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. We have had a bit of a chill in the air recently, after having a nice stretch over Christmas and New Year, but we are back to somewhat normal temperatures. If you are concerned because it is the New Year and you have some IRS issues that you have to clean up, now is the time to do it. We are getting into tax season. It is basically here and the hurricane O-freeze, the disaster freeze from Hurricane Urma is going to be reversing as of the end of this month. So, for anyone out there who has got an IRS issue that has sat dormant for the past few months because of the hurricane and the devastation that it caused, IRS puts in what is called a disaster O-freeze. We will talk about that in a minute but let me re-introduce everyone again to the famous former revenue officer who used to work at the IRS for over thirty years, good morning Greg Mahaffey.
Greg: Good morning Lawrence. What is new in this great, beautiful sunshine morning? Up here in Michigan it is cold with lots of snow.
Lawrence: Yes. Everything is a lot better than snowy Michigan. Let’s talk about a couple of the files that happened this week. I know there was quite a bit that was going on in the Greg world, to say the least, with some IRS files. In particular, we had a client who came in yesterday, on Friday, and when he came in, he ended up having a mismatch of a W2/W3 which they were assessing him for a civil penalty. He is a commercial electrician. He is a real nice guy and had heard us on the radio. It turns out that he was getting assessed for, he thought between $8,000 and $80,000 in W3 penalties.
Greg, I know you have had some recent success stories where you had the one contractor, again, that you were able to get that penalty wiped it. It was for about $120,000, but can you explain to the listeners out there about this. I saw a letter that his accountant tried to write to the CAWR Unit back in August of last year and this had really got him nowhere. Can you just explain to everyone what that W2/W3 mismatch is, but let’s keep it real brief as we have got a lot to cover today?
Greg: Okay. Basically, the IRS adds up all of the W2, comparing it to the W3 transmittal which is a summary of all of the W2s, and they compare that to the four quarters of 9/41s that should have been filed. If there is a mismatch on those numbers, the IRS doesn’t like mismatches, and if it is big enough you are subject to what they call a CAWR (combined annual wage reporting penalty). That could be quite substantial. Sometimes, as much as $100 per W2 and sometimes even more if they determine that it was potential disregard for the law.
Lawrence: That’s right, and this guy’s payroll, it was a for a tax for 2014. It takes a while for the IRS system to catch-up to find that discrepancy. So, literally, this arose from 2017 (from the letter), but now that has got to be challenged where you are probably going to get that file on your desk, probably on Monday. Sorry, go ahead Greg.
Greg: Basically, what we have to do first is to find out if that mismatch is legitimate, or not. Many times, this can be caused by simple errors such as duplication of W2s, especially if you end up duplicating the entire batch of W2s for all employees. It could be as simple as not filing a 941 return and the IRS is filling the gaps. It could be for these different reasons, but you need it in there to figure out why they are doing this.
Lawrence: Right, exactly, and in this case when we asked what caused this, his answer was that it was just a screw-up from quick book. I said, “Well, who is doing your quick books, and who is doing your payroll? You are an electrician, you are not an accountant”. Oftentimes we see that quite a lot.
I am going to go backwards in the week to Wednesday. A really nice guy came in. He is in the IT business. He also sells and leases copiers, faxes and scanners. He is a real nice guy. He comes in. He hasn’t filed a corporate tax return in, probably, seven or eight years. He brought us copies of the bank statements. They were very neat and clean. He brought us a copy of his quick books file. So, we were able to look at it and he had negative $4 million or $5 million of inventories and we were trying to find out why that was going on. Here is another example of someone who just has not focused on their books. The company grosses a decent amount, but, unfortunately, he had let the books go. In this guy’s case, there is no balance.
Greg, you are actually the POA on this file. There is no balance that is owed, but it is assigned a revenue officer probably for the non-filing side of it. So, now we have to catch-up and do multiple years of the book-keeping, multiple years of the corporate tax return preparations, and there is going to be quite a chunk of work that has got to be done, and the deadline to get those returns in is February 1st. So, literally, imagine having to do book-keeping for five to seven years in a matter of a couple of weeks.
Did you see that, Greg, when you used to work at the IRS? How long were you at the IRS, was it thirty something years?
Greg: Over thirty-two years.
