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 Associates of Delray Beach, tax resolution specialists. Call Levy and Associates 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 their time and having a great summer in Florida. So far, the weather is holding off and we haven’t had any near misses. Let’s keep our fingers crossed that it stays that way.
Before we get into the show, I want to talk a little bit about firefighters and first responders and give a big shout-out to a couple of firefighters in particular that were very helpful. Last week, we thought we could smell smoke and ended up having the fire department come out. It has been in the news lately, but, whether it is the police or first responders, they are getting a bit of a bad reputation, in my opinion. I promised these guys, the firefighters that came out, in particular, that I would give them a shout-out. I wanted to start off the show by saying, “Thank you” to all of the men and women in uniform. The firefighters, the police officers, the first responders, the paramedics, the people in the military, and the former military, (? 00:01:49) to us, but we wanted to say, “Thank you to everyone out there. Particularly, these firefighters”.
These firefighters came out, and, thank God, it was nothing. Who knows, it could have been the smell of something bad in the house, or the AC unit kicked off a smell? I don’t know what it was, but the house was not on fire, thank God. After a few fire trucks showed up, we sat there and were talking to these firemen. I was there with my older son. It was just shooting the breeze a little and they were nice guys. A lot of firefighters have separate businesses. One of the guys had a photography business, another was in construction and we were trying to give some tax tips. We were asking what we could to do to say, ‘Thank you’.
Occasionally, when we have had an event and had left-over food because we ordered too much, like my wife does from time to time. We had a graduation party and ordered too much food. We called up the local police department and said, “Send over a car and grab these twenty-two boxes of pizza. We ordered too much”.
I said to the firefighters, “Do you get to share in that? When the Levy house sends over some food?” They said, “No. We are totally separate buildings”. So, we are going to put the firefighters on our rotation list.
I wanted to start off today by saying, “Thanks”, to the firefighters in particular, and certainly all of law enforcement, and military for keeping us safe and protecting us, and doing what they do to give us the life that we need to live, and function. When there is an emergency, you call the police, you call the firefighters (they are not gender specific), and they get out there. I am telling you, this crew was out there in minutes. I think, they were telling me that their response time from the minute they get the call and the alarm goes off, no matter whether it is the middle of the night or not, they have about two minutes to be out on the trucks and rolling. Something under two-minutes, if I am not mistaken, is the national average.
Let’s talk about men and women in the military. Greg Mahaffey, welcome back to the show. Greg was working for the IRS. Greg, for how long?
Greg: Thirty-two years, plus.
Lawrence: Thirty-two years plus, at the IRS. You also served in the Navy?
Greg: Right. I was also in the reserves and was called up for Desert Storm back in 1991.
Lawrence: Again, like we started off by saying, “Thank you” to the first responders and the firefighters in particular, we want to say, “Thank you for your service to this fine country and we appreciate that”.
Greg, working for the military is a different arm from your other career for thirty years which was working for the three favorite letters of the alphabet, that I am sure most listeners have, and, that would be an ‘I’, and ‘R’, and an ‘S’, for the Internal Revenue Service.
Greg, now that you are on the other side, now that you are power of attorney, and you are a former revenue officer, but you also worked in the offer and compromise unit dealing with offers. How long was that duty?
Greg: That was approximately three years and I also did employment tax audits for about two and a half years. I did innocent spouse cases for a six-month detail. I had various acting team management assignment duties, and I worked for the international ATAC unit. The ATAC unit is the people who deal with the high dollar, multiple entity money laundering part of the IRS. I did that for a three-year rotation. I was well-versed within my thirty-two years at the IRS.
Lawrence: Of all of that technical stuff, the offer and compromise is more simplistic compared to the ATAC. Although, offer and compromises are never easy, by any stretch of the imagination. Lately, we have had a tremendous amount of success with offer and compromise programs.
