Introductory audio: Liens, levies, wage garnishments, back tax debts of all kinds. If you’re facing any of these tax debt problems, stay tuned for the next 30 minutes. This is the Levy Tax Help Show presented by Levy and Associated of Delray Beach, tax resolution specialists. Call Levy and Associated 24-hours a day, seven days a week with all of your civil tax questions, 1-800-TAX-LEVY, that’s 1-800-829-5389. Now, the Levy Tax Help Show.
Lawrence: Good morning South Florida and welcome once again to the Levy Tax Help Show. This is the post Hanukkah show, the pre-Christmas show, since we have that coming up very soon on Monday, and if you are listening on Saturday, you are going to need last minute runs to the mall for any last-minute shopping, this is it. If you had Hanukkah this week, hopefully everyone ended up taking care of the kids and your loved ones, but we are not here to talk about the holidays, although we are going to tie them in a little bit.
We are here to talk about what do you do if you have IRS tax problems. We are also briefly touch upon what has been newsworthy this week with the tax reform, but before we get started let me introduce everyone to a couple of famous people. The first one, and I will start with him just because he is a little bit older to give him respect, the gentleman who used to work at the IRS for over thirty years. He used to be a revenue officer. He was in the offer and compromise group, the very talented former IRS employee, let’s welcome back again to the show, Greg Mahaffey. Good morning, Greg.
Greg: Good morning, Lawrence. How is everyone doing this morning?
Lawrence: Everyone is great, as we always are. We are upbeat. I have one of my bosses. I have three bosses in this world. There’s only three. I have my wife and I have my two boys. They run my life, as most gentlemen have their wives and their kids (excuse me, ‘wreck’ their lives, I am coughing on that one), but let me introduce everyone to Mr. Jet Levy, who is in the house.
Jet: Good morning south Florida.
Lawrence: How are you doing, Jet?
Lawrence: Yes, did you have a good Hanukkah?
Lawrence: Are you looking forward to a little Christmas action too? Sort of, kind of? Well listen, being Jewish, you can say you are looking forward to Christmas, that is politically correct, but even though we celebrate Hanukkah we still wish everyone a health happy holiday season out there. Why don’t you give the 800 number really quickly, before we start? Give me the number nice and loud.
Lawrence: And the local phone number? Do we know that one? Let’s see if it is on that business card, right there.
Jet: 561 865 7800
Lawrence:And the 800, one more time.
Lawrence: And, is Levy really your last name?
Lawrence: How do you spell that?
Lawrence: You must make the grades in spelling. You are getting old, are you?
Lawrence: Do you know how to spell Levy?
Lawrence: That is pretty impressive, I love that.
Let’s move right along. Let’s talk a little bit about what Greg did during this past week. We had a client that owes the IRS, the business owes payroll taxes. I don’t know the exact amount, Greg, but, I think, it is well over $100,000. You had called, asking for a little bit more time from the revenue officer. You called on the Friday and you called again on the Monday, and the revenue officer did not get back to you, and unbeknown to you, there was a levy that was issued. ‘Levy’, like my last name, but I saw that earlier this week you were able to get that released. Can you walk everyone through what went on there and, as a former revenue officer, why you think this other revenue officer didn’t give you the courtesy of a return phone call saying, ‘I am not going to grant you any more time’? I mean, you left a couple of messages and I know you have now got it worked out, but, so that everyone understands. Levy, like my last name, that is a tool that the IRS uses to get someone’s attention. IRS has deadlines and if you don’t meet the deadlines they really have no choice. The IRS are not as bad as people think they are. They have a job to do and like in everything in life, you can go out to a restaurant, and I talk about this all the time, you can go out to a restaurant and the restaurant is going to maybe have great food, but you may get a bad waiter, or a bad waitress and it could ruin the whole experience, even though it has good food. It is the same thing with a revenue officer. There are nice ones, and there are certainly ‘not so nice’ ones. So, Greg, as a former revenue officer that used to work there, how long were you there? Thirty years, right?