Lawrence: Also, by the way, you were in the navy. So, we wanted to say, ‘thank you’ for your service. Now, we are in the tax season we give a discount to retired military, active duty and anyone in service, and anyone in the police and fire service. We always like to say, ‘thank you’ and that is the Levy way of at least saying ‘thank you’.
Greg: Don’t forget the teachers out there too.
Lawrence: Yes, that was my older son, I forgot about that one. Teachers out there, to say ‘thank you’, that was a pretty big push we had last year when my son was graduating from high school. He wanted to say, ‘thank you’ to all of the teachers from kinder-garden and all of the way up that had helped him. So, he said, “Dad, why don’t we offer the teachers a discount on their taxes so that they don’t have to go to a national chain, and they don’t have to go to someone who they don’t trust, and they don’t know, and may not do it the right way. So, we did a little program where we offer discounts to all educators. It doesn’t have to be a teacher. So that we are clear, anyone that was in the school system from the janitor, like in ‘Breakfast Club’ the movie, to the administration, to of course educators. We want to really expand that. Especially this year, we are going to try to push that hard. It is just the Levy way of saying ‘thank you’ to certain professions out there that, I think, do a great job to protect and serve – the first responders, the military, and the educators out there. Those are really important parts of life that I don’t think, in my opinion, get a pat on the back.
When you were at the IRS Greg, you say, I’m sure, a ton of people over the thirty-something years. You saw a ton of people that just didn’t have their books right. Their books were just a mess. In fact, I am going to tell you, yesterday we had a guy locally come on in, right here in Delray Beach. He had an older CPA, who has actually passed on now, and the return he thought was wrong. The CPA did it. It showed a very large K-1 profit and this gentleman now has a balance due for a significant dollar amount, and he has got multiple years that still need to get filed. A lot of it is because he wasn’t doing his books. It was a lack of book-keeping that was going on. Now, that is on the right track and on the road to getting corrected.
So, Greg, when you were at the IRS, you saw that a lot with people who just had a mess, or a lock of book-keeping. If you don’t have that foundation right, the rest is going to crumble. Is that fairly accurate?
Greg: That is definitely accurate. Also, those people that thought that just because they formed a corporation they can continue co-mingling funds. That is a big ‘no, no’ in the real world when it comes to tax issues. There are many things. There are disasters waiting to happen which is why it is so important to keep those books as accurate as possible. If you can’t handle quick books, and if you can’t handle basic book-keeping, and if you don’t have the time for it, that is when it is time to realize you need help. Hire people like us for book-keeping just to keep the books and records straight so that you actually know what you are making. Maybe you are losing your focus and you need to change operations, but you have no idea until those books and records are straightened out and accurate.
Lawrence: Greg, you are right on that. There is a tremendous amount of people out there that are (? 00:09:56). We have seen it a lot with doctors, quite frankly. We have a tremendous client base comprised of physicians. You name it, every doctor you can possibly imagine, we have, almost literally. It really is amazing because a lot of these clients, doctors and lawyers that we have, and you have seen it all, and we have seen it all, but there’s good people out there that get themselves into jams. It is not intentional. It just happens. Unfortunately, it is just part of the IRS tax resolution world that we live in and you just need to be able to dig out of it. In Florida, the O-freeze is about to be reversed.
Greg, since you used to work at the IRS for thirty years, can you give everyone a little background as to what the O-freeze has meant for the past few months?
Greg: Basically, the IRS has not been contacting taxpayers, reps, or anyone else. They have been forbidden. That was the freeze that was instituted by the federal government to give people time to recover from the recent disasters from last years’ hurricane season. Whether you actually had any damages, or not, is irrelevant. If you are living in certain areas they kept their hands off of you, and did not contact you, and nothing was happening.
So, what we are doing right now in the Levy Office is for all of our Florida, Texas and Puerto Rican clients, we are doubling up and working overtime to make sure everything is good to go because come January 31st, the freezes will be lifting. On February 1st some of those RO’s, especially some of the ones that are in South Florida, will be going berserk with blanket levies left and right for anyone that still has any open issues which are unresolved. (? 00:11:48) to do that.
Lawrence: We don’t know exactly how that is going to happen. If there is going to be this blanket levy issued on February 1st, but let’s be proactive about it so that you do not have to be concerned about my last name. We always say,
“You want a Levy on your side, not one against you, and don’t fear a levy, you hire a Levy”.
