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.
Good morning, South Florida and welcome to the Levy Tax Help Show. We hope that everyone is enjoying absolutely phenomenal weather here is South Florida and we also hope that you are enjoying, what is for us the heart of tax season, but if you listen to the show you either have a tax problem, or you just love to hear about other peoples’ tax problems.
Lawrence: On the Levy Tax Help Show we talk about real-life examples, real-life stories, and people like you that are listening out there that have fallen perhaps on some rough times either from a business going bad, or perhaps it is a bad divorce, or God forbid it is health related, but whatever the reason may be we have a really nice group of clients that have true problems and need help.
As we often do, we have our staff on the radio show. A very frequent guest happens to be a gentleman that worked at the IRS for over thirty years. He was also in the navy, in the Gulf war, and so we thank you for your service to the country, and he has now been out of the government as an employee for a few years and on the Levy, team advocating for tax payers all around the country. Let me go ahead and introduce everyone to the famous, the knowledgeable, the very persistent Greg Mahaffey, former IRS officer of over thirty years. Greg, good morning.
Greg: Good morning, Laurence.
Lawrence: How long did you work at the IRS, by the way?
Greg: Over thirty-two years.
Lawrence: You were a revenue officer. You were the guy that would physically knock on the doors of tax payers, either individuals or businesses that either hadn’t filed in a few years, or owed taxes, payroll tax and/or income tax. Then, in-between, you were also what is called an ‘offer and compromise’ specialist. So, you worked for a division of the IRS that analyzed an offer and compromise. Then, after that stint you went back to revenue officer rounding out your career and here you are at the Levy office with a guy named ‘Levy’ that signs your pay check. Imagine that twenty years ago when you used to press a button and fire off levies, wage levies, bank levies, levies un-receivables, and now your pay check is signed by a guy named ‘Levy’. It is crazy.
You have really shown a lot of clients the heart and soul that you put in to advocating for their rights.
Two weeks ago, we had a gentleman come into the office in Delray, and, by the way, we want you to come into the office, and I don’t give it out enough. So, I am going to start off in the first three minutes here and give out the phone number.
Locally – 561-865-7800 Toll free – 1-800-TAX- LEVY
Yes, ‘Levy’ really is my last name. So, a gentleman comes into the office. He is a really nice guy. He brings in his wife. His wife, unfortunately is sick. She has got some severe medical issues, but she is a trooper. She is fighting through it, and what a tremendous husband he is to give his wife this incredible support that she needs. They come into the office and they are in the ministry, is the best way to put it. The church has some tax problems and we have dug them out of the hole once before that was created. They are just such nice, polite people. When you have someone that generally needs the help, and they have got themselves into a financial pickle.
Greg, when you worked at the IRS, a lot of the times you would see this, and you see it now while working in the private sector, but you would see an individual or a business owner that has financial problems. Generally speaking, and not all of the time, but some of the time, or certainly, I think, most of the time, the clients that we deal with now and that you see while working for the Levy office, even when you were at the IRS it is not just the IRS that they owe money to. It could be the landlord. It could be credit card companies. It could be accounts payable that they have for vendors if they are a plumber or electrician. So, it is not just the IRS and oftentimes the IRS just doesn’t get it, in my opinion. The State may not get it, that there’s other payables that are out there.
It sometimes feels like the IRS only cares about their debt and a lot of our clients, for example, this week on Tuesday, I was talking to a client of ours who is a doctor. He is a very nice guy. Unfortunately, he had hip replacement surgery about 8 – 10 months ago and his is six months behind on his rent. He has had a struggle with his practice. He owes the IRS about $350,000, and he is literally struggling to try and keep the lights on, keep his insurance up, he hasn’t paid the rent in six months.
Greg, while you were working at the IRS and seeing people that don’t just owe the IRS, they owe others. Whether it is utility payments, rent, they are behind on their mortgage and close to foreclosure, or behind on their car payments and the car may get repossessed, you see I am sure over your years, like we have seen, so much where the tax payer, the client is in a financial hurt. IRS unfortunately, sometimes doesn’t see it like that. They don’t care if you owe the credit card company, they don’t care if you had to borrow money from your loved ones, or friends and family, they don’t care that you have your kid in private school, or that you are paying for your kid’s college and you don’t want to impact their lives by not paying.