Greg: Yes, over thirty-two years.
Lawrence: By the way, you were in the navy and you were in the Gulf war. We want to thank you for your service to our country, and thank you for keeping us safe. How long were you in the Gulf war for? You were called up from the reserves, right?
Greg: Yes. That was back in 1991. That is when we knew how to fight wars the right way. I was only there for three months before we got out of that mess.
Lawrence: Got it. Alright. Well, we are glad to have you back and to have you on my payroll, and glad to have you safe and sound. I would rather have you in the Levy Office, safe and sound, than on a navy ship. Were you in the Persian Gulf?
Greg: Yes. I was in the northern Gulf area off the coast of Kuwait City in the middle of the oil slicks and mine fields. In fact, we even hit a mine that didn’t go off. Thank God for crappy technology on their part.
Lawrence: Well, thank God for that. Otherwise, we wouldn’t have you on the Levy team. I had never heard that story. Greg, never ceases to amaze, but as a former revenue officer, when you called this revenue officer and said, “I need some more time, we have got to give you accurate financials, please don’t levy”, and they did. I never even talked to you about this, this week because it has been a really busy week here as we wind up the year, but how did you get that levy released?
Greg: I just called his manager and I explained what happened and the sequence of events. I chalked it up to probably miscommunication. He said, and what was documented in the history was that he left me a voicemail message, which I never got, and I explained that to the group manager. Anyway, when all is said and done, this manager knows me very well. He knows that I get these people back into shape. I get them current and get an acceptable resolution, so he gave me the benefit of the doubt. and I had that release of levy faxed over to me within ten-minutes of my phone call.
Lawrence: Well, I will tell you something. That is really incredible, and it is a nice story. It is just, even if he left you a voicemail back, which is surprising. That is why I am always a big person to want to document the file. Send a fax, “We left you a message, please call me back”, right. Even if he called, it still doesn’t add up to me, but again, I am happy that a manager, and that is what it takes oftentimes to navigate through the red tape of the bureaucracy, if you will, of the IRS. It is remarkable. So, you had that levy released and faxed over to you early this week. I think, if I am not mistaken, it was on Tuesday? It could have been on Monday.
Greg: It was on Tuesday that I got it. I called them on Monday and had the release in my hands-on Tuesday.
Lawrence: Great. Well, there is another success story. Again, a lot of people wouldn’t know what to do or how to do it and that is why you want to hire a professional to help you navigate through these things.
I want to switch gears onto another success story. I am looking at a letter dated December 13th. So, it is relatively recent. This is from the IRS out of the Austin, Texas campus. This was for an offer and compromise. December 13th, 2017.
“Dear (taxpayer), We have accepted the offer and compromise you signed and dated September 30th, 2016.”
Then, a modified addendum. So, about a year and four months, not even, it took to get this offer and compromise from start to finish. I don’t know the exact amount of how much this taxpayer had owed, but I can tell you this date back to 2006, 2008, 2009, 2010, and 2011. Both payroll tax, which is called trust fund, and income tax liabilities. In the offer, the offer amount was just over £12,000 that the IRS accepted, and I am going to try and find for us here how much was actually owed in total at the time.
Greg, an offer and compromise is a great tool to use if you qualify. We were talking to a client earlier this week. The business owes, I want to say $800,000 and the individual trust fund portion is about $400,000 to $500,000. Can you explain the background behind an offer and compromise, as I am trying to find out how much this lady had owed in totality?
Greg: An offer and compromise is basically where you owe a lump sum of money to the IRS, to the Federal government that exceeds what they project they could ever collect from you. So, instead of beating on you for the rest of their lives without parole, so to speak, and possibly going into extensive litigation, they have the offer and compromise program setup.
Basically, you offer them a sum equivalent to you net equity and assets and your ability to give them an installment agreement. In short, it is a business decision by the IRS.
How much can we get from this given taxpayer over the lifetime of these taxes that is left here?
Is the taxpayer able to offer us a sum that exceeds that amount whilst staying current?