In particular, I want to talk about something that is recent from this week. It was on Monday. A client came into the office. We have talked about this file before, but when he came to us originally about a month ago, at the end of May. He had a bank levy and a wage levy, and within 24-hours one of the other PA’s, one of Greg’s colleagues, was able to get that levy released in full. The levy was holding a chunk of money and now on paper he owes about $600.000. He is a really nice guy. He is married. His wife had to be brought into this, not because she is liable, but, because she is married to him and they live together and share expenses to some extent. The do try to keep things relatively separate, but calculation-wise you always have to bring in the non-liable stuff. It gets pretty technical. He owes over $600.000 and we are now in the process of an offer and compromise which should, if accepted, save him over a half of a million dollars. As of today’s, airing of this show, right before we end the month if you are listening to this on live on Saturday, it is the 30th and tomorrow we are into July. In the next week we have the 4th July cook-in, in the middle of the week. The Levy Office is open, but the IRS is closed. Here is a really good example of a gentleman that came in and in a matter of under six weeks, we got his bank levy released and his wage levy released, and he had got an offer and compromise out in the mail. If it is successful, it will literally save him well over a half of a million dollars. That is not bad.
We are here to help tax-payers, our client, to navigate through challenging situations with the IRS. We don’t deal in any criminal matters. We deal specifically, and only in the civil arena. We don’t deal with, what is called the CI, the criminal investigation cases. We deal with areas of audit and if you haven’t filed your taxes in five or six years, or if you owe back payroll taxes to the value to $20,000, $50,000, half of a million dollars. If you are self-employed, a real estate agent, a plumber, an electrician. No matter what it may be that is causing you to get into a bind and a pickle with the IRS.
Greg, when you worked at the IRS, did you see a lot of people that would fall of the wagon because they didn’t fix the problem? Can you explain to the listeners how, at the Levy Office, we take the ‘let’s fix it’ approach so that you don’t come back as a repeat client? Did you see this at the IRS, that they wouldn’t fix these things the they would just keep coming back?
Greg: All the time. IRS revenue officers have a joke that “old tax-payers never die, they just form new corporations and accrue new taxes”. We always saw the same tax-payers over and over again which is one of the reasons why I came here to work when I retired from the IRS. I knew that the way this firm works is that when they get a case, they want to fix it right the first time. The old TV show, ‘Homes does it right’, or, ‘Homes on the homes, HGBT’, he does it right the first time. So, you don’t have to call a different contractor to come and fix your leaky faucet. It is the same thing here. We will analyze your tax situation, find out how you got into the mess, and develop a strategy to get you out of the mess after we develop a strategy to keep you out of the mess so that it never happens again. Ideally, you will listen to us and when everything goes right there are no more tax problem after we finally get you fixed. Sometimes, it is a heck of a job to get you fixed, but that is our goal here at the Levy Office. Fix it right the first time.
Back to you, Lawrence.
Lawrence: Back to you, Greg. I love it when you say, “Back to you…” The engineers laugh at that. It is like we are live on TV, “Back to you in the studio”.
Let’s talk about another one. This is the Florida Show. It airs in Florida. So, let’s talk about another gentleman who was in the office this week. By the way, we like you come into the office. We are local. We are the best. We have been around for a long time and probably maintain an A-plus with the better business bureau.
The phone number is: –
Local: 561 865 7800 Toll free: 800-TAX-LEVY
Yes. Levy really is my last name. We pronounce it L-E-V-Y, not L-E-E-V-E. Once in a while, IRS will say, “What kind of name is Levy?” I say, “Well, it happens to be my last name and it happens to be a pretty common Jewish last name”. So, bank levy, wage levy, we always say,
“Don’t fear a levy, hire a Levy, and, you want a Levy on your side and not against you.”
Let’s talk about another really nice gentleman. This guy is self-employed. He hadn’t filed his taxes since 2011. We had to file 2012 – 2017, both corporate and personal taxes, and when the dust settles he is going to owe, ballpark, about $50.000. Now, we don’t know the exact number, but it is going to be ‘give or take’. Now, Arnold, one the POAs right here in our Delray Office is going to be interacting with a local revenue officer. By the way, for this area, from Miami primarily just north of Palm Beach there are three IRS Offices. There is one in Miami. There is one in Plantation. There is one in West Palm. There is also one north of that, but this show we will call it Miami, Plantation and West Palm. Years ago, there was also an office in Deerfield, but Deerfield and Plantation merged many moons ago. Anyhow, this gentleman has a local IRS revenue officer. The return is now going to be submitted to catch him up so that he is in filing compliance, and when interest and penalties are assessed, he is going to owe, when the dust settles, probably $50,000. Now, what do you do?
