Levy Tax Help Show - Transcript - 1/24/2017

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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 hope that everyone is enjoying this fine, windy weekend here in South Florida, but what do we have coming up soon?  We have the start of the official tax season which, if I am not mistaken, is the 29th.  It will literally be upon us in about 48 hours.  So, the tax-payers out there in the world, if you have refunds, you probably don’t listen to this show, but if you have an IRS problem, guess what?  As of Wednesday, the 31st,  the IRS is back in the game.  The IRS is back in their collection mode.  The gentleman you hear chuckling in the background, let’s say a ‘hello’ and a ‘good morning’ again to my buddy and colleague, Joseph.  He is one of the CPAs here in the Levy Office.  Joseph, good morning.

 Joseph: Good morning to everybody in Florida.

Lawrence: And, everyone that screamed us out which means we have a nice big following.  I have been doing this show for quite a while.   Let’s give out the phone number because I usually gloss over that key component of the Levy Tax Help Show.

 The phone number is 561-865-7800, and toll free is 800-Tax-Levy

 Yes, Levy really is my last name.  That is the guy who signs those pay checks of yours, right Joseph?

 Joseph: You got that right and your name is on the front door. 

Lawrence: My name is on the front door, that is right.  Let’s talk a little bit about what Joseph does for a living.  Besides being a gentleman who comes in with a very perky, upbeat, lively personality because he likes to dance.  You do some round dancing, is it?

 Joseph: Round dancing and western square dancing.

Lawrence: Okay.  I got it.  As opposed to break-dancing or stepping which is what my forte is.  You see me spinning on my head a bit, typically.  More theoretically than in reality, but we are not here to talk about our dancing skills.  We are going to talk about taxes and tax problems, and some of the new tax changes, and what you do if you have an IRS problem.

Joseph, you are also what is called a quick books pro advisor and a CPA, obviously.  How long have you been a CPA?

 Joseph: Twenty years.

Lawrence: And, you have been a quick books pro advisor for how long?

 Joseph: About the same time.

Lawrence: Can you explain to everyone what a quick books pro advisor is and what it does?  The reason I am asking you is that we have had multiple clients at least this week.  In fact, on Wednesday we had a client come in who is from right here in Palm Beach County.  The client has had a history of a lack of book-keeping, and the lack of book keeping has caused them to not know if they are profitable or if they are not profitable, how much they take in a pay check,  and if they are transferring money from a corporate to personal.  Technically, they are an S-corp.  So, that is somewhat kosher to do, especially now with the new pass through and S-corp and K1 and all of those great changes you hear about talked on the news.  That is legitimate and kosher, but for our clients, mainly because they have a tax problem, keeping it clean and not co-mingling is pretty critical.  So, they were talking about the client.  This was literally on Wednesday at 3 o’clock in the afternoon.  It was a few days ago.  Their book-keeping was just lacking and over the years it got them to be audited.  Then, the Florida Dept. of Revenue (FDOR) picked up on the IRS audit chains and now they owe the FDOR a nice chunk of change.  So, the book-keeping seems to be their biggest problem.  They were a very nice couple, a husband and wife, and they sat here in our conference room for a good hour to an hour and a half, and that is the crux of it.  That is fixable.  That is ‘clean-upable’, as I say.

Joseph, why don’t you explain to the folks out there about why having the books is such an important part of the building job for a business.  You can’t build the house without having the bricks, and if you put the bricks up and you have no roof you are going to wet, and you don’t have a good stable roof.  Not that I am a builder but explain why the quick books component and getting the books right is such an important element of any business model.  That is what you see leads a lot of clients into our office.

 Joseph: Well, quick books is your foundation.  A lot of clients that we see look at the cheque book and if they have money left at the end of the month – ‘Oh, I made money’. 

Okay, that I fine but how did you make it?  Where did you make it?  That is what a good set of accounting books, for which quick books is the best and most popular accounting software for small businesses on the market, comes in.  It sets up your accounts.  It sets up your income statement which is basically a statement that says, ‘Okay, you brought your money in from these sources, you spent the money on these other sources, here is your net profit or loss, and here is where you can improve because you can see where you spend your money.  Did you spend too much on office supplies or on meals?’  If you just have a cheque book, you don’t know.  That is what a good set of books does. 