A lot of parents, and we have seen this a lot lately, have their kids in private school and they have sacrificed. Whether they don’t go out to eat, or whether they haven’t paid their taxes, or haven’t paid their other bills. We were talking to a lady who has two children, both are in private school and are elementary age. They literally say that they don’t go out to eat dinner. They eat at home for the seven nights of the week, no matter what night of the week it is. They have cars that are 8,9, 10 years old, but they pay a significant amount to keep their kids in private school, and trying to explain that to the IRS, they just don’t care. “Take your kids out of private school. The money you are paying in private school tuition can go to pay your IRS debt”.
Look, the IRS has a job to do. There’s rules. The rule book primarily is called the IRM (Internal Revenue Manual) and everyone is supposed to play by the rules contained in that rule book. Greg, when you were working at the IRS, didn’t you take a practical approach to case resolution?
Greg: Yes. If there was someone with unusual circumstances, I would listen. That is they key to getting a tax situation resolved. Listening to tax payers. Listening to reps. Listening to everyone and have them listen to you in return. Everyone needs to communicate because if you don’t communicate, then you have problems. Then, people start jumping to conclusions. Then, levies start flying all over the place. Then, appeals start getting filed and/or threats made to go to Inspector General’s Office, or something else. The trick is to listen. You learn a lot more from each other if you sit down and talk. Maybe, our elected officials should start doing that as well.
Lawrence: We are not here to talk about politics, we are here to talk about IRS issues.
Greg: Yes. We have got to talk and that is the problem a lot of times. They don’t want to listen. The trick is to make them listen. Make them realize that we are talking about a human being here. Yes, they had mistakes in the past, but here are their circumstances and here is their situation. Again, we advocate for the tax payer. We make sure that the IRS realizes, and ideally the IRS should be putting themselves in the tax payer’s shoes and listening. That is the way it used to be, up until the pendulum starts swinging in the opposite direction again.
Lawrence: Well, the IRS has a job to do, as I said. They have rules that have to be followed, but generally speaking, the appeals division of the IRS for the most part is a phenomenal division within the IRS where you can try and speak to someone in a more rational sense, where they will actually listen, and they will be flexible. We are very big fans of the appeals division. For the most part, they are more human-natured, if you will. They care and the listen. This is coming from a guy that used to work at the IRS for over thirty years.
Now, it doesn’t always work like that. Sometimes you will get the person in appeals that is just going to be staunch in their position and they are not going to budge, but oftentimes you are going to get someone who is going to try and be reasonable. We want to really try and communicate the issue. One of our clients received a call this week from the Florida Dept. of Revenue, saying that their business owes $24,000. This was on Monday. As it turns out, the representative told our client that they had 24 hours, literally, to get back to them or else. The ‘or else’ was that they were going to file a warrant. The client doesn’t really know what that warrant means. The clients think they could be going to jail. Well, a warrant from the Dept. of Revenue is basically a tax lien. The client is in panic-mode. Our office contacts the representative of the Florida Dept. of Revenue at about 13:30 hours on Monday. The representative says, “Yes. I talked to your client. The tax payer was told that they needed to give this information in 24 hours and if they don’t we are going to proceed. So, they have 24 hours to get us the information”. So, wait a second. What kind of rule is ’24 hours’ and where did that pop up out of? Again, this is not IRS, this is the Florida Dept. of Revenue, locally, here in South East Florida.
After that representative was, what I am going to call ‘unfriendly’, and I am being politically correct and polite, she was unfriendly and unwilling to speak rationally, as Greg suggests is needed. Our office again contacted the manager. The manager was very receptive. She couldn’t be any nicer. She was pleasant. She was professional. She was polite. She was actually apologetic. It was interesting that ultimately, about the representative who spoke, she said that they were wrong in their approach, I guess is the best way to put it. This representative was going to be spoken to about her demeanor and her approach.
