Tax Resolution Success Show

Larry and Michael go back nearly twenty years. Larry began the American Society of Tax Problem Solvers to specifically foster education in the area of tax resolution. It’s a place where practitioners can learn and also meet other people in the same industry as them.

[4:10] What is tax problem resolution? Simply put, if someone has a problem with the IRS, a tax resolution specialist can come in and solve that problem.

[6:35] Larry’s company was initially doing tax resolution work whenever it came along in between tax preparation cases. At that time, tax resolution wasn’t really a thing that people could do professionally but the jobs they did motivated them because it was difficult for people to get the answers.

[8:15] Larry remembers that the first tax resolution clients he worked with had come from other tax preparation companies, how in the process he learned how different the work was and how surprisingly good at it they were.

[9:50] Larry was thinking the IRS would waive penalties in light of the coronavirus pandemic but probably not push back the filing date. At this point every firm is playing it by ear as the situation is developing and changing each day. Larry’s company has decided to turn every tax return into a dropoff case in order to avoid getting his team sick.

[13:10] Out of adversity comes opportunity. All of the companies that have been resisting adapting to the updates in technology are now looking at integrating it as quickly as they can in order to stay in business. Working remotely is a real possibility for most knowledge workers, and that includes tax resolution and preparation.

[15:35] Software companies and the IRS are turning tax preparation and tax compliance work into a commodity. There are a number of free ways for people to file their taxes so the compliance side of the practice is almost required to stay in business. Tax resolution can’t be commoditized.

[18:50] The IRS was decimated years ago but Congress recently appropriated over $300 million for a new enforcement fund, which indicates an increase in enforcement over the next few years. Data mining is going to be a new technique for the IRS that is going to really boost their ability to collect taxes.

[22:50] Tax resolution specialists are not in the business of helping people cheat, they are not tax protesters. They are in business to help people resolve problems.

[23:40] Pricing and fees are a major advantage of tax resolution services over regular tax preparation or compliance work. The same amount of energy goes into a $500 tax compliance case as it does for a $5000 tax resolution case. The deferred revenue is also a big benefit of this kind of work.

[30:30] Now is the perfect time to master the skill of closing a deal with a client over the phone. It doesn’t have to replace what you’re already doing, you can do it in addition to having clients come into the office if that’s how you currently do things, but now you have a great excuse to implement phone closings.

[32:30] There are 14 million people in the crosshairs of the IRS’ sights right now, and about 7 to 8 million are classified as non-filers, many of whom tax practitioners look down on as potential clients. Making a judgement on those people is a big mistake. If they understood the potential of tax resolution work and what it’s worth, they would reconsider how they approach these types of clients. All they have to do is understand the rules and build up their confidence.

[40:50] If you want to learn the nuts and bolts of how to resolve a client’s tax resolution problem, go to the American Society Of Tax Problem Solvers. If you want to learn how to get the client in the first place, go to rozstrategies.com.

[41:50] One thing that many tax practitioners don’t realize about tax resolution is that the deadlines are more flexible, and when you combine that with the ability to really help people solve some intractable problems while making more money, it becomes a very attractive option for anyone considering the business right now.

[44:15] Tax problems affect all areas of life and the vast majority of them are the result of people’s difficult life events that got them into trouble. Tax resolution work is a great way to help people, help yourself, and have a much more comfortable practice.

[49:30] The best way to get started in the tax resolution business is to come to Larry’s two and a half day bootcamp. All of that information can be found on the American Society Of Tax Problem Solvers website.

[51:25] Michael and Larry have both seen the two most recent economic upheavals in living memory and both times were some of the highest revenue periods in the business. The next year is likely going to be a similar opportunity for tax resolution specialists.

[50:50] How the client...

Christine and Michael go back all the way to 1998, when Michael was buying huge numbers of names from TaxLienLists.net. Christine started out in 1996 while working for a trucking company, where a friend shared the latest technological advance with her later known as the World Wide Web. One of the family members came up with the idea of collecting government records online, and this developed into a business selling that information to CPA’s, enrolled agents, and tax attorneys. In February, Christine will have been with the company for 21 years.

[7:00] Tax collection enforcement tends to swing back and forth like a pendulum, and it appears that we’re in another swing towards more enforcement with the IRS receiving an additional $200+ million in funding.

[8:40] In the late 90’s, the enforcement agents were a little overzealous. In many ways the IRS was ruining the lives of regular people because they got behind on their taxes. It was around that time that the IRS had to change their image and try to be a bit less intimidating. This change was groundbreaking for tax resolution businesses and that’s when Christine’s company really started to take off.

[12:40] Levies and liens are the two main drivers of clients to tax resolution businesses, so an increase in those means a lot of additional business for us. The IRS benefits immensely from tax resolution companies because they help collect on their behalf, which is one of the reasons that it’s such a good business to be in.

[16:00] There was a major decrease in lien filings starting in 2009, but even with that happening, Christine was still seeing plenty of successful tax resolution companies taking off.

[17:45] Federal tax liens for 2019 will likely be around half a million, similar to the last two years. Christine’s company has been able to combine the list of federal tax liens with the individual state’s tax liens, which has enabled tax resolution companies to market directly to those people. Marketing to state tax liens is a great way to get to the clients’ federal problem and get ahead of the competition. Marketing is about numbers: when the number of federal tax liens is low, go after the list of state tax liens too.

[20:00] A lien is public record, which is why federal tax liens can be compiled into a list, unlike levies which are not. There is no set standard for individual local courthouses where liens are filed. What this means is that Christine’s company has to be very flexible when collecting records.

[24:10] As a list broker, Christine collects the same information that the IRS has on file. Name, mailing address, the type of lien, and the dollar amount of the lien that was filed against them for that year. They always remind their clients that the information on the lists are just the tip of the iceberg and most people with a current lien against them owe more.

[27:30] The information Christine collects is really geared towards direct marketing, but there are companies that also use email to reach out to prospects. One thing to keep in mind is that you should expect to mail multiple times to get the best results from your marketing. If you do the mailing right with an accurate and fresh list, and a good mail piece, you should be able to get a 0.5% to 1% response rate.

[32:10] Part of the service includes a personalized letter containing the prospect’s information, as well as brochures, business cards, and other marketing pieces that you can add to the package. Christine breaks down the math on purchasing a list with 1000 names on it, where with a good closer most tax resolution companies should be able to close 50% of the people who call in to their business. The typical ROI for this kind of marketing is anywhere from 400% to 2000%.

[36:00] TaxLienLists.net services less than 55 customers nationwide and they have limited the number of clients for years, but now, with the increase in the number of tax liens, the doors are open.

[37:30] Follow-up mailings can improve those numbers even further and potentially bump the response rate up to 1% to 2%, but you have to keep in mind that no marketing list is perfect. There will always be a part of the list that’s too old or inaccurate. Part of the strategy is to record the undelivered mail as it comes back and to remove those addresses from follow-up mailings.

[43:45] Christine’s company tracks the results of their best customers over the years and what they’ve found is that follow up mailings produce paying customers. When the customer calls you, they are ready to do business. When you start follow-up mailings, a lot of the competition drops off because they only mail once.

[45:00] Sometimes a mailing can generate no calls initially, but 9 months down the road the prospects start reaching out. Follow-up mailings are seeds that you have to plant and harvest later. Always include a business card or brochure in ev...

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

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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