 Also, in your tax return, all that is, is numbers on a form.  If you are every audited, IRS will say, ‘Prove those numbers’.  Well, that is what quick books does, it proves the numbers.  It is the backup for the numbers and like any foundation, if you are not a builder, don’t do your own building.  If you don’t know quick book, and especially a pro advisor, don’t even try to set it up.  Quick books advertise that anybody can set it up.  Well, yes, anybody that buys a ‘how to’ manual can build a house, supposedly.

Lawrence: Not me.  I can barely change a light bulb.  I am no good with that at all.  With me and building and changing light bulbs, that takes me to hire an electrician.  So, I am not doing that.

That is where we come, and folks should hire us. Hire the Levy Office because of the quick books and the taxes, that is important.  That is what you do.

 Joseph: Exactly.  On setting the quick books up, if you set it up wrong you will never know it.  It will still look very neat and very clean.  For example, ‘cash in bank’, that is an asset.  Most people know what an asset is.  I have seen some companies where ‘cash in bank’ was an expense which is totally wrong of course.  Then, when you read your statements there are nonsensical.  That is why you need someone who knows what they are doing to set it up.  Now, we have set it up for a lot of clients and they actually do the data input, but we set it up and we monitor it for them because we are the experts.

Lawrence: Oftentimes, a lot of clients who are trying to do these things themselves,  they mess it up.  In fact, you are dealing with this.  In the past couple of weeks in this calendar year, and you are cringing, but you are almost through it, you had negative inventory in the millions of dollars.

 Joseph: Five million dollars.

Lawrence: You are holding up your hand and you have all of your digits.  So, you had to clean that all up and that is what we spend a lot of our time doing.  It is a clean up of the quick books and getting the accurate set of books is important.

There is another one that may be coming your way to the nice young lady that we just hired a couple of weeks ago.  Her name is Laura by the way.  She is a great book-keeper.  She has been sitting in the office right next-door to Joseph.  This is a client that has got three or four years of tax returns and they appear to be wrong.  This particular client ended up having a non-CPA prepare the tax returns and the tax returns which are C-corp, 1120 C’s showed profit.  Well, the book-keeper believes that the CPA didn’t do the tax returns the right way.  So, now we have to go back and redo the books because the book-keeper is not sure of how she arrived at the numbers because she was being helped by the CPA, but now they don’t trust it and by the way, that CPA for all we know is unlicensed because on the tax return itself the paid prepare box is empty.

So, I said, “Are you guys sure this person is a licensed CPA?  Perhaps they are an EA, enrolled agent?”  To the naked eye, it looks as if our client has self-prepared these tax returns.  He said, “Oh, you are right.  I don’t know about that”.  So, that becomes an interesting little pickle and problem as well, but it has to be addressed.  Now, Joseph and one of the book-keepers are going to get tossed this which will be relatively soon.  You don’t even know about it, but here is three years-worth.  It is not huge, but a half of a million dollars, six hundred thousand dollars, four hundred thousand dollars. I think, it is in that range of gross revenue and there are a lot of transactions that have to be gone through and sorted out.  It is just mind-boggling how these things are wrong.

This is a story that Joseph hasn’t even heard yet.  We will make the theme of the show ‘Joseph Davis Quick Books theme’.  We had a client who came in about a week ago and the company gross is in the millions.  He is a nice, nice man.  He ended up getting into a successful business and we are looking at the tax return.  The tax return appears to have a double entry of an expense.  So, they took it twice.  We caught it, we looked at it and it needs to be amended.  It needs to be fixed.  H said, “I cannot believe that you guys just caught this.  I’ve had our CPA look at this”.  It turns out that, I think, he has an EA, but that is okay too.  There is nothing wrong with being a licensed enrolled agent.  It is just a different couple of letters you have after your name, so comma CPA, or comma EA.  It was a significant mistake and it has got to be adjusted because if IRS audit you, you are going to get potentially hit with what is called a civil fraud penalty.  There are a whole lot of other bad things that can happen.  So, you want to make sure that the number is correct.

