has money, but there are unique problems and opportunities facing entrepreneurs.

• His ideal client is a business owner or entrepreneur who is doing more than $1 million EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). A company that has revenue and profits is where Jim can really add value.
• Jim builds virtual family offices for entrepreneurs, which is the wealth management solution that the billionaire club uses to manage their wealth. A family office is where a billionaire will simply hire all the needed tax, legal, insurance, and investment professionals and bring them under payroll for the family.
• Jim learned about the process from a billionaire family that was willing to show him the processes and he decided to help entrepreneurs achieve similar results.
• Every entrepreneur needs to protect, manage, and grow their wealth. Jim helps entrepreneurs in nine different areas under those categories by coordinating the different professionals involved.
• In most situations, the entrepreneur in the middle trying to manage those relationships is the weakest link. Jim’s company takes a central role so that all the players are collaborating and coordinating together to achieve better results.
• Most financial advisors either get paid for selling products or managing assets. Jim’s company does neither, they represent the entrepreneur and negotiate on their behalf.
• Jim believes that the incentives need to be aligned because they drive where you get advice and the results you get. This is why all of Jim’s advisors are compensated with salary and bonuses, this way they are aligned with the client’s needs in a true fiduciary relationship.
• Covid-19 has affected entrepreneurs all over the world. If you were in the right space your business exploded, like Peleton did. If you were in the wrong space though your business suffered. Jim’s company has been helping clients navigate the situation no matter what they are facing.
• One of the lessons that Jim’s clients have learned is that you have to know your numbers, that’s how you navigate hard times like this.
• Entrepreneurs need a great team with a CPA and a tax attorney who are proactively looking at their situation and coming up with great ideas.
• The tax code is complicated and set up in a way that an experienced tax planner on your team is a major asset. You won’t go to jail for screwing up the deductions, the danger is in hiding revenue. There are a number of strategies that you can use to minimize your taxes, but you have to be careful and have smart people on your team to help you implement them.
• Jim was raised by parents that went through the depression, so he learned to be very frugal with money. He had always been idealistic and was good at math and science, so Jim started off as a public school teacher. He did that for five years and learned two important lessons from the experience. The first is that he loved making a difference and helping people, and the second was that he couldn’t work in a broken system. Jim got into financial services and after getting into an argument with the manager of the firm Jim went on the path of starting his own company.
• The basic fundamental truth is that entrepreneurs get rich by being concentrated in a business, but you stay rich by being diversified outside that business.
• Every great investor has a discipline. Jim starts with where his clients are now and then comes up with a strategy to get to where they want to go. This allows them to quickly evaluate investment opportunities.
• Often people look at election results and other economic indicators to try to determine their investment strategy. When it comes to investing, you want to invest on probabilities, not possibilities. Every politician promises a number of changes, but they rarely get turned into law without considerable changes.
• Cash is historically the worst-performing asset class. Try not to get worked up about apocalyptic predictions about the market and avoid trying to predict the future of the market.
• Focus on your business. Don’t think you’re going to get rich from Bitcoin or Tesla stock. Your business is what is going to make you rich and improve your lifestyle.

Mentioned in this episode:

Michael Rozbruch's Tax & Business Solutions Academy

Beyond a Million: The Entrepreneur’s Playbook for Expanding Wealth, Freedom and Time - https://www.amazon.com/Beyond-Million-Entrepreneurs-Playbook-Expanding/dp/1619618222

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