That is the important thing, staying current. So, when you become a client here at the Levy team, the first thing we do is we fix your tax problems going forward. We ensure that you never have tax issues ever again. We fix it right the first time. Unlike a traditional law firm that hopes that you will default later and have to rehire them later, and spend even more money later. We don’t work that way.
Lawrence: Sorry, Greg, let me interrupt. I just found it. Sorry, but you are correct. We fix the problem, stop the bleeding, but with this particular taxpayer, we were first able to get her, a female, into what is currently non-collectible. So, September 2016. I am reading a letter out of the IRS Memphis, Tennessee Office that says,
“Dear (taxpayer), This letter is in response to your phone call on September 16th of 2016 about the unpaid balance case for the period”.
So, it was just over a year ago. Then, it says,
“Case closed, currently non-collectible. We determine that you cannot pay the money you owe at this time. We temporarily closed your collection case for the period listed above. However, you still owe $111,000.”
So, this lady owed, probably now with interest, around $112,000, if not more. She settled for literally $12,000 and change. So, this was just about 10 cents on the dollar, but I want to be clear. Greg will be clear as well. It does not always work like that. Every single case is not going to be an offer and compromise. It just doesn’t always work like that, but there are options, whether it is a payment plan or putting you into an instalment agreement. There is a variation called a partial pay installment agreement and there are also options to consider about penalties being abated. So, you have various options out there and the offer and compromise are just one of them, but depending on what you qualify for and that the numbers, your financials will dictate which way you can go. So, on this case the lady owed $111,000, $112,000 or $115,000, who knows around the dust settling, and was able to settle for literally almost 10 cents on the dollar. There is no specific arithmetic behind it, but again, this is why you hire someone.
Mr. Jet, can you give us the local phone number one more time, please?
Jet: 561 865 7800
Lawrence: And, the toll-free number?
Lawrence: I want to talk a little bit about one thing. I had a client come into the office. We are right here on Delray Beach. Jet, you are sitting right in Delray Beach, right?
Lawrence: Rather here, than in snowy Michigan, right? There were big snow storms last week, right?
Lawrence: So, have a good break, enjoy the sun, doing a little bit of work on the Levy Radio Show, but you are happy to hang out, but we are located, and we want you to come on in. We are open seven days per week and we are happy to meet you on Saturday’s, Sunday’s, and even Christmas day as we are going to be available to meet if you like, on Monday. Our office never sleeps. We are on Federal Highway about half a mile south of Linton. We are in what they call ‘car dealership row’, right across from the Toyota dealership and right next to Enterprise, Rent-a-car. The Levy bench is deep. Jet, let’s see if you know? We have the former IRS revenue officers, right?
Jet: CPAs, attorneys.
Lawrence: The EAs, enrolled agents, right. So, Greg is actually, what we call, an EA. As a former IRS employee, you get what is called and EA card, an enrolled agent. There are also people here that have taken the test to become an enrolled agent. So, like Jet said, we have the CPAs and the EAs. Let’s talk about one more thing, Jet, because I had a client in on Wednesday morning, very early. For us, actually that is alright because we are a 06.30 AM start usually. At about 8 o’clock this guy came in, and if you are listening you will know who I am talking about, and he said, “I want to tell you, I loved how you talk about your Dad a couple of shows ago”. That would be your grandpa and I don’t know if you really remember him because you were pretty young when he passed away. Do you remember him at all?
Jet: A little bit.
Lawrence: Alright, so, let’s talk about him for a second. As you can tell, I am a pretty down to earth guy and, I think, I am just a normal guy. I am a husband, I am a Dad, right? That is what you call me? The last time I checked you called me ‘Dad’.
Lawrence: Come on, speak up a little bit, we can’t hear you.