A lot of times, tax payers don’t know what to do when they get backed into a corner. Unfortunate, if you don’t have the proper representation to guide you, assist you, advocate for you, and represent you, you get caught with your back up against the corner and it becomes very awkward, and you almost feel like you need to cave. You shouldn’t. You should know that there are options that exist out there whether it is a payment plan, whether it is abatement of penalties saying, “Please abate the penalties because…”, and you have to have a reason as it can’t just be because you are a nice guy or lady. You have to have a reason behind it which is called ‘reasonable cause’, and of course, at the home run for the IRS which is called an ‘offer and compromise’. With an offer and compromise, I want to be very, very clear, not everyone is going to qualify for an offer and compromise. Not everyone is going to always be able to qualify to settle for the pennies on the dollar. It is based on your financial criteria.
I always like to talk about a success story. Greg, you recently had a gentleman right here in South East Florida who owed about $220,000, and he had developed cancer. I can’t recall if it was an ETA, but, I think it was down as ‘collectability’.
Greg: Yes, standard one.
Lawrence: Right. Standard on collectability, and he settled with an offer and compromise for around $50,000, I think it was. So, you literally saved him $200,000. Explain how an offer and compromise works. From a guy who used to work at the IRS.
Greg: Okay. The IRS doesn’t take a certain percent. The IRS uses a mathematical formula with which they calculate what they project they can collect from a given tax payer over the lifetime of the taxes. In IRS jargon, it is referred to as RCP (reasonable collection potential). It is basically a formula they use in which they add up your equity and assets and they combine that with your ability to give them an installment agreement, and they come up with a numerical factor of what they project that could be an acceptable amount for them to accept as an offer.
There are many caveats and many rules concerning this. It is not a straight percentage. A lot of times there are all types of fudge factors, such as values of assets, which can be disputed and/or whether an asset really exists or not, or if it only exists on paper. So, it is a very complicated, complex procedure that they go through and that you need a really good professional for who knows what they are doing, and who has done offers before in the past. Just because someone hangs a shingle on the wall saying that they are an attorney, doesn’t mean they are an IRS expert. They could be great at going into court and battling your traffic ticket, but they don’t know diddley about IRS collection matters. That is why you need to hire a professional, like us, to battle and be on your side, and to know what the rules are, and to see what can be done, and to protect your rights out there. It is important that we protect your rights.
In the old days, the IRS used to get away with a lot of things, like you cannot believe, but no more. Again, you need a professional to guide you, to help you, and more than that we solve future tax problems for you. We set you up on a plan where you will never get into IRS trouble again. It doesn’t always work, but we ‘sure as heck’ try to keep you out of trouble once and for all. Back to you Laurence.
Lawrence: It is really important that the problem has to be stopped. So, when you go to a doctor and you have a cut, you have got to get stitched-up or maybe it needs a band-aid, but eventually that wound has to heal, and getting yourself cleaned up is very important because you want to make sure that in the future you have stopped what that bleeding is. You have stopped the problem. A lot of times it is getting fundamental books and accounting. Greg, when you were at the IRS did you see a lot of tax payers that had no book-keeping and no accounting?
Greg: Exactly, and they had no ideas of their business expenses, and a lot of times their taxes were over-inflated simply because they didn’t keep proper records. You need to cover yourself when you are in business. You have to make sure that part of your time is spent keeping up the books and records and all responsibilities in the business. If you don’t have that time, you need to hire a professional to do it for you, such as our firm that does book-keeping, or a professional CPA who will do your tax returns, someone who will compute out a schedule of how your taxes are going to accrue, how we project they are going to accrue, and how you need to stay on top of them in the future. So, once we get you out of the trouble, you never get back into it for the rest of your life.
Lawrence: That is very important. We see so many people who come in that have a lack of accounting. We had a gentleman that we talked to yesterday morning. He hasn’t filed corporate taxes in around 5 or 6 years. We see a gentleman, a doctor in Florida actually, who hasn’t filed in around 7 or 8 years. It happens, and when we ask, “Why?”, the reasons are endless. They were scared. Their head was in the sand. They knew that they would owe. There a just a number of reasons that are out there.
Greg, when you worked at the IRS, you were reasonable and very passionate with what you did and how you did it, and you knew where to be flexible or not so flexible, you were from time-to-time, but you had a rhyme and reason behind it. You didn’t do it because you just had a bad day, or because you just had a personal dislike for the particular client that we had when you were there. Our office worked with you on the other side of the phone, and on the other side of the table for 2 – 3 decades, but you did it with dignity. You did it with a professional aura about you, and you were always willing to talk. In fact, you were the revenue officer that was working on Saturdays. You were the guy that we could always reach. You would return the phone calls. You would be at your desk for the majority of the day, unless you were out in the field.
In today’s IRS world, like you talked at the beginning of the show, there seems to be a lack of a willingness to talk it out. Now, it doesn’t always happen like that, but for the most part, if you were to spend 20 minutes analyzing, asking questions, talking about a client’s financial picture, what is this on the bank statement, show us a copy of their bills, show us their tax return, let’s talk about this. There could be some real progress, but it appears that there is this unwillingness to talk. It is bizarre to me. It is mindboggling. We ran across that with the State as well. The Florida Dept. of Revenue says, “We want a payment plan”. We say that the client can’t afford that payment plan, “Now what?”. Then, you have to go and show their financials and just have some dialogue.
I will never forget this. It was about a year and a half ago. We had a client right here in Florida that was dealing with a Florida Dept. of Revenue debt. I was significant. It was north of $75,000. The Florida Dept. of Revenue representative said, “We want a payment of ‘X’. We want a down-payment of ‘Y’ “. Well, “How do you come up with that? You can see his bank statements. He has got less than £3,000 in the bank. He brings in this amount. He spends this amount for the business. Where do you think they have a chunk of money to put down? Where do you think they can afford to pay this much on a monthly basis?” With that, there was no answer. I said, “You have seen the financials that we have sent you. You have seen the bank statements. You have seen the tax returns. So, where, in your mind, in your arithmetic, whether it is 8th grade math or high school trigonometry, calculus, and algebra, where in your math skills, or your analysis, whether basic and rudimentary or very intricate and detailed, where do you think and why do you think this tax payer can come up with money and they can pay”. Again, it was dead there. So, I said, “If you can’t give us your analysis, how do you expect us to go back to the client and say that the State thinks you can pay and your company can pay ‘X’, and here is why”. You just think they can come up with a miracle. They can go to some well that doesn’t exist or dig somewhere and they can dig deep and ask a friend or family member, it just makes absolutely no sense.
Greg, the IRS, don’t they have an obligation to… Remember, back in High School, I would say in 8th grade when the math teacher said, “Show me your work?”. Don’t they have an obligation to show their calculations?
Greg: They should. They don’t always do so, but they should. That is what I tried to do when I was on that side of the table. It is about working with people and not against them because when the lines of communication break-down, all of a sudden nothing gets accomplished. It is a lot of hard actions, hard words and levy actions can start taking place, appeals actions start getting involved, and it can get really messy and hairy. That is not the way to get your taxes fixed. You don’t go to war. You work with people and when the IRS realizes that, they will get further ahead too because, all of a sudden, all of these cases will start getting resolved on an equal footing basis.
Sometimes it works, sometimes you have to go to bat for your clients, as I have been finding out.
Lawrence: Unfortunately, and I talk about this a lot, you go into a restaurant, or the dry cleaners, or get your oil changed, or wherever it may be in life and I always use the restaurant. You go in and you could have a really great meal, but you could have really horrible service, and you are going to question, why did that waiter have a chip on their shoulder? I think, human nature is going to dictate that each person is going to have a different approach in life. You may have people that are just willing to bend over backwards.
I will tell you, right now, we have a client that owes significant dollars. It is well over ½ of a million dollars in back payroll taxes. We have a revenue officer that is absolutely incredible to deal with. I want to repeat that. The revenue officer is polite, professional, friendly, knowledgeable, and he is willing to try and be practical and take a pragmatic case approach. This guy is phenomenal. He is not in Florida, by the way, but absolutely phenomenal.
Then, we have another example of a revenue officer who is just absolutely unwilling to listen, to be reasonable, and wants to just really press the edges of the envelopes so hard, for no reason, and the dollar amount is significantly less that is owed. It is just mindboggling to me, how there is such a dichotomy between the approach of one revenue officer compared to another one. The size of the liability doesn’t really matter. We have clients that owe $30,000 – $40,000 and you would think they owed $20,000,000 by the way in which some of these revenue officers work. Now, this isn’t just IRS.