That is always a really great thing to live by, “Don’t fear a levy, hire a Levy”, but we haven’t given out the phone number.
Locally – 561 865 7800, or toll-free 800-tax-levy.
We are right on Federal Highway, about a half of a mile south of Linton on the east side of the street, right across from the Toyota dealership, and right next to Enterprise Rent-a-car. We are now open for seven days a week. We want you to come into the office. We want you to stop by. We want you to say, ‘Hello’. We are very down to earth people and that is why we talk about our kids, and I talk about my wife, and we talk about real experiences.
One of the things that people always comment on is that we are just normal people. We are just down to earth normal people and in the tax resolution world, sometimes it is nice to find someone who is so real like that. That is one of the nice compliments that we hear back from a lot of the clients. They say, “Do you know what, you are ‘in person’ as you sound on the radio” and it really makes our day because, ultimately, you feel good about helping people.
Greg, you have been out of the IRS now for a few years. Doesn’t it make you feel good to help someone? Talk about the gentleman who had cancer. He was a doctor, I think, and you were able to get quite a bit of penalties waived from him, right?
Greg: Right, it was actually his wife who was going through cancer treatment and because of her cancer treatments he basically neglected his taxes, he neglected his financial life, he was too busy trying to take care of her and ensuring that she stayed alive. Eventually, she did recover from that, however, it took many, many years of treatments and now there is follow-up care indefinitely going forward from here. So, as a result of that, at the time he was working for a hospital that was calling him an independent contractor. He neglected his estimated tax payments and so forth. So, the first thing that I did was to get him setup on an instalment agreement to get him out of the RO’s inventory and into a solution to start paying his back taxes. He also changed professions and changed hospitals where now he is a wage earner. So, I made sure he only filed with two exemptions and that he would never owe taxes ever again. We set him up for a permanent solution going forward. The next thing is that we got all of the documentation that was necessary. We went back to the IRS. We went for a ‘reasonable cause abatement request’ over several years. Basically, we won on all of those grounds without even having to go to appeals. So, the result was that he saved over $26,000 on his total liability to the IRS. He is now down to his last $11,000 that he is paying off shortly with no accrued penalties and he is happy as ‘a pig in mud’, so to speak. He is very ecstatic over what we got done for him.
Lawrence: That is really incredible. All of these stories are great. This week, in fact, Danielle, one of the other POAs in our Florida office is wrapping up an ‘offer and compromise’ for a client that owes about, I think, $600,000 or $700,000. A contractor in the construction trade. He just ran into some trouble and owes, like I said, I think it is over $600,000. I think, the offer amount for him is going to be around $100,000 to $120,000. So, literally, he could be saving a half of a million dollars by virtue of an ‘offer and compromise’. It is not officially done yet, but in the works to be done. That is what we do.
The phone number: 561 865 7800, toll-free 800-tax-levy.
Check us out on the web: www.Levytaxhelp.com.
I want to also talk a little bit about some of the new tax changes that are going to be coming down with ‘S corp’ and ‘K-1s’, and with the ‘C corp’ with the standard versus itemized deductions. These also support for your alimony payments if you are paying it, it was deductible on your tax return. So, if you pay it, it is deductible. To the recipient it used to be taxable. That is a big thing that is changing. That is no longer going to be available as a deduction. There are some significant things happening. Your schedule A, your itemized deductions as far as property taxes, any State withholding, obviously not in Florida, but those are also going to be capped and limited as well. So, if you have questions on any of the changes that are going to be applicable, pick up the phone and call us.
Telephone – 561 865 7800
We are putting together, and we don’t know where or when exactly, some seminars that we are going to offer locally, probably in Broward or Palm Beach County. I don’t know the exact dates yet, but I will fill everyone in as to when those are going to be done, and we will have some invites. You can reply on an email that we may send out to most of our client base here.
There are changes coming and they are not all going to be bad. Some of the media makes out that it is all bad, but there are some good, and some not so good, but it will all just depend on what you make, and what you have, and your income brackets, and if you own a house and have mortgage interest. There are a lot of factors that play into that.
So, Greg, back to some of the reasons why someone should hire a POA. Why should they not go at this alone? You are not in the tax resolutions world, why would you want to attempt it? A lot of people don’t know that the industry exists. That there is such a thing as tax resolution. A lot of people don’t think that they can afford it. If we are generally speaking, they can. A lot of times, what we are able to achieve, you wouldn’t know what exists. I am going to give you one example. This is not an IRS issue, but it is a State situation.