Lawrence: You command me, “Do this, do that, Dad, jump”, and I say, “How high, right, that is how it works”. I am a Dad and I am a husband. Obviously, I own the business, but the client thought it was really nice how I talked about my Dad. I always want to speak about him as much as I can because if it wasn’t for him, if it wasn’t for (not only) what he taught me as far as business. and as far as doing the right thing, and as far as making sure that we help people. What we do is, we help people. Greg, you knew my father away back when, correct? When you were on the other side of the phone from him…?
Greg: Yes, I had known him for many, many decades. Literally, decades.
Lawrence: Right. I always say, “Everything great about me and good about me, I could attribute to my father. Everything that is not so good about me, I think, it is my fault”. Jet, I hope, please God, that in years to come, you speak highly of your Mum and your Dad, that would be me, right? Also, to know how much we try and we care, but how many times… I was going to say that was really nice of that client to bring that up. It means a lot because we do care. We take the time to text and to respond over seven days per week. I really pride ourselves on our customer service. We can’t always make every single person happy, we can’t always have the offer and compromises, we can’t always get the penalty abatements, but ultimately, you have got to be in a position where you at least get a resolution that everyone can live with.
Greg, is it not a real gratifying experience to see things get themselves resolved. I know that you have gone through some some recent discharges that have been quite hairy and messy. So, it is pretty nice to get that through. Why do you think, when you worked at the IRS, there were a lot of times that a lot of people try to do this on their own which is mind boggling for me? Did you see that a lot, Greg? We have about half of the show to go.
Greg: Yes. I did, and sometimes I had to recommend people go out the and get some help. Especially those people who were struggling to do their own tax returns. It is a nightmare for the self-employed who aren’t familiar with it and who don’t keep good business records. They don’t know the difference between corporations, LLCs, partnerships, BBAs and so forth. They just simply filed a bunch of stuff, not knowing what they are doing. Call (? 00:15:18), so when a client comes in here, we have to educate them not only on their tax resolutions, but also the proper way of running and organizing their business which is why we also offer book-keeping services.
Lawrence: Right. Keep that in mind. I want to read you some statistics. When you talk about why people use the IRS offer and compromise and try and use these things, this was an article and, I think, it is right out of Forbes. So, just to footnote this one, but since 2012,
“The IRS has been much more willing to compromise with taxpayers with overwhelming tax debt than in the prior decade. The IRS section permits the IRS to accept offers in settlement of tax obligations for less than the full amount outstanding. The willingness of the IRS to exercise the authority has ebbed and flowed through the years. In 2012, as part of the ‘Fresh Start’, the IRS generally liberalized the standards it used for accepting offers. The stats for the most recent years…”
This was a few years ago, but in 2012 there was 64,000, and I don’t know if these numbers are accurate as I am just reading what is online here.
- 2012 – 64,000 offers received and 24,000 were accepted.
- 2013 – 74,000 offers received and 31,000 were accepted.
- 2014 – 68,000 offers received and 27,000 were accepted.
It ranges right around the 40% of the filed offers. Now, I saw a statistic that said that the acceptance rates are substantially higher if a professional represents you. Greg, you can probably speak to that as you used to work at the IRS. I will look up that stat, if I can find it.
Greg, how much more different was it when you had someone who knew what they were talking about? It was a pretty substantial difference, right?
Greg: Yes. It was a very big difference. The hardest part about an offer is making sure someone is in current compliance and has systems setup to stay that way. If they are not currently compliant, there is no way that offer will ever be acceptable. I don’t care if the taxpayer was offering 95 cents on the dollar, it would not be an acceptable offer because, as part of the offer and compromise procedure, you have to agree to never again owe taxes in the following five years after an offer is accepted. So, the IRS will not take an offer and then turn around and just watch you default it by owing for a future year. That is why we cover the basics first.
Lawrence: Right, and I also want to talk about this. I don’t know, again they didn’t tell you where this stat is from, but it is from online. I pulled this off earlier this week.
“An average of 40% of the offers and compromise are accepted by the IRS. The core reason being that the taxpayer didn’t properly provide realistic, professional and supportable info. for both financial status projects and valuation of the assets. However, if the offer and compromise is done properly, for example, by an independent accredited professional firm, the taxpayers success increases to 90%.”.
