Stories of great success in the tax resolution business. Listen to CPAs and Attorneys on how they have added additional revenue, some of them upwards of a million dollars, to their existing practices.
Stories of great success in the tax resolution business. Listen to CPAs and Attorneys on how they have added additional revenue, some of them upwards of a million dollars, to their existing practices.
How To Prepare for the Affects of Covid-19 on Tax Resolution – Paul Colligan interviews Michael Rozbruch
Paul Colligan has switched seats with Michael for this episode of the podcast to ask some very important questions about the future of the tax resolution industry.
[1:15] How do tax resolution practitioners get ready when we don’t have an idea what’s going to happen in the world of taxes over the next 12 months? Michael has experienced three major downturns during his 22 years in the business, and in his experience the years following a downturn are major opportunities for tax resolution.
[2:40] Pre Covid-19, there were 13.2 million people already identified by the IRS as owing taxes. There will probably be another 10 to 20 million more collection cases coming up over the next few years.
[3:15] We are going to see the largest influx of payroll taxes cases coming down the pipe very soon. The IRS is the only creditor in the world that can pierce the corporate veil without a court order, and this may lead to an additional Trust Fund recovery penalty tax case for every payroll case.
[5:00] There were 30 million people that were planning to file on April 15th, but the filing date keeps getting pushed back. What’s going to happen to those people who won’t have the money to pay their taxes once it finally comes due?
[5:55] The IRS isn’t closed; they’ve just reduced their activities, but when July 15th comes around and everything goes back to business as usual, all hell is going to break loose.
[7:10] Michael teaches his members to never take their foot off the marketing gas pedal. When things get slow that’s when you should double down on your marketing to keep your pipeline full. When the floodgates open people are going to be turning online for solutions and if they can’t find you, they can’t retain you.
[8:40] It’s more important than ever to have an online presence right now. Now is also the time to negotiate rates with radio companies as Michael hasn’t seen advertising rates this low for 18 years. Radio stations have inventory to sell and will be looking for ways to raise revenue so incredible deals will be available over the next couple of months.
[11:10] The government is hungry and they’re going to be closing in soon. The tax resolution specialists that embrace marketing and make it the overarching umbrella for everything they do are the ones who are going to profit.
[11:45] Most CPAs and enrolled agents believe that if they went to the best school that it guarantees success, but it doesn’t. In today’s world, marketing is what guarantees success.
[12:35] If you’re in business, you’re in sales whether you realize it or not. Many people have a mindset issue around their business and marketing. They believe their deliverables are primary, but they have to come secondary to the marketing if they want to create wealth and become rich.
[13:15] One of the major opportunities for tax resolution specialists lies in calling their past business clients and helping them understand what assistance and relief programs are available to them right now. It’s also the perfect time to help your clients do some financial planning in reverse and put them into the best situation they can be to minimize their tax settlement. There are a number of tips and tricks that you can do right now with your clients because you have the luxury of time.
[17:05] There are a number of opportunities for accountants to help their clients get what amounts to essentially free money.
[18:30] The SBA/PPE is not a long-term business strategy. If you haven’t done it yet the window of opportunity is closing.
[19:55] The effects of the 2008 recession on Michael’s business lasted for three years. The same is likely to happen this time around. IRS problems have the habit of percolating over time. It may take some time for them to find you, but eventually they will and you need to be prepared.
[21:40] Michael is telling p
Covid-19 and the Credit Management Queen – Angela Setters Bessard
Angela and Michael have known each other for a long time and they’ve been referring clients to each other for years.
[2:50] Good credit is one of the best assets you can have. The US has a unique credit system that allows you to leverage your cash position and grow your wealth.
[4:10] Angela works with both businesses and consumers but she spends a lot of her time teaching business owners to separate their personal credit from their business credit. There are protective measures that business owners can take to keep the debt of their business from affecting their personal credit.
[5:50] Angela had been on her own since she was 16 where she was working three jobs, one of which was as a cashier as a bank. She quickly moved up to working as an underwriter where she was exposed to a number of people who needed credit help, which she would provide. Ironically, helping people with their credit and being one of the top underwriters in the company was also the reason she was fired.
[9:45] What are the consequences to a consumer when it comes to credit? The end result is generally very simple, the lower the credit score the more interest that person will pay which will end up costing them considerably more money. When it comes to big purchases, a low FICO score can cost someone thousands of dollars.
[11:55] Not everyone has the same credit history, so improving your credit score isn’t a standard process. There are a few basic steps that Angela walks her clients through that improve their position and allows the algorithm to take over.
[14:00] Good credit practices shouldn’t be a secret but oftentimes, even when someone knows the steps, they will still need help with the process. That’s why people hire Angela. When she works with a client, she creates a custom strategy for them for their team to execute on their behalf.
[16:15] There are a lot of companies that do credit repair, but they are more interested in increasing the number of customers rather than improving customer’s results. There are easy ways for consumers to dispute the information directly with the credit bureaus but that only goes so far without personally working with someone at the company.
[18:15] Credit repair really involves you taking the time to understand the root cause and going directly to the creditor and working with them to remediate the problem. There is a lot of work that goes into how Angela assists her clients which is why she gets such great results for them.
[20:00] Angela was asked to be a mentor by a company that sold credit repair software where she discovered the general problem with the industry, which was that the main priority of people getting into the business was money, not on improving the customer’s lives.
[21:45] Every bank has a relationship with a credit bureau which is why they will only usually work with one or two instead of all three.
[23:00] The way most credit repair companies work is very frustrating to people because the derogatory records often come back when not dealt with properly. In the end you get what you pay for.
[24:30] Angela’s ideal clients are students who need to know how to better use their credit. Most people don’t understand their credit, and they’re afraid of what they don’t know. The best clients are the ones that are ready to learn from what they are going through.
[27:50] Clients with student loan debt are on the rise. One of Angela’s passion projects is a financial literacy course that teaches young adults how to understand what they are signing up for in terms of student loans and how to minimize the interest they end up paying.
[29:55] If your credit has fallen since the advent of Covid-19 there are a number of programs available that can help. It takes a little work but there are ways to defer payments to your creditors that can make the situation a bit better. The trou
Coronavirus and Tax Resolution Opportunities with Larry Lawler of the ASTPS
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
Best Practice IRS Tax Lien Marketing with Christine Lacina of TaxLienLists.net
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 cl
Predictions from the Godfather of Tax Resolution - Robert McKenzie
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 serv
Tax Season Found Money with Jeffrey Schneider
Jeffrey Schneider has a tax and accounting service, but he also has a separate company that helps taxpayers with tax resolution and solving their IRS problems.
[3:40] When Michael presented the Audit Protection Plan, the first thing that Jeffrey thought was “free money.”
[4:30] Michael originally got into the tax audit protection business when he was running his tax resolution business. He was running a separate business of his own selling audit protection plans that generated over $9 million in revenue over three years. It was an opt-in plan at first.
[5:30] In an opt-in plan, you have to choose to take the option to join the program. With an opt-out plan, you are telling the client they are enrolled and they have to choose to opt out. The way that Jeffrey structures his audit protection is opt-out.
[6:45] Since implementing the plan in 2017, Jeffrey offers the plan to every single client but his practice is a bit atypical. About 80% of the people that turned it down were over the age of 75. He still has a very high acceptance rate for his clients and the program has generated over five figures every single year so far. The retention for the program has been over 96%.
[9:40] Jeffrey made more money this tax season than in the past because of two factors. The first is that he has raised his fees across the board and the second is that many of his clients are self employed in some form and those clients are automatically enrolled in the Gold plan.
[10:50] The Audit Protection Plan covers three major things: responding to notices after you file the return, audit representation in the event of a full-blown audit, and tax identity theft. It’s also customizable and has three tiers of membership.
[13:40] When Jeffrey sends out the engagement letter, he includes a nicely designed brochure that explains the plan and conveys its benefits. He positions it as a cheap insurance plan. The brochure is also present in his waiting room and conference room so new clients always see it. Since it’s automatically included on the invoice, he has had an average 90% acceptance rate.
[15:50] The Audit Protection Plan system includes all the documents you need to implement the plan in your tax resolution business.
[17:25] You’re charging them on the invoice but it’s not mandatory. If they opt out, the charge is removed. People make mistakes, and the plan is an easy way for your clients to protect themselves from small but costly errors. The plan is also easily adjusted to whatever your existing fees are. The more you charge for your services, the more you can charge for the Audit Protection Plan.
[22:45] For the first two years, Jeffrey kept the plan priced at exactly what Michael recommended, but he raised his prices until people complained. The value of the plan still far exceeds the expense for the client.
[24:00] You make so much more money by having the plan in place than not having the plan and then charging people separately. Before the plan, Jeffrey would often work for free providing similar services but he tracked his accounts very carefully. The costs involved in handling the services were not even close to the amount of revenue generated by offering the protection plan.
[27:15] You are not splitting the proceeds of the plan with anyone, unlike many out of the box tax software programs.
[28:05] Jeffrey is going to make about $12,000 net revenue off the 110 tax returns he will do this year. Imagine how much you could make if you had a business that processed 200 or 300 tax returns.
[30:30] Jeffrey’s Gold plan includes a couple of extra features beyond what Michael recommends, including additional schedules and expedited response times.
[31:30] The people who don’t want the plan are required to sign a client disclosure form that explains they will pay the hourly rate for any work done outside the scope of the r
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