Joseph, since we are now in the tax season and we caught that, and that guy loves us because we caught that by just taking a look, but again, I said, “Why do you not have an accounting firm doing your monthly books?”  He really didn’t have a great answer.

Now, we are in the tax season.  Joseph can you explain to the folks listening, why should they come to us as opposed to (without saying names) a national chain?  What is the difference between Joseph Davis as a CPA, Dave Crop as a CPA, Dan Marino is a licensed EA, or going to John Smith and John Doe who are working out of your house, or maybe some of these national chains that are out there?  What is the big difference?

 Joseph: Education and experience and knowledge.  Most people that operate out of their house and most of the national chains have people who work part-time during tax season only.  If you go in there during the summer, the office may not be open.  We are here all year-round.  We have got a whole staff here.  We even have attorneys on staff, and we bounce things around.  Dan Marino is the enrolled agent here.  He is also an (? 00:10:16).  So, sometimes you have got to talk it out with somebody even from a county viewpoint, by talking it out you figure it out yourself.  That is the advantage.  We are here all year round, we have got the experience, and we know much better what we are doing on all levels of tax, and any more with this new tax code change it is getting even worse.

Lawrence: Yes.

 Joseph: It is more complicated, and you don’t know what you are doing.  Well, that is what we are here for.  We know what we are doing.  We are the experts on all of this.

Lawrence: Right, and a lot of the times you get into a situation where the book-keeping is the biggest problem, but I am going to shift gears past the Joseph Davis Quick Books book-keeping side of it.  I was at dinner with my wife and my younger son on Monday night.  My cell phone rings and I answer numbers that I don’t recognize because I always think that maybe someone is calling to tell me I won the Lotto.  So, I always answer the phone.  A client calls.  We actually know their family through just what we will call the social grapevine.  The gentleman says that they are having an IRS problem that they are trying to deal with themselves.  There is a local revenue officer and he owes somewhere around a half of a million dollars.  This is not in Florida because the IRS has been in O-freeze which is ending at the end of the month due to hurricane Irma.  I said, “Well, let’s see what you have got.  Send us over a recent notice”.  He sent over a notice dated the middle of January, where he owes over $260,000 for one tax year, and that is a notice of levy like my last name.

 So, we always say, “You want a Levy on your side, not one against you and don’t fear a levy, you hire a Levy”.

 Ultimately, this gentleman has been trying to deal with the revenue officer, himself.  So, he came into the office on Tuesday.  He met with our staff and we asked, of course, “Why did you not reach out to us?”.  He said, “Well, I thought I would give it a shot myself”.

Over the years, I can’t tell you how many people have tried to deal with these things themselves.  They don’t know the rules.  They don’t know what you can do.  They don’t know what national standards are.  They don’t know what options exist.  They just truly don’t know what to do.  They put themselves into a position where they are backed into a corner.

This particular client had some extenuating circumstances.  They are a very nice couple.  Several kids.  You know, nice mum, nice dad, good people.  They just got themselves into a bind.  In the Levy Office, we deal with civil tax controversy, nothing on the criminal side of it.  So, if you have a criminal IRS matter, we refer that out.  We don’t really see that all of that much.  It is not in our space.  It is something, at least in the Levy Office, we don’t deal with a lot, both on the Florida Dept. of Revenue side and on the IRS side.  We don’t see it a lot.  Needless to say, it happens, and you want to make sure that you are declaring your income.  You want to know that you are being legitimate, and that you are being honest, and that you are straight-forward because, ultimately, you don’t want to have a problem with the IRS.  If you do, there are solutions that exist.  The three most common ones are:-




We actually had a client that Danielle, one of the power of attorneys helped.  Even though Joseph mentioned that we have attorneys, we are not a low firm, we are a tax resolution firm.  So, Joseph is a CPA.  You have been a CPA, you said for twenty something years, right?

 Joseph: Exactly.  Yes.

Lawrence: You seem to have a bit of an accent.  You seem to be from England?