Now I don’t know if that is right. I don’t know where these stats came from. I am just reading you what I see from an online site here, but I would tend to agree that. That your statistics, and your chances of getting a successful case resolution is drastically going to go up if you have someone representing you who know what they are doing. A case in point, by the way, is that Greg started a file a couple of weeks ago. It was a non-profit business that owed over $1,000,000 in payroll tax. Do you know which one I am talking about Greg?
Lawrence: Now, we have transitioned that file to a different POA in the office. I went to Danielle, who has been here for almost nine years. Before we got involved, the taxpayer’s accountant, and I don’t even think it is CPA, was trying to represent the business with the file being assigned to a relatively veteran, more aggressive postured than others, but that is not a good or bad thing, it is just factual, and Greg when you got involved, at least you had actually known this revenue officer for years, and, I think, you also knew her husband, correct? He worked at the IRS.
Greg: Yes. He and I were trainees together back in 1982.
Lawrence: Right. So, you have got a lot of history with a lot of these local revenue officers in your neck of the woods and you run in to the same people over and over again, and you know that going into it that certain revenue officers are going to have a certain disposition and that are going to make life a little bit easier, or a going to make a life a little bit more difficult. You know that going into it, unfortunately. You also know that there are nice group managers, where there are reasonable folks that are in upper management, as what is called TM’s (Territory Managers), and there’s thing that you know after being in the business for literally over twenty-seven years.
This was an interesting case because this nice lady, who has this non-profit, and she didn’t start fifty years ago. She just came into it in management and now has ran it for twenty years or so, but she got herself into a real pickle and she didn’t really have the best advice, whatsoever.
Greg, when you were at the IRS, did you see that quite a bit, where unskilled people, and he may be a great accountant, this guy, but he is certainly not well-versed in tax resolution, and was that frustrating for you? To me, it would be frustrating if I was on your side way back when and it is also very time consuming because you are explaining things to people, but before you answer that, let me have my colleague here give out the local phone number one more time.
Jet: 561 865 7800
Lawrence: And the toll-free number?
Lawrence: Yes. So, Greg, thank you sir, thank you young Levy. Young Jedi. Star Wars, you haven’t seen that yet. Thumbs up from the engineer, let’s go see it.
So, Greg, it was frustrating though, but again, look at these success stories that we have talked about. An accepted offer and compromise just his week, that Levy released just this week. There’s so many things that go on, that a lot of people wouldn’t know how to navigate through and, in fact, I am trying to see if starting at the beginning of next year we can have an article written in a local newspaper because, I think, people need to know that tax resolution exists. Also, that there’s good people, qualified people like the Levy Office that can help.
Greg, when you worked at the IRS, you saw so many people that would fumble and they wouldn’t know. I can’t tell you how many times I would say it when we take over a file for someone, “Who was handling it before?”. The client says, “My CPA”. Well, let’s see what the CPA was doing. We will call the CPA and say, “Hey, did you file a CDP on a 1058?” So, Greg, if I ask, “Did you file a CDP on a 1058” that is so tax resolution basic 101 in my opinion. That is like asking your dentist or the hygienist ‘Did you floss? Did you add some fluoride treatment at your last visit?” That is as basic as your dentist not knowing what dental floss is. So, I said to this guy, recently, “Did you file a CDP on a 1958?” and the guy says, “Can you speak English? Can you speak in normal terms?” I said, “That is normal. Did you file a CDP on a 1058?” This person didn’t know what that meant. Greg, that is pretty scary, isn’t it?
Greg: Oh yes, definitely. I saw it all the time as a revenue officer. In fact, as a revenue officer, I would take lots of extra time educating some of these so called ‘professionals’ out there because they were in over their heads. Like you said, they might be great accountants and they might be able to do depreciation schedules and multi-national subsidiary corporations up the ‘yang-yang’ and get it done correctly and that would spin our heads, but when it comes to collections work they were out of their league and they had no idea what they were doing.
