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Discussion:Figured it out--the tax resolution ads

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Discussion Forum Index --> Basic Tax Questions --> Figured it out--the tax resolution ads


Discussion Forum Index --> Tax Questions --> Figured it out--the tax resolution ads

JR1 (talk|edits) said:

October 27, 2009
Finally figured it out. Listening to them again, wondering, ok, so how can they say this? Listen carefully. You and I separate taxes due into two categories: legit and not legit. The Not legit is the CP2000 stuff, mismatch errors, penalty notices, etc. that we regularly handle and clear. The legit debt is owed, and as we all know, there's been quite the stiffening up of actual tax resolutions the past few years, to the point where I personally don't know anyone who's even tried.

What these guys advertise are the unwitting taxpayers who don't have a legit tax debt, which the companies handle for a fee, and get knocked down to nothing. And they blow their trumpets. Well, I, too have a 100% success rate on those over 25 years of practice!

Now we know. Make sense?

Kevinh5 (talk|edits) said:

27 October 2009
I have had several of those then, where the IRS says the taxpayer owes $250,000 based on SFRs prepared based only on 1099-Miscs. When I prepare and the client files the correct return, the actual tax debt is often less than $8 or $10,000. When the IRS accepts the return to replace the SFR, does this mean that the IRS 'settled' for 3.2 cents on the dollar?

JR1 (talk|edits) said:

October 27, 2009
That's exactly how they're selling it. Like I said, listen carefully. They say, "IRS says you owe a bunch of money..." Not that you actually do owe it, merely that IRS says so. Well, every piece of mail from them says that! Misleading big time. Patently false? Perhaps not. Now starting my own advertising campaign.

Fsteincpa (talk|edits) said:

27 October 2009
How bout when the client forgets to give yo one of their brokerage statements and they have about $300,000 in stock sales cause they fancy themselves day traders. They get a notice stating the entire amount is taxable until after we do the amendment and add in the cost basis, sometimes even generating a refund.

Ksnoopytax (talk|edits) said:

28 October 2009
You did save them tax. Time to bump up the bill! I could put quite an advertising campaign up too if that is how those ads work.

Smokeytax (talk|edits) said:

28 October 2009
I plead guilty as well - I botched a partnership extension last April, client got fined ("IRS says they owe a bunch of money"), I got penalty waived under Rev Proc 84-35, now I'm the hero!

That makes perfect sense, JR1.

NMexEA (talk|edits) said:

28 October 2009
But those ads DO send a shiver up the old spine, don't they? I still haven't figured out how they can claim to have attorneys working for them...a lawyer cannot "practice law" through a non-lawyer business entity nor can he split fees with a non-lawyer, employer or otherwise. True, accounting firms use lawyers for IRS representation but those guys don't represent themselves to the client AS lawyers, I don't think. Doing so absolutely constitutes "practice of law".

Joanmcq (talk|edits) said:

28 October 2009
Roni Deutsch is an attorney, so that clears that hurdle. Not sure about the JK Harris's & other sleazeball firms.

Kevinh5 (talk|edits) said:

28 October 2009
I hear that the OIC mills subcontract out the work, so perhaps they subcontract some to attorneys who are in their own practice and therefore legally practice law.

NoVATaxes (talk|edits) said:

28 October 2009
I've never had to do an OIC before. Is there even a chance of success if the application isn't based on doubt as to liability and the TP is not insolvent? How much can you argue based on effective tax administration? Anyone with practical experience?

Kevinh5 (talk|edits) said:

28 October 2009
well, all of the ones I've done have been based on doubt as to collectibility, and I've had several accepted.

I've got one in the works now - she owes about $15,000 and we've submitted an offer of $500. I believe the IRS will accept it, based on the info submitted. If not, she will take her $500 across the street to the bankruptcy attorney in a few more months. Then HE will get to say he saved his client thousands, instead of me saying it.

Wwtaxes (talk|edits) said:

29 October 2009
I'm not the final filer in our firm for OIC's, but I do get involved in the prep work. Personally, I don't see a whole lot of rhyme or reason for what is accepted and what is rejected. I've seen them accept offers without the person being insolvent, and I've seen them reject offers when the person is insolvent, so go figure.