There is a client that we had that the State was really pushing hard. It was not Florida. It was a different State. They were really pushing hard to get into payment arrangements. The client could not afford it. The client said, “Well, I never knew that I had any other options. I never knew that this particular State has an ‘offer and compromise. I never knew that an ‘offer and compromise’ was an option”. I said, “Well, that is not their job to give you what your options are, they are there to collect the tax”. They are not going to say, ‘Hey, maybe you should look for an ‘offer and compromise’ and see if you qualify’. So, Greg, when you were at the IRS, was the protocol to try and collect the tax or would you, and I know you are reasonable and smart, and always thing, and quite frankly, I thought a reasonable guy at the IRS, but were you saying to the client, ‘Hey, you may want to file a 656’. That really wasn’t what your job was, is that correct?
Greg: Well, since I was an offer specialist for three of my years, I was well-versed in finding a total solution to a taxpayer’s situation. When I was at the IRS, and this is the way the IRS is supposed to work, the most important thing was making sure and identifying what the problem was, how did this taxpayer get into trouble, and what is it going to take to keep him out of trouble going forward from there. Once you fix the basics, then we can go back, analyze the financial situation, and determine what is the best, most fair solution to taxpayers and the government. What would end up with a ‘win-win’ solution for everyone involved and making sure that we don’t leave the taxpayer short which would cause him to default on the agreement, or at some other emergency.
Lawrence: Right, but Greg, out of fairness, you were the anomaly. You are a very reasonable, honest, sincere, and caring guy. Once of the stories that I always tell is that after you had your open-heart surgery, you actually called our office. I will never forget this because I happened to be there on a Saturday. You were literally in your hospital bed, working files from your hospital bed. I don’t know if you remember that, do you?
Greg: Oh yes. I remember that. It was a terrible internet service for Wi-Fi at the time at the VA Hospital.
Lawrence: Now, you work for me, but ultimately, not everyone is as caring. So, now, in your travels as a POA I am sure you have seen plenty of revenue officers, and plenty of ACS reps, and plenty of offer specialists even, that are not always going to look out for the taxpayer, but that is not their job. They work for the IRS. You work for me and you work for the client now, Greg. So, isn’t it critical and very important to have someone advocating for you?
Greg: Yes, definitely. Unfortunately, not every employee at the IRS, or any States work the same way that I did. I looked at the long-term solution because I did not want to work the same case twice in my career. I wanted to make sure we fix it right the first time. Not everyone at the IRS likes to do that. Some ROs have been so jilted they are actually quite cruel at times and don’t care. We prefer, and what you need is, a representative out there who will care about how you got into the problem, what it is going to take to fix it and keep you out of the problem, and then come up with a solution on the back amounts. There are many, many, many options out there. The average person has no idea what options are available, and not all IRS reps are even aware of all of the options available. I was a specialist in 3 – 5 different major areas of the collection division within the IRS. I was well-versed in many options that the average person at the IRS is not aware of, much less the taxpayer. and much less the CPA. Does the CPA know anything about the spouse? No!
Lawrence: Let me interrupt you, we just had right here in South Florida, I think, it is in Broward County. We ended up having a 100% win on. I should try and have her on. A woman from Broward County. Sorry, Greg, go ahead. You are right, CPAs don’t know that.
Greg: That is right. There are differences between independent contractors and employees. Maybe, whoever you are working for out there is illegally calling you an independent contractor when you are definitely an employee. You have rights out there and you need to know what the options are. You need a professional out there who can guide you and make sure we fix it right the first time. We will represent you, we will do the right thing for you, and we will advocate for you, and be professional.
Lawrence: Right, you do. That is so important. Just so that people know, you can handle a file, Greg, where a taxpayer, or business individual owes $20,000 or $30,000, but you are just wrapping up now a client that owes over a million dollars. So, the numbers range. The person who owes the $20,000 is just as concerned as the person who owes the million dollars. I was actually in a meeting on Thursday afternoon with a couple of ladies. They were business owners and they were saying that they just can’t believe that we owe $40,000 or $50,000. I said that we were just talking to this other gentleman earlier, a doctor actually, and he owes $800,000. They said, “Oh my God, I don’t know how they can sleep at night”. Our job is that we want you to sleep. So, the gentleman that is in the IT businesses, as an example, I talked to him for 24hrs. That was a three and half hour meeting on Wednesday of this week. I talked to him on Thursday around lunchtime. I said, “How do you feel now, 24-hours after hiring us?” He was just thrilled. He was so happy. He was just so thrilled and happy with how everything was going. It was really just a nice situation.