Lawrence: Yes. You know it is sad, but in the Levy Office we have a very deep bench. We are going into the tax season and we have the CPA, and we have the attorneys. All of which function as power of attorney’s. We have the former IRS revenue officers, Greg and a lady named Claire Coffee, like the Coffee that you drink. We just actually celebrated with her for our holiday party, it was great to have everyone together in our offices, but we want you to come on in. We want you to see what goes on. We want you to talk, and we want you to be face-to-face, if you can. If you can’t, and let’s say that you are listening to this in Miami, or let’s say that you are listening to this show in Palm Beach Gardens, or you are all the way pumping, do we go to Tampa? Not quite, but almost. So, we go to the outskirts of Naples. You don’t have to drive across alligator alley, we are happy to do a lot of what we do. I’d say that 98% of what we do is over the phone. In fact, Greg, when was the last time that you had to meet face-to-face with a revenue officer since you have been in the Levy Office? It is very rare, correct?
Greg: Yes, very, very rare. Only once, I actually had to travel to an IRS office. It was that big case that I had on the lady that (? 00:24:02) was trying to setup on the third of a million-dollar assessment that I got her off from.
Lawrence: Exactly, but my point is that it is very, very rare that you have to travel. So, most of what we do is via phone and via fax. You don’t really email with the IRS by the way, it is fax, and it is phone and it is old-fashioned mail if you can believe it, but a lot of it is via phone and that is for the majority of it. So, you don’t have to come on in, but we want you to come on in. You can meet Jet. Right, Jet?
Lawrence: Do we still have you with us, Jet, hanging in tough, in the morning?
Lawrence: Well, we appreciate you taking the time to come on. Let’s finish out the show, because this week, and even Jet has probably heard me talk about this probably, and I don’t know if you have a current events class or social studies, but what is the latest thing in the news these days? The tax reform bill. How are the GOP tax bill and what is going on with it? Is that going to change anyone’s lives? Well, it is going to have a little bit of an impact. I don’t think a lot of impact, but it is going to double the standard deductions. So, if you are in a certain tax bracket, you don’t itemize, you don’t have a house, you are going to get the doubling of the standard deductions. So, a lot of it is going to boil down to four factors: –
- How much you earn.
- Your filing status, meaning single, married, you have kids, you have a household.
- Where you live.
- Whether, or how much you itemize.
So, a lot of these cuts, by the way, are not permanent. There are sunset clauses on these individual income tax changes that end in 2025, while they will keep a lot of the corporate tax breaks in place. Some of this would also adjust with how inflation is calculated in the tax code which would cause a lot of taxpayers getting a cut now, to get a hike in 2025.
We have got about one-minute left. So, there’s hypothetical things that are changing and a lot may overestimate the tax cut that you get. So, speak to a tax professional as to how it is going to impact when all of these new regs. come out. You have to analyze the data from what you have, your income, and what is going to change and what is not going to change. So, if you have questions on any of this give us a call. You want to call us immediately and the phone number for local calls is…
Jet: 561 865 7800 and the 800 number is 1-800-tax-levy.
Lawrence: Do you know, how about the website?
Come and check us out. We are here. We are here to help you to get yourself out of a tax mess and we have the O-Freeze which is the disaster hurricane Irma that is going to be ending in about another month or so at the end of January. So, IRS collections is going to flip that light-switch back on. Before that happens, and before my last name starts coming to your house, bank levies, wage levies, receivable levies, you want to be proactive. Right now, we are still in that O-Freeze, that disaster freeze. You call us at 1-800-tax-levy and the local phone number again is, Mr. Jet?
Jet: 561 865 7800
Lawrence: Signing off for now, you have the famous former IRS revenue officer, Greg Mahaffey in the house along with my boss, my Son, Mr. Jet Levy. Guys, thanks for coming on today. I love that we have the family little twist to it. Merry, merry Christmas and happy holidays to everyone out there. Be safe, enjoy the good weather we are having in south Florida. You take care everyone.