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 the week. We hope that you had a great ‘Memorial Day’ long weekend. The IRS, as well as a lot of places in the State of Florida, was closed on Monday. For those of you that didn’t work and had a short week, there we are. Let’s start off by giving out the phone number because I have been told that we don’t give it out enough.
Local 561-865-7800 Toll free 800-TAX-LEVY
Yes, Levy really is my last name.
What do we do in the Levy Office? People often ask this. Well, we specialize in IRS civil tax controversy, as well as State civil tax controversy. At the Levy Office I have employed CPA staff, Enrolled Agents (EA), and former IRS Revenue Officers. We are about to talk to someone who used to work at the IRS for over thirty years. I will introduce him in a second. We have the accounting staff, the book-keepers, the case managers, and our fantastic administrative staff, and our receptionist. At the Levy Office, we have a very deep bench. From the CPA to the attorneys, and to the EAs, they all function as what is called ‘power of attorneys’ to represent tax payers throughout the country that have tax problems, either with the IRS or with the State.
Let’s introduce again, officially, Greg Mahaffey because it is the morning on Saturday and you may hear this again on Sunday on our sister sports station, ‘The Hurricane – AM 840’. The show re-airs on Sunday. Let’s say ‘hello’ to Greg Mahaffey. Greg Mahaffey used to work at the IRS. Greg, for how many years, 32 years?
Greg: Thirty-two and a half years before I retired for one weekend.
Lawrence: Thirty-two and a half years. In talking about ‘Memorial Day’, you were in the military. You served in the Gulf War in the navy, so thank you for your service. We appreciate that, certainly. Greg, when you worked at the IRS, you were a revenue officer for most of the time, and you also worked a little bit of time in the ‘offer and compromise’ group, is that correct?
Greg: Right. I was an offer specialist for about three years. I was also an innocent spouse specialist for a six-month detail. I was an employment tax specialist for two and a half years, as a revenue officer examiner I worked (? 00:03:07) cases which are highly specialized cases for a three-year rotation. So, I have done a little bit of everything including various acting management assignments, and so forth. So, I have been all over the place at the IRS.
Lawrence: So, a well-rounded, former veteran revenue officer that has knowledge from innocent spouse files, to offer and compromise cases. You even worked a lot on (? 00:03:34) which was a very high dollar involved, technical, tricky cases. You were a relatively high-grade level when you retired, correct?
Lawrence: I don’t mean that you got good grades like in high school when you graduate with an ‘A +’, but the IRS has grade levels of their employees which basically means what?
Greg: It means the expertise level. They rate on what you can do, the assignments that you are given, and the complexities of those assignments.
Lawrence: You are a complex guy. At the IRS, I will tell you, when you worked there and someone in our office ended up getting a file that you were the revenue officer on, we were always very happy because we knew that you were fair, reasonable, tough, but you also took a very practical case approach. You were always looking towards a resolution, as opposed to being the anti-Christ of our resolution and trying to cause grief and unnecessary headache and heartache for people. You, at least, were trying to work towards resolution.
Greg: Right. I tried to help people.
Lawrence: Yes, you did. Absolutely, and you certainly do now. You try and advocate and try to help people. You have a phenomenal work ethic. You work a lot. You can hear the passion in your voice.
I want to talk a bit about a frustrating story that we had. It was not with the IRS, but I want to bring it up again because it is still in flux as we air the show. One of the POAs in our office was dealing with the Florida Department of Revenue. It was not the IRS. It wasn’t, in the tax resolution world, a huge liability. It was just over $20,000. It is a lot of money, don’t get me wrong, but in the tax resolution world it is not a huge liability. One of my staff members had proposed an installment agreement to satisfy it and pay it off at $500 per month. The Dept. of Revenue said, “No. We believe they can pay $25,000 per month”. We said, “Well, can you please show us how you arrived at that number?” Absolutely zero mathematical skills were used to determine how this particular tax payer can pay $25,000 per month. When we asked the question, “Can you please show us?” Greg, do you remember back in 8th grade, or 7th grade, where the math teacher would say, “Show me your work”.