Just turned down a request to handle one that I felt had no shot. I'd pestered this client repeatedly several years ago to make sure the son was paying taxes on his 1099 work, and was assured it was taken care of, and the son pretty much had the attitude that it was none of my business. So I figured he had another preparer. Wrong. The IRS finally caught up with him, wants back taxes (rightfully so), and the son is now gainfully employed. I just didn't see any basis for filing the OIC, but Roni Deutsch was willing to take him on - for a hefty fee of course.

NoVATaxes (talk|edits) said:

29 October 2009
Thanks Kevin and WW for your thoughts. Are there any continuing negotiations per se with the IRS after an OIC is submitted? Or is it mainly preparing the application and once submitted, it becomes a waiting game?

Irsfixer (talk|edits) said:

29 October 2009
The number of practitioners that prepare offers that have no clue about the process really amazes me.

Skassel (talk|edits) said:

30 October 2009
I think it is safe to say that the vast majority of people that dabble in the tax resolution business might be the very worst of any business in the country....except for Congress that is. From the sales staff in the boiler rooms to the supposed tax professionals that haven't got a clue, as Mike stated, it is indeed amazing. The reason that most offers get denied is simple; they shouldn't have been submitted in the first place. I spoke with a woman in Louisiana last week who told me she paid an attorney in New Orleans $25,000 who submitted a zero dollar offer. One problem...she and her husband have more than enough equity in their home to pay in full. So forget that it is just the scumbag firms that I have railed about for more than a decade...there are just as many tax professionals who are absolutely clueless.

Kevinh5 (talk|edits) said:

30 October 2009
I got the letter for the OIC I submitted a week or so ago today from Holtsville - they have received the OIC and will contact me by 12/14/09.

Michaelstar (talk|edits) said:

30 October 2009
Steve - and as you also know - there are also many of us - like me who are not embarrassed to say - THIS IS NOT MY AREA OF EXPERTISE and we refer this line of business to you!

Skassel (talk|edits) said:

30 October 2009
Michael, you know that there are many areas in which I am not an expert as well...and I gladly profess my ignorance. Unfortunately, there are far too many that use their clients as guinea pigs or the proverbial pigeon in the mineshaft...lots of dead pigeons I'm afraid.

Michaelstar (talk|edits) said:

30 October 2009
Your absolutely correct. Those types do the profession a disservice.

Dealing with tax notices on returns I prepared (not often thank goodness...) or even ones I did not prepare (most often) are fine. Preparing an OIC and that type of work needs to be done by the ones (like you) who really know that area. I myself, have no desire to learn or get involved in that area of tax practice.

Taxguy1024 (talk|edits) said:

30 October 2009
NoVATaxes don't just sit back and wait after you submit an offer. Once you send it in, you should hear back within a week or so whether or not it is "processable". If you don't receive that response quickly, by all means follow up and find out where it stands. If they tell you it isn't processable, then quickly gather whatever information they are missing and get it to them. And if it IS processable, the people I deal with who do a lot of these tell me they follow up on it every couple of weeks just to keep track of it.

NoVATaxes (talk|edits) said:

30 October 2009
You guys have really piqued my curiosity. Maybe I should go find myself a guinea pig just to see what the aversion is all about. You're talking like there's dark magic involved. Can it really be that much more tricky than dealing with CP notices or undertaking an audit? I'd hate to discount an area of the practice without experiencing the process for myself.

Kevinh5 (talk|edits) said:

30 October 2009
don't start out right away with guinea pigs. Start out with the pigeons. They last longer.

NoVATaxes (talk|edits) said:

30 October 2009
Thanks Taxguy. We cross-posted at the same time. I have a potential guinea pig pigeon that I'm trying to discourage moving forward because I don't think there's a chance any offer will be accepted. But if he insists, I might just do it to get the experience.

Joanmcq (talk|edits) said:

30 October 2009
Of course Roni took it on...the fee won't be refunded and will end up an installment agreement.

Mscash (talk|edits) said:

31 October 2009
Like SKassel I handle these routinely. My fees reflect the fact that I don't spend two thirds of the money coming in on TV ads and salesmen. My web site costs me a hefty $3.00 per month because I'm a big spender.