 Joseph: South West Virginia.

Lawrence: Very close, very close to London, like one of your colleagues here.  Again, you have been a CPA for a long time and the Levy bench, you’ve heard that term, right?

 Joseph: Yes.

Lawrence: Are you a sports guy at all?

 Joseph: Not at all.

Lawrence: Really, I didn’t know that.  Well, I am not at all either.  I promise you that I know less than you know.

 Joseph: That is kind of bad.

Lawrence: Well, I am being honest with you.  I know less than you.  Although, I will tell you, my kids are into sports.  I ended up taking my son to see a basket ball game last week.  He loved it and, I think, I would much prefer to watch paint dry.  In fact, I was texting Jack the engineer some pictures of where I was, and it is just not my thing.  Apparently, it is not your thing.  It just isn’t.

 Joseph: No.

Lawrence: That is why I like you, right?  It is one of the things we do have in common, we both enjoy dancing, but I am more of a break dancer and you are more the square dancer.  You are a little country, and I am a little ‘rock n roll’.

 Joseph: I like early ‘rock n roll’.

Lawrence: Early ‘rock n roll’, like what?

 Joseph:  The Beetles and Elvis.  Elvis is still the king. 

Lawrence: Absolutely.  Those are legends.  I am more like the Michael Jackson.  I am like Michael Jackson meets Bee Gees.  I mean, I am like 1970s, 1980s guy.  Stuck in the 1980s.  All of those one hit wonders back then, but we are not here to talk about if we know anything about sports which clearly you and I don’t.

 Joseph: No.

Lawrence: We are both man enough to admit that we know absolutely nothing regarding sports which is absolutely great because I was saying, and I don’t want to get too far off the topic, but sports, does it impact your life?  Who cares who wins the Super Bowl?  I know it is coming up in a week or so, but it means nothing to me, absolutely nothing to me.  Joseph, is it going to change your life?  I don’t even know the teams that are playing.  Do you?

 Joseph: No.  I don’t.

Lawrence: The Patriots and the…

 Joseph: The Eagles?

Lawrence: I don’t know.  Maybe DJ Flash knows.

 Joseph: Eagles and Patriots.

Lawrence: There you go.  So, you got one and I got one.  Imagine that, that we actually got it.  It has no bearing on my life.  My life will not change one ounce on who wins that game.  Now listen, people say it is enjoyment.  So, we are not here to judge you about what you like, or what you don’t like, but we are here to talk about tax problems and what do you do.

The phone number is  561  865 7800, or toll free 800-taxlevy.

 Let’s talk a little bit about another file, since Joseph is in the house.  He had a really nice client and he had to knock-out, I think, it was three for four years of a tax return.  It was for three corporate and three personal for a gentleman that is in the moving business.  Do you remember that guy?  He is a real nice guy.  You asked him, “Why did you get into this jam?  Why did you get into this pickle?”.  His words, he “got divorced”.  There were some stories behind it, but he loved you.  In fact, I read you that text from Kenny.

So, I just want to give some compliments out.  We had a client of ours that sent me a text.  I am going to try and pull it up here.  If everyone out there listening gives me a quick second, this was on Wednesday at 08.59 AM.  “Everything went well.  Thank you for assigning Joseph.  I feel very confident with him and the job.  We have another meeting setup for Friday” which was Friday.  “Hopefully, we can get together and meet up for a cup of coffee” is what he is texting me.  In any event, it is nice to hear that feedback.

I am going to switch gears again on everyone.  Again, this isn’t a Florida issue, but it is a good story as to why you have got to focus on these things.  We had a client, not in Florida, and the client ended up getting their corporate bank account levied for over $21,000.  Now, that is enough that could potentially put a lot of folks under.  It is a lot of money, $21,000.  We had asked the client for some records because this particular State had computed, which means they guessed, at the sales tax even though there was no sales tax applicable, so the client says, through this particular time.  They didn’t file the proper forms to let this particular State know that there was no sales tax.  The State had computed the assessment.  They computed the assessment and they sent out letters and letters and letters, and eventually – boom!  What do they do?  They end up levying and using my last name.  A bank levy, levy being the verb.

I was actually sitting on a plane this week on the way from Detroit to Fort Lauderdale, talking to the lady sitting next to me.  What do you do for a living?  I said, “What do you think I do?”.  I happened to have on blue jeans, and I happened to have on a sweatshirt because it was chilly in Michigan.  I had on a hoodie and a ski hat because it was cold.  I was not wearing a suit, but I am certainly not a suit wearing type of a guy.  Do you ever see me in a suit?

 Joseph: Never.  I think, I would faint if I did.

Lawrence: Although, I will tell you, when I was a kid growing up I went to school and we had a uniform, and I wore a tie every single day.  I don’t mind it, I just don’t.  It is not very common these days.  If I do dress up, or go on TV,  I don’t usually wear a tie, but regardless, I said, “What do you think I do for a living?  I will give you three choices.  I am in the entertainment industry.  I am in advertising, or we deal with folks who have tax problems.  What do you think?”  She did not pick tax problems.  She picked, I think, advertising, maybe.  It was very nice.  Coincidentally,  she was in advertising.  She owns an advertising agency in the western part of Michigan.  It  was actually very interesting to speak to because when I am telling her these stories, she was asking me about her profit from her s-corporation.  I said, “Well, don’t you speak”, and this is going to go back to Joseph in a second.  I said, “Don’t you have your year end tax planning meeting with your accountant?”  Joseph, how many of these did we have right before Christmas.  Right after ‘Thanks giving’.  You know, in that 30 – 45-day window before the New Year.  We had some tax planning and it happened, and you gave people advice.  That is what you job is.  So, expand upon, again, why you want the CPA and why you want that book-keeper.

 Joseph: Experience, knowledge, and okay, most people know how to run their business, but when it comes to looking at the statements, what has gone wrong with it, how do you improve, that is where we come into play.  We look at your income statement which is your statement of your expenses and your income item by item.  A lot is just through experience and through the use of experience to say, “That looks high.  Why is it that high?”  That’s what I do.  The way I throw rocks at it, is the way I put it.  I try to criticize it, so the business owner can use the statements and make more money. 

Now, I am not an expert in auto mechanics, for example.  We have got several body shops and car shops here, but I am an expert in reading their statements after they have given us their data.  So, I can say, “Hey, it looks like you are spending too much here, what do you think?”.  That is the way I go about all of this, like these people coming five years at a time.  I never criticize them.  Okay, they are in a mess, let’s clean it up.  That is what this is all about.  It is trying to read the statements, trying to help these owners, and year end tax planning comes in and we look at it. Okay, you have got eleven months of profit here.  That is what it looks like for the year.  What can you do in that last month to alleviate your tax bill?  Also, if you know you have got a huge tax bill, you need to start putting some money aside now to pay for it, to go on to send your estimates in so that you do not get bitten or surprised, “Why do I owe that much money?”. 

 Lawrence: Right.  At that point.  The same gentleman who had the mistake that we caught on his tax return wanted us to figure out if he should make a forth quarter estimate.  Now, your fourth quarter, and this is pretty technical stuff and I usually try and keep it simple on these shows, but it was due on January 15th.  So, it was already late, but with one of your colleagues, Dave Crop, who is another CPA in our Michigan Office, we undertook some calculations.  (I call them the C-level employees.  You got that comma after your name.  ‘C’ for comma, I made that one up.)  We basically did a proforma rough draft of a 2017 tax return, just to see if he was going to owe and what was going to be going on, so that we could figure it out.  It looks like he is not going to have any liability based upon what the withholding was and what was already paid in, but that is the job of the accountant.  That is why you want someone and need someone there to determine what you are going to look like on paper and who is on first base.  These issues are so critical.

Getting back to the gentleman who had a levy for $260,000 not even a couple of weeks ago.  Literally, not even two weeks ago.  Getting back to the that person.  They need tax resolution help.  They truly do.

IRS is out there to do a job.  They are out there to collect the fair amount of tax that is due, but they have a collections division.  There are revenue officers, that is what they are called, who knock on doors.  That is what they do.  They knock on the door.  They will send you letters.  They are in the civil collection world.  They collect for past due taxes.  They want to make sure that you have filed.  They want to make sure that you pay, and they want to figure out how you are going to pay if you owe.