Greg: Yes, and if you don’t show the math teacher your work, if you were in a parochial school you would usually get a whack to the side of the head, but that is besides the point.
Lawrence: Well, please, God, I hope that doesn’t happen in today’s world, but, yes. So, if you don’t show the work, you would fail. You would get that problem wrong and they would give you a negative mark on that.
So, when we asked, politely, professionally, and in a reasonable fashion, “Please show us how you arrive to it, that this particular tax-payer can afford to pay $25,000 per month. Where do you see $30.000 of disposable income?” It was absolute silence. There was no answer. There was no, “Well, let me go back and check my notes”, or, “Let me tell you how my analysis of this tax-payers tax return, or the financial statement, or the bank deposit analysis, or the analysis of the bank statements led me to believe that this tax-payer can afford to pay $25,000 a month”, let alone $2,000 a month. There was absolutely no explanation that made any sense. It was very frustrating. Of course, you have to then speak to a manager. Then, you have to speak to the manager’s manager. Then, you have to speak to another level up in the management. You finally have to get through to someone who can be reasonable about this.
If anyone is listening out there that owns a business, whether it is the IRS or the State that it is suggesting that you can pay a certain dollar amount, you really need to look at the numbers.
The IRS has their own financial analysis. They have two forms that they ask you to fill out. A 433A is the form you fill out if you owe individual taxes. So, if you are an individual that owes taxes, e.g. payroll taxes, civil penalty trust fund, or it could be income tax. If you are a business, they want you to fill out the 433B. The premise behind the 433A, or 433B is simply two-fold.
- What do you make and what do you spend?
- What do you have, and what equity do you have with any assets that you could liquidate?
Generally speaking, the IRS is going to give you their analysis as to how they arrive at the number. Occasionally, we will run into a revenue officer who just believes the tax-payer can pay a certain amount, and they don’t have any basis for it. They just want to say, “Yes. We think you can do this”, but it doesn’t really matter what you think, or what they think, it really matters about what the numbers look like on paper.
Greg, as a former IRS employee who worked at the IRS for thirty years, does the IRS have an obligation to analyze the financials, to then determine what a tax-payer truly can afford to pay? Isn’t that part of what your job is, as a revenue officer? To look at the numbers?
Greg: Yes. You get the financial statements from the tax-payer, review them. Look at the documentation and analyze them and determine what is the fair and proper resolution.
Can the tax-payers stay current?
- Can the tax-payer realistically make any kind of payments?
- Can the tax-payer possibly borrow against equity assets?
- Does the tax-payer have any assets that might be used to borrow the money?
Borrowing against assets is cheaper than paying the IRS on instalments. I actually looked at it as a tool and a ‘give and take’ to work with the tax-payer to try to figure out their situation. Ideally, the IRS should be putting itself in the tax-payers shoes to see how they got into the mess, making sure that they fix the mess and the source of the problem, and then coming up with a solution on the back taxes. That is what should be done. It is not always done though.
That is why you need a firm like us to step in there and advocate for you. Too many times someone will take the lazy way out. They will just divide what is owed by a given number, such as 24 months, or 60 months, or 72 months, and say “Yes. This is what you can pay per month”, and not realize that you have got to fix the source of the problem first. Do it right the first time. That is what we do here, at the Levy Office. We analyze your situation. We see how you got into the mess. We come up with a solution so that you don’t step into the mess yet again, in the future. Then, we come up with a solution or a proposal to get you out of the mess as far as resolving the current tax situation. Back to you, Lawrence.
Lawrence: ‘Back to you’, Greg, I love that. So, when you used to work at the IRS and a power of attorney, or a tax-payer would supply you with financials, and I will make up these numbers, but the business was grossing 1.2 million dollars. They made $100,000 per month in gross revenue, but they also spent $100,000. So, they were literally at a ‘break-even’, or potentially at a loss. Does the IRS have ‘currently non-collectable’ status, which means that they have determined that you cannot afford to pay? Therefore, the IRS will deem you ‘currently non-collectable’. That is an option as well, if you truly can’t afford to pay.