If you owe the IRS, you do have options. Let’s run through. Let’s make this the pre-July 4th Show, besides saying the big shout out to the firefighters, but talking about IRS tax resolution basics.
Greg, let’s talk about the three options.
Installment Agreement
Lawrence: You owe, and when I say ‘you’ it could be an individual, or a business. You owe the IRS $25,000, $50,000, $300.000, $500,000, or whatever the number is, and, because you either make too much, spend too much, or have too much, meaning – liquidity and equity, and some of your assets. Whether that is retirement, stocks, equity in your house, the Harley Davidson, the vintage automobile, or a time-share, you have no choice but to enter into an instalment agreement because you won’t qualify for anything else.
So, installment agreements, typically, are going to be your fallback position if you don’t qualify for any other relief.
Greg, there is really no straight guideline. People talk about the Fresh Start and things of that nature. The Fresh Start is, what I will call an IRS advertisement to try and give you a fresh start. That is what they called it. The Fresh Start Initiative. There were adverts on the radio, but, basically, if you owe under a certain threshold you can go into an agreement and pay it back over six years, or seven years. Then, in a business if you owned a certain amount you can go into a payment plan and pay it back over two years, but an installment agreement is one of the options that is out there.
Currently, Non-Collectable Status
Lawrence: Now, let’s talk about ‘currently, non-collectable status’, CNC. Greg, do you want to elaborate on what CNC means, since you used to work at the IRS for thirty years?
Greg: In IRS jargon, CNC usually refers to a ‘hardship’ situation. Someone has had too many bills, too many necessary living expenses, and they don’t have any way possible of paying the back-taxes back. So, IRS will suspend active work on their case for a period of time to allow for them to reorganize their lives. Sometimes, they get back on their feet, and, sometime, they don’t. If they do get back on their feet and their income goes back up, those cases can be reactivated. So, just because it is in CNC status, currently non-collectable, doesn’t mean the IRS is all said and done with you. They can come back at any time in the future if they think that your income has risen to the level where you can start making payments against your back-taxes.
While CNC is an option, it is not a cure all. The only thing that is a cure all is either paying the taxes in full, or filing for an offer and compromise, or, eventually, taxes do die. There is a ten-year collection statute on taxes, but those collection statutes are very liquid, and they can be extended in various ways.
It does get very complicated, which is why, if you have a tax issue out there, you need to come into our office so that we can analyze it for you. We can tell you your options and which way you need to go, and what you need to do to keep out of trouble going forward. Believe it, or not, we want the same thing the IRS does. To keep you out of trouble from here on out so you never have to come back to us again.
We love our clients, but we really like to see it when they get everything together and they don’t ever have to come back to see us, except to say, “Hello” and “How are things going?”
So, that is the big deal. Again, currently non-collectable is one option, but it is not a save all option because it could come back in the future.
That is a very important thing to do, and in many cases that is the only thing that can be done. Again, you need a professional to tell you what your real options are, and, again, everything is based upon interacting with the IRS which is what we do for you.
Back to you, Lawrence.
Lawrence: I love when you say that.
Greg: It is just to give you a chuckle.
Lawrence: We appreciate the chuckle, Greg. You are always a boisterous fellow.
So, currently non-collectable is an option. Depending upon how long you can stay in non-collectable status, depending on if you stay on non-collectable status, and depending on when your statutes are going to expire. You will hear a lot of these terms if you listen to the show a lot. It is called, C-SED – collection, statute expiration date. So, when does the IRS lose their right to try and come after you for the money? When does the statute expire?