What we do is, we analyze what your options are.  It is not always going to be a home-run offer and compromise.  Let’s be very clear about that.  Not everyone is going to qualify for an offer and compromise, but I am going to give one example that blends-in with the book-keeping, and one of Joseph’s colleagues.  There’s a staff of book-keepers here.  There’s Lisa, there’s Beth, there’s Audra, and there is now Laura.  So, that staff of book-keepers is doing the books for a client who was not really having his books done.  The company grossed almost a million dollars a year.  I think, the last year I looked it was $970,000 or something dollars.  We are going to do his books now to see what the problem is, and why there is an issue with his books.  He owes about a quarter of a million dollars in taxes.  Well, if he took a straight pay check and there wasn’t any surplus co-mingling K1 distributions, he wouldn’t have a problem year after year.  So, we asked him what the problem was.  Well, he wasn’t having dialogue with the book-keeper.  He wasn’t having dialogue with a CPA, and guess what?  He said, “I love that you brought that to my attention.  Please take care of my books.  Please make sure your CPAs in your office do the taxes”.  We said, “Great”.   This was, and you  may inherit this one yet, but we are just in the infancy stages.  This is not a clean up job.  Thank God.  I am sure you are happy with that one.  This is just starting fresh with 2018 books and getting 2017’s done, and before we know it, we are almost 45 days away from March 15th.  The corporate tax returns are due by March 15th, right?

 Joseph: Yes.

Lawrence: Then, what do you have coming up in April?  You have April 15th which falls on a Sunday this year.  So, technically, you get until the Monday, and if I am not mistaken, Monday may be Emancipation Day, so you may even get until the Tuesday.  I have got to double-check that it is right, but at least, you are going to get to the 16th because April 15th this year falls on a Sunday.

So, to recap today’s show.  We have Joseph Davis, the round dancer guy who knows nothing about sports, like me.  Who is a talented CPA, who is also a quick books pro advisor,  and who has done quite a bit of clean up on some of the books in the Levy Office for a lot of the clients.

You also have heard about a gentleman who owes the IRS over a quarter of a million dollars and his case it is actually closer to a half of a million dollars, if not more.  He was trying to deal with the IRS himself, and trying to negotiate his own resolution.  Eventually, he wasn’t getting anywhere.  I said, “You are great at what you do for a living”.  To his wife, I said, “You are great at what you do for a living, but you are not in the tax resolution industry”.  It is just like if I needed to put a new light fixture in the office building, I have got to hire an electrician.  I am just not good at that, and that is what you have to do.

In the Levy Office, we will assist and resolve your IRS tax problems.  We have resolved millions and millions and millions of dollars in federal and State tax problems over the past twenty years.

We pride ourselves on being available to you seven days a week, literally 24 hours per day, and we really mean that.  We really care.

The good thing about the Levy Office is that you have a staff that really gives a ‘you know what’.  We really do care.

Joseph, thanks for everything.  You are a pleasure to have on the show.  We appreciate that and again, Joseph Davis, the CPA, the quick books pro advisor in the house, along with Lawrence Levy.

We are in the tax season now folks.  By next week’s show, you are going to have the E-filing season, assuming the government stays open for business, but as of today the doors are open.  The government is open, and we don’t have the ‘sorry we are temporarily closed’, or the little clock thing saying that we are out of business for a little bit, but the government is up and running and the IRS is up and running.  The Levy Office is certainly available seven days per week for all of your tax needs.

We are giving the same special to the first responders.  The men and women out there, the fire-fighters, the police officers, and former or retired folks from the military.  We love what you do and thank you for your service to the country,  and for keeping us safe.  Mention that when you come in to get your taxes done at a discount for first responders and former military.

Signing-off for now from the Levy Tax Help Show, Joseph Davis, in the house.  The CPA, quick books pro extraordinaire, and Lawrence Levy.  Enjoy the rest of the weekend South Florida.  You take care.

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