Greg: Yes. That is one of many options that the IRS has. However, if you are in business and these are payroll taxes, that option is very, very difficult to get because the IRS has to be convinced that you will never fall off the wagon again, going forward from here. They have to be certain that you will never run into this problem again. They can consider a currently non-collectable, or a hardship situation on an ‘in business’ tax-payer.
Individuals are a different story. Individuals get what they call a 53 or put into hardship all of the time due to various factors, such as personal disasters. Maybe someone is in the hospital, maybe someone has surgery, or perhaps someone lost their job, or they were laid-off. It could be one of many different alternatives that could happen, and that is the job of the IRS revenue officer specifically, to analyze and see what is going on and make a firm but fair determination on a resolution with the case.
Lawrence: Ultimately, there are a few options that are out there. So, let’s talk about them. If anyone is listening out there and owes to the IRS, pick your number – $50,000, $20,000, $500,000. Whatever you owe the IRS, there are solutions that exist out there. We are going to talk about them, just to get back to the IRS tax resolution 101. So, you owe the IRS $100,000. When I say, “You”, it could be payroll taxes for your business, it could be income taxes for you.
- You make too much.
- You spend too much, or,
- You have too much.
If any of those are applicable, you then are going to be stuck with an instalment agreement, more than likely, and you have to pay back the debt that you owe. However, if you qualify, like we just talked about, the IRS could deem you CNC. The acronym means ‘currently non-collectable’.
Greg is right. In business, currently non-collectable is not a very common collection alternative. It is an option. It is called ‘IRM’ – internal revenue manual. In order to qualify, you have to be able to prove that you can stay current, but you have no distrainable income, and no disposable income, and you can’t afford to pay the business.
Now, individuals can be deemed currently non-collectable, probably a little bit easier depending upon the situation. The IRS has what they call CNC status. It is a Code 53. If you ever hear that term things get pretty technical. So, being deemed uncollectable is another option.
What you hear advertised a lot is an ‘offer and compromise’. You owe the IRS $100,000 and you try to settle for, in essence, pennies on the dollar. That is an offer and compromise. It doesn’t always work for everyone. It is not always going to be in the stars for everyone, but certainly, if you qualify there are options there.
Right now, one of the POAs in our office is dealing with a file where the gentleman owes over 1 million dollars. There is a tentative offer and compromise amount of $189,000. So, he is literally going to save, when all is said and done, over 1 million dollars if the IRS goes through and approves the offer and compromise. He will pay $189,000 against his 1 million dollars plus liability. I want to be very clear. It doesn’t always work like that.
If not an offer and compromise, you have a Plan B, and a Plan C. There are options that exist. If you are sitting here on a Saturday, or driving around, perhaps you are relaxing and kicking-back whilst having a bagel and cream cheese, or some healthy yoghurt and granola, like my wife as she likes to eat healthily. You may hear this show and think, “Wow, I should do something”. We like the weekend calls. If you are hearing the show, please call us.
Local 561-865-7800 Toll free 800-TAX-LEVY
Remember, you want to avoid the levies.
“You want to have a Levy on your side, and not one against you. Don’t fear a levy, you hire a Levy.”
That is what we live by. You want to be mindful of dates because the IRS is going to give you deadlines. If you don’t hit those deadlines, guess what? The IRS loves to use my last name. Yes, it really is Levy. My father was from Europe and it was always ‘Levy’, not ‘Leevie’ (pronunciation of name). We say, ‘Levy’. When people have their bank account levied, or their wages levied, or, if it is a business you could have your receivables levied.
We were just talking to a dentist this week. He came to us as a referral. The revenue officer has levied his receivables, part of his insurance carries the receivables coming from insurance companies. We are dealing with that whole mess. That guy owes quite a bit of money and has had an ongoing history and struggle. He was using another firm that he wasn’t too thrilled, so he jumped over to us.
Greg, when you worked at the IRS, did you see a lot of practitioners out there who really didn’t know what in the heck they were doing? It was almost embarrassing because you could talk circles around them. You are an honest and sincere guy with a heart, and you want to try and help people. You didn’t try to talk them into having their client do something that they can’t even afford or achieve. Did you see that a lot when you worked at the IRS? Were there a lot of power of attorneys out there that really didn’t have any business at being in the tax resolution world because it just wasn’t their area of specialty. Much like going to a dentist for braces, you don’t go to your chiropractor if you have chest pains. Did you see that a lot, Greg?
Greg: Yes. All of the time. Especially, with the brand-new attorneys who were fresh out of law school. They thought they could just handle everything that has to do with law practice, and they jump right into what they thought was going to be the easy stuff, but it is some of the hardest stuff in the world, namely tax resolution issues. You have got to know what you are doing, and you have got to know your options. You have got to know what options you do have, and what rights you have so that you can best be represented by someone who knows what they are doing. Not someone who is going to ‘wing it’, and hope for the best. They could get you any old instalment agreement, but you need someone who is going to fight for you, and advocate on your side by being in your corner.
I have been in everyone’s corners. I have fought tooth and nail for some clients. Again, the trick is to try and find a common resolution. Most IRS people want to find a common ground. Some not necessarily as much as other, because, once again, we are dealing with individuals, and everyone does things differently.
Again, it could be someone at the IRS, or, it could be someone from the State, but you have got to know what you are doing. You have got to have someone who knows that they are doing and know what your rights are, and how to protect you. They need to know how to file necessary appeals, and if necessary, go above that person’s head and through to their manager, or group manager, or even territory manager depending on the circumstances and the nature of what is happening.
Just yesterday, I had to be on a call with three different managers on a couple of different cases. In the end, we got the levies released. We got everything done. The tax-payer is going to be filing the necessary return so there will be no more miscommunication, and we should quickly be on our way by Monday morning to getting that case resolved and fully closed. Everyone is happy eventually, but, again, you need a firm that can fight for you, will fight for you, and will stand in your corner for you.
Lawrence: Right. I have to tell you, we had a similar situation right here last week. It was with a really nice gentleman who came into the office. He came in with the weight of the world on his shoulders. He had a bank levy and a wage levy. It happened to be assigned to, what we believe to be a very reasonable and fair revenue officer from right here in South East Florida. Danielle, one of the POAs in our office, was able to get on the phone within hours of this gentleman leaving our office. It may have been less than two hours, and she was able to get the levies released. This was before the ‘Memorial Day’ weekend. We talked about it a little bit, but he came back into the office mid-week, on Wednesday of this week, and he was so thrilled. He was able to enjoy his weekend and not have the stress that he has been going through. He was just as happy as could be. It is not an easy case, but the revenue officer was very reasonable about it.
A lot of the time, you try to take the emotions out of these files. If you are listening and you have an IRS problem, take a minute and pause.
- Why have you not done anything about your IRS problem?
- Why have you not tried to reach out to someone, like us, to ask for assistance?
- Is it because you are fearful that you are going to poke the sleeping dog?
- Is it because you think you can’t afford to hire a firm to represent you?
- Is it because you are the quintessential procrastinator that is out there listening right now?
Any of the above. If it fits, call us. There is no harm in asking questions. We want to talk to you. We want to help. It is a very good feeling to help someone.
I will give you another example. We had a couple from Florida that owed the IRS about $80,000. They set themselves up into an installment agreement, not know that there were other options that exist, but they didn’t do the financial analysis. When we took over the file in the past few weeks, one of the POAs in our office was able to call and get penalties abated to the value of just over $3,000. So, we were able to call the client back and say, “Look, we were able to have the IRS remove over $3,000 of penalties”. They said, “I can’t believe it!”
For everyone out there who is not in the ‘biz’, you wouldn’t know how to do that. You have to do the research. You can go to IRS site and look up penalty abatelement. There are certain criteria that you have to qualify for. There are different types of penalty abatements that exist, and you have to hit reasonable cause. There is a whole bunch of things that go on with that one, but, ultimately, when we called that client back and said, “Look, in the first week that we were representing you, we were able to save you $3,000 against your $80,000 debt”, they were absolutely tickled-pink with that. It was incredible. At least, it starts to file again, but it doesn’t always work like that. Let’s be very clear about that, but, if you are listening and you have an IRS problem call us.
Are you in the middle of an audit? Are you worrying at night because you know that one day this is going to hit the fan?