The first thing I try to do on a case is get the account in currently not collectible status if I can to get the client off the hot seat. After that it is almost pot luck. Using judgment does not seem to be part of the process. I've had a settlement officer reject an offer where the taxpayer had 400% interest payday loans that she thought should have been used to pay the tax due. She needs to make a drive through the ghetto. That taxpayer is now in bankruptcy and IRS will get zero. Another did not want to allow enough gas money for the taxpayers 141 mile commute but would have allowed even more than I wanted if he moved to the high rent area closer to work. On the other hand, I just got one accepted where $6,300 will settle a $400,000 balance due. The offer examiner wanted $6,900 but I managed to convince her that the taxpayers 12 year old car wasn't worth quite what she thought.

Fletch (talk|edits) said:

1 November 2009
wow, I get a fair number of audits after-the-fact where the taxpayer never showed up for the audit, so the IRS disallowed everything in the 30-day letter. Then I go to appeals (either thru a Tax Court petititon or not if soon enough) and get the legit items approved. Can I then claim that I took a $35,000 tax bill down to $1,500? That never occurred to me. These forums are great!

Bubzeebub (talk|edits) said:

2 November 2009
I'm not very familiar with OIC and tax resolutions. What is the process from the time the taxpayer receives notice to the time a judgement is made and/or settled?

NMexEA (talk|edits) said:

2 November 2009
Hey, Fletch,

Your profile doesn't say whether you are a Tax Court practitioner. I have heard that sometimes enrolled agents, and I would assume therefore CPAs as well, do a kind of Tax Court representation in the process of post-petition referrals to Appeals. THat sounds like a very sensible arrangement to me so I wondering it it's true?

Have you thought about taking the Tax Court exam?

Sandysea (talk|edits) said:

2 November 2009
Always when I file a return to replace a SFR, the clients think I saved them. Not so fast. They just did not tell IRS what deductions they were entitled to. I hate the idea that some mills say pennies on the dollar. Yeah, pennies? For tax owed?

I have one right now that owes about 22K, but due to a SFR. File the return and then IRS knows what they deducted. Simple logic but clients do NOT open the envelopes from IRS and therein lies the problem.

Fletch (talk|edits) said:

3 November 2009
NMexEA,

I am not a Tax Court practitioner. I do not consider Tax Court representation (which I do not do) the same as post-petition referrals to Appeals (which I do). I have no interest in taking the Tax Court exam.

NMexEA (talk|edits) said:

3 November 2009
But it does work that way then, right? The Tax Court refers the case back to Appeals and you handle it there? WHat if the case went through Appeals pre-petition? Do they send it back again anyway?

Death&Taxes (talk|edits) said:

3 November 2009
NMex: you hit it exactly. I have a friend, a probate attorney, who will file the petition if needed, then I attend the Appeals Conference. We have done this three times, twice with non-filers.

Gfisher (talk|edits) said:

3 November 2009
OIC: I've prepared maybe a dozen - try to discourage clients because they're so voluminous and require so much documentation, and most clients who want one filed really aren't entitled to a reduction (you're right on that one). I've had maybe two clients who should have gotten it awarded but have never won one. Perhaps I should start referring these to other practitioners!

Tax Court: I've filed petitions and had the clients sign them themselves (since I'm not an attorney), then I come along with POA in hand when the case is sent to Appeals. Recently, four parallel/related cases were NOT sent to Appeals and trials were scheduled. Ulp! I called the Appeals Officer who signed the letters, and she said that the General Counsel thought the government had a "slam-dunk case" and so it wasn't worth going through Appeals. We talked for a while and she had me send her the entire package I'd prepared for submission to Appeals and she would forward it to the General Counsel with her own thoughts and findings - she actually thinks our case is pretty strong. She didn't have settlement authority, but of course he does.

I would never appear in Tax Court myself; no experience and not competent representation of the client. I would send it to a tax attorney at that point. So far, it's remained in Appeals (I hope these four do, too!) and I could handle them.

I'm glad people have figured those ads out. They always have bothered me - if the money is there to be gotten, I can get it for the client, and if the government is right (a good 60% of the time), money won't be gotten. I never knew how these people could do better than any of us could.

Waynecpa (talk|edits) said:

3 November 2009
This might be somewhat off topic, but I've always wondered about what happens when you have a self-employed taxpayer that successfully goes through an OIC, reducing their taxes from say $100,000 to $10,000. My question is whether they still get credit for social security on their annual statement. I think SSA should be notified by the IRS that the individual did not "pay" the self employment taxes shown on their filed tax return.

Mscash (talk|edits) said:

3 November 2009
They will get the credit. IRS codes the account as compromised.

NMexEA (talk|edits) said:

3 November 2009
Gfisher:

"Ulp" indeed! Sounds like a good reason to take the TC exam. I wonder if being able to handle the client in TC would give the practitioner any leverage with Appeals?

I did a little infosnacking on TC exam prep courses...my goodness! They cost almost twice as much as most State Bar reviews out there!

Skassel (talk|edits) said:

3 November 2009
Wayne, it doesn't matter what happens to the account. Social Security is credited for ALL taxpayers who REPORT self-employed income. Whether or not it is paid is irrelevant and Social Security has no record of it in any event.

Tpasco (talk|edits) said:

3 November 2009
I do OICs, but I won't do it for less than a minimum of $1500 for one year plus $500-$1000 for each additional year, depending on the complexity of their situation, even if it's just a W2 return. The documentation required is too burdensome to do it for less. And in my experience most clients for OIC are, um, not the best at record-keeping.

I only recommend them if people would not have much of anything to pay monthly under the collection financial standards, generally OIC is really only useful to persons with fairly low incomes since the 48-months-of-payments amount was added to the all-of-their-assets amount. Exceptions might be people with moderate income and enormous tax debt. And a lot of times these folks could just apply for uncollectible status and save themselves the money.

Sometimes I recommend OIC for other situations, but the facts have to be fairly unique.

In my experience OICs are dealt with fairly promptly, I usually get notified within a month or two, and then they usually want additional documents within short periods, two weeks or so. I've had a hard time getting the actual closing letter, though. I usually have to call several times and it might take months.

Irsfixer (talk|edits) said:

4 November 2009
"I do OICs, but I won't do it for less than a minimum of $1500 for one year plus $500-$1000 for each additional year..."

This is puzzling to me at best. The difference in the time it takes to do an OIC for one year as opposed to two years is approximately 2 seconds - that being the time it takes to type the additional year on the 656. Additional years take even less time since they only require the typing of a dash between the range of years. Of course if you have a couple responsible for differing years, it may require another 656 - but that only takes an additional 10 minutes or so. Your pricing strategy makes me wonder about the rest of your post.

The time it takes to do an offer does vary for each taxpayer - but the number of years they owe for is not one of the significant variables.

Kevinh5 (talk|edits) said:

4 November 2009
well, let's at least give her 8 minutes to pull a few transcripts. In any event, I don't find her fees to be out of line with reality.

Skassel (talk|edits) said:

4 November 2009
I happen to know that Mr. Fixer's fees are incredibly reasonable...to put it mildly. In fact, I have implored him to raise his fees many times in the past. That said, I agree 100000% that fees have nothing to do with the number of years for which one owes. Can you imagine what the fees would be if that taxpayer was an out-of-business payroll tax case with 20-30 plus periods owed?? A fee of $10,000 or more may well be justified based on other factors, but surely not on the fact that 20-30 periods were owed.

Irsfixer (talk|edits) said:

4 November 2009
I was not really saying anything about the amount of the fees - just the basis of them. It makes as much sense to vary fees for an OIC with number of children or hair color. I don't discuss my fees publically but Steve does know generally what mine are.

Death&Taxes (talk|edits) said:

4 November 2009
Sunday a week ago, the phone rang at 10 am in my office. Thinking it was my wife, who was traveling, I picked it up. No such luck. A cold caller from the Philadelphia suburbs who found me in Directory Assistance. He went on about his problems with a Levy and his efforts to handle it himself. I told him collection work was not my speciality and gave him a name or two in the area, but he was such an admirer of Mike.....'IRSFixer is the one guy I would love to use."

Then he went back to say he would be trying to see the R.O. the next day, despite my warnings.

Irsfixer (talk|edits) said:

4 November 2009
I certainly appreciate those kind words. There are so many snake oil salesmen out there (read TV advertisers), charging an arm and a leg, I think most people think representation is out of reach for them. They also think it cannot be justified unless they owe tens of thousands of $.

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