I am going to give you another example. It was not Florida. It was the State. We had a manger, not a collections revenue officer for a particular State. It was not Florida. The manager calls and says, “Your client owes money”. It is about a business and owes with-holding tax with the State that has with-holding. “Your client has got two options. Option one is that they full pay, and option two is they go into a payment plan”. So, the Levy Office said, “Well, with all due respect, Mam, there are other options. There is what they call ‘an offer and compromise’. Now, we don’t know if the client is gong to qualify or not”. The debt wasn’t overly large in the whole scheme of things with the tax resolution industry. It was literally under $10,000, at least at that time. This was recent. It was the past couple of weeks. The manager is saying, “Your client has got to pay, or they have to go into an installment agreement, or write a check”. We said, “That is not right. There’s other options that are out there”.
One of the reasons that I am bringing this up is that we want to educate the public. We want the tax payers out there to know that options exist. You do not have to always echo ‘yes’ to what the taxing authorities are requesting. You want to look at your options. You want to analyze your financial condition to see what option is going to fit, and each case is unique, and different, but you have options. You also have appeal rights that you need to understand that you can exercise. So, with the State issue, we said, “Look, you are wrong. It is not just cut and dry. It is not just option one or option two, there is actually option three and you have got to let people know”. They said, “Well, that is your job as a ‘power of attorney’ to let them know”. I said, “Yes, but not everyone is going to hire us. Not everyone can afford to hire us, and not everyone even knows to hire us. So, how is that right? Why would you not let tax payers know?” The representative said, “Well, they can look on the website”. Come on! It was the most aggravating call that we have had in a long time and we brought that to the attention of this person’s manager. So, this is the manager’s manager and he was actually very receptive, again, like with the issue with the Florida Dept. of Revenue, and said, “We are sorry. That is not correct. That is not what we are trying to promote. We are trying to promote a case resolution-oriented approach, and we should let tax payers know”.
Greg, referred to reps. earlier, representatives, power of attorneys. “We should let them know their options”. A lot of people are going to try and have their CPA doing this work. A lot of CPAs out there, and I am sure, Greg, that you ran into them in your career, they don’t know. It is like going to a dentist and saying, “Your child needs braces”. Well, the dentist is going to send you to the sub-specialist orthodontist. Greg, I am sure you had a lot of dentists out there trying to come to you for assistance, or you are dealing with them as a revenue officer and they, the tax payer, really could have used the orthodontist, the specialty. You saw that a lot, didn’t you, Greg?
Greg: Yes. All of the time. It is because their CPA maybe a wiz at preparing taxes, but when it comes time to figure out solutions to back tax problems and long-term solutions, again, that is not their specialty. Their specialty is preparing taxes and being up on the new tax laws, and all of the changes, and everything.
Lawrence: Just this week, we got another referral of a client from a CPA who was honest enough and sincere enough to herself, her office and her client. She has been on the show. “Hey, that is not my sweet-spot. That is not my area of expertise. I am a great CPA. She is a great tax preparer. She has got incredible tax planning knowledge, but when it comes to someone owning the IRS $100,000, that is not her sweet-spot, but it is ours. If you have an IRS problem. You pick up the phone and call the office. Right now, it is Saturday. It is tax season. We are open for seven days per week.
Locally – 561-865-7800 Toll free – 1-800-TAX- LEVY
Yes. Levy really is my last name. We are coming up in about 30 days to the famous April 15th deadline date. This year you get an extra couple of days because of the weekend and Emancipation Day, but if you haven’t filed in a while, or you are not happy with your accountant, pick up the phone and call us.
Locally – 561-865-7800 Toll free – 1-800-TAX- LEVY
We are local, we are the best, and always remember: –
“You want a Levy on your side, not one against you. Don’t fear a levy, hire a Levy”.
Signing off for now from the Levy Tax Help Show, the famous former IRS revenue officer of very 30 years, Greg Mahaffey, and also you have Laurence Levy in the house. Enjoy the rest of the weekend South Florida, you take care and we will talk to you next time.