We talked to a retired school teacher who hasn’t filed her taxes in several years. She was sick of worrying. She eventually said, “I just want to be done with this”. She knew it was coming one day, and here we are now, having to catch up on some tax return and getting her back to compliance. We try to advise her of how she should be handling her finances going forward with pensions from the school system and with any other sources of income that she has. It just takes you to move in that direction in order to fix the problem.
A lot of people come in and they have the weight of the world on their back, and, when they leave they have a sense of relief. It is not an overnight fix, I want to be clear. Not everyone is going to qualify for an offer and compromise, but there are options that exist out there. As we come to the top of the hour here, with about five more minutes left, here is our phone number.
Local 561-865-7800 Toll free 800-TAX-LEVY
We would love to have you come into the office. The office is on Federal Highway, about half of a mile south of Linton. We are on the east-side of Federal, right across from the Ed Morse Toyota headquarters. We are right next to Enterprise Rent-A-Car.
Greg, let me just go back a little bit. You were dealing with a gentleman about a year ago. He had fought cancer successfully. He owed the IRS about a couple of hundred-thousand dollars. He is from right here in South Florida. You were able to have the IRS accept an offer and compromise for around $50,000. You probably saved him about $200,000, give or take. Doesn’t that make you feel good, to go home to your wife and loved ones and say that you helped this guy out that had cancer and he had been riddled with this IRS debt. The revenue officer was not that friendly to work with. The offer and compromise division were quite a bit better, if I recall. Doesn’t that make you feel good as a human being, to be able to help this guy out and save him a couple of hundred-thousand dollars?
Greg: That is the main reason that I am still doing this to this day. It is to help people out.
Lawrence: It is a good feeling, and because you used to work there for thirty-two years…. We also have Claire Coffee, she used to work at the IRS for over thirty years as well. She was in the offer and compromise division unit for the last ten years before she rounded-out her career. So, that is what she retired as, an offer and compromise specialist. Just between Greg and Claire, we have literally over sixty years of combined experience with people who worked at the IRS.
Greg, when you speak to a revenue officer and they are saying or doing something that you know is wrong, or not allowed, or inconsistent with policies, you will call them out on that, and say, “Hey, I used to be a revenue officer. You can’t do that”, or, “You are looking at this wrong”.
Now, obviously, there is a delicate way to politely approach that, but do you see that occasionally where the IRS doesn’t even follow their own rules, and you have to push to upper management?
I will give you an example, as we come to the top of the hour. Do you remember last fall, right around when the hurricane hit, when one of the POAs from our Florida office was working a file? It was not a Florida file, and so it didn’t sit on-hold while the hurricane was going on, when they had the O-Freeze. The revenue officer tried to say that an offer and compromise was sent out to intentionally delay or hinder collection. Do you remember the aggravation that we had to go through, last fall, trying to get that reinstated? We talked to management, we talked to the territory manager eventually. Do you know what case I am talking about?
Greg: Yes. I remember that one very well. I stayed late that night, again. I had to stay late on that one to get it resolved. We ended up arguing and ended up just having to tell him, “Hey. This is not a frivolous offer. Look at the big picture. How can this be frivolous if he is putting $40,000 up front with an offer. That is a lot of money to waste if you are only going to be stalling for six months”.
Lawrence: It was crazy. It was absolutely insane, but the good news is, that offer, and compromise was recently accepted, in the past few months. How great is that? So, here you go from a revenue officer that tries to kill the deal, and I think he know he is wrong, but the amount of effort that we had to go through trying to get his offer back on the table was astonishing, when the end result was that it was a good offer and compromise. It was a solid offer and that is why the IRS has these programs out there, but, if you don’t know what you are doing you would be stuck.
Pick up the phone now.
Local 561-865-7800 Toll free 800-TAX-LEVY
Ask questions. We are happy to answer them, no problem. Give us a call.
Greg, thanks again for all that you do. Signing-off for now from the Levy Tax Help Show, Lawrence Levy, and Greg Mahaffey who used to be at the IRS for over thirty years as a revenue office. Greg, thanks for all of the hard effort that you put forth on behalf of these clients. Enjoy the rest of the weekend, South Florida. You take care and we will talk to you next time.