Greg, you saw that. You know, over the years, that there were people who were just so happy to be done since you have worked for us. They send testimonials and say how great and how happy they are. It is such a good feeling to hear that. It should make you feel good. You worked at the IRS and now you work at the other side of the phone, but doesn’t it make you feel good with you and your family, and your wife to go home and know how much you help people?
Greg: Yes. Basically, it is the same way I used to feel at the IRS too. I never really liked having to enforce against taxpayers, but with some taxpayers you had no choice there. They ignored you, they purposely went out of their way to avoid paying. They hid assets. I worked some of those cases in which they would put things in their wife’s name. They live the lifestyle of the rich and snobbish out there and think that they were above paying taxes. They didn’t want help, they didn’t care. To them it was a big game. Other taxpayers, the vast majority of them, do not fit that realm. They just got behind for one reason or another and they just need help. Those are the people who I love to help on both sides of the table.
Right. So, that is nice and that should make you feel darn good. It is actually refreshing to hear that, that is how you used to treat people. I will tell you, because we were on the receiving end of your professionalism, you were always like that. You were always reasonable. In fact, one of the files that you ended up working before you retired was a large dollar file. I think, it was multi-billions, and you were just reasonable, and you handled it, but not everyone is like that and that is part of the concern that exists. It is that not everyone is going to have that reasonable approach, like Greg Mahaffey does. That is where you want to have people that know what they are doing. You want the best team on your side. You want experience. We have a very deep bench in the Levy Office. We have been around for a long time. We have a very good set of staff. Our accountants are incredible. CPAs stated. We have two former POAs, Claire Coffee and, of course, you. Claire was at the IRS for over thirty years. She was great. She was in the offer group for the last ten years of her career. So, it is really incredible to have such a nice team. Our administrative staff is awesome, I can tell you. Now, it is tax season. Come on in on Saturday. You are going to see the whole crew in the Levy Office on Delray Beach.
Telephone – 561 865 7800
Give us a call. We are available to you over seven days of the week. We want to help you. We want to make sure that your tax problems go away. We want to make sure that you are all in a good frame of mind and want you to be able to sleep at night. We have got a long weekend, and the IRS is closed on Monday. It is Martin Luther King Day. So, it is a great day for us. We get a lot of work done. We want the meetings. We are happy to meet with you on weekends. We are happy to talk to you at 0600 AM. We are happy to have evening meetings. Yes, we can even have a meeting at 5:30PM at the office in Delray. That is just how it is. 7:00 AM meetings, we love them. We are an early start office.
Greg, you get them usually around 0700 AM almost six days of the week.
Greg: So, 0700 AM to 0600 PM, usually, and five days per week and for six hours on a Saturday. As soon as you want to, you could even fly me down to Florida for a week or so.
Lawrence: You have got it. You know what? We would love to have you in Florida. In fact, it would be nice to have you speak at one of the seminars as you have that knowledge and that base. The Levy Office will help you to fix those problems so that you can sleep well at night.
If you have an IRS issue, keep in mind that the O-freeze is reversing itself, but what did you talk about today? Greg, you were able to get penalties abated for a gentleman because his wife had cancer – $20,000 – $30,000. You were able to get a civil penalty abated for another large chunk of change. I think, that one was $116,000 or $130,000. Again, some significant dollars, but that is what we do. We want to make sure that people can sleep at night. We have an incredible team. I love our support staff. I love everything about everyone of my staff members. We always try and help. The attorneys that function as POAs, the EAs, everything that we do that really makes us feel good.
Signing off for now from the Levy Tax Help Show, Lawrence Levy and Greg Mahaffey in the house. Enjoy the rest of the weekend, South Florida. If you have a tax problem and you can’t sleep, call us.
Telephone – 561 865 7800, or toll-free 800-tax-levy
Yes, Levy really is my last name. We will talk to you next week. Take care South Florida.