There is a lot of strategy involved, but a lot of it also comes down to whether a tax-payer, business or individual, have disposable income. The IRS can place an individual into ‘currently non-collectable status’. The IRS also has, what is called ‘in-business CNC’. That is, in business – currently non-collectable. There are options out there. By the way, in business – currently non-collectable is NOT very common, but it does happen. If you are current, and if you can show that you have no distainable assets, you don’t have receivables (receivables are going to pay the payables), and you have no ability to pay but you are able to survive and sustain life, then, perhaps in business – non-collectable is an option. It is something that you can consider.
We are about half-way through the show here. Let’s jump to another Florida file. This gentleman is in a situation where he owes the IRS quite a bit of money. Somewhere in the neighborhood of half of a million dollars. His mum ended up getting hurt and he had to spend some of his time and money on addressing his mother’s medical needs. By the way, as a son, you can’t blame him. It means he is a good kid. Well, he is not a kid anymore, but it means he is a good son, meaning a good kid to his mother, but, sometimes, you let things go. We see that all of the time. There is usually, most of the time, a pretty darn good reason as to why someone has got themselves into a financial pickle, or otherwise. It doesn’t always happen like that, but, some of the time, it does.
If you have an IRS problem, you have got to pick up the phone and call us.
Local: 561 865 7800 Toll free: 800-TAX-LEVY
As we have ten-minutes or so left, I want to just talk about this gentleman that ends up owing about a half of a million dollars, maybe more. He ended up filing his return. By his filing status, compared to filing married separate, he filed married-joint which really changed the return for him quite a bit. We ended up getting him about $10,000 for one of the years, another year he may be losing the refund because more than three years has expired, but there is some smart play that was involved in how this came about.
When you have a tax problem, you want to try an analyze it from all angles, both in tax-preparation and in a pure accounting perspective should you file married-joint, or married separate, what is it? Unfortunately, a lot of people don’t do the analysis. A lot of people are doing their taxes online on Trimble Tax, self-preparing them. I would say that 98% of the time you should hire a professional.
I was talking with the firefighters about that. You should always have a professional prepare your tax returns. So, in the (? 00:20:53) prepare box, you always have a professional that is going to be out there and that is going to be assisting and guiding you.
Where the tax resolution meets the tax preparation, that blend and that crossover, and that synergy is really critical. Oftentimes, we work hand in hand with CPAs. In fact, just on Monday, I got a referral from another CPA. We get referrals all of the time from CPAs because they don’t specialize in tax resolution. It is not what they do. Also, they aren’t geared to deal with the multiple years of unfiled tax returns.
Greg, when you were at the IRS, did you see a lot of tax-payers, the clients that would be in your inventory, as the term goes, who just simply didn’t have a book-keeping system, or didn’t have any type of books, or their accounting was slim – non-existent? If they had a CPA, they really weren’t doing a great job. Did you see that? Was that almost the crux and the foundation of a lot of the tax problems? Was it because they lacked book-keeping?
Greg: Yes. A lot of the time. What that usually results in, when you don’t have good book-keeping, and you don’t have good accounting, your taxes end up being abnormally high. A lot higher than they should be. In other words, you are paying tax on monies you really don’t earn simply because of the way you are recording your income and your expenses. This is why, when you are out there, and when you are in business, you need to rely upon a professional. We can’t all be professionals. Plumbers don’t prepare tax returns. Plumbers are not book-keepers. Plumbers are plumbers. Heating and cooling specialists are great when it comes to HVAC issues, however, when they hit big deals what they have problems with is basic book-keeping. Let the plumber be a plumber and let a book-keeper be a book-keeper. When you try to do something that you are not trained to do, disasters usually happen. It is like trying to fix your own car and you don’t know what you are doing. You go down the road, you think you have fixed the brakes, and, then, all of a sudden, you realize that you have no brakes. It is the same thing here. Don’t let your tax life get out of control and let there be no brakes. Hire a professional and do it right the first time. It may cost you some money upfront, but in the long-run it will save you tons and tons of money and aggravation and time in the future.
Back to you, Lawrence.
Lawrence: Thanks. I am going to give you another example along those lines. We had a gentleman whose company grows to over $1,000,000. So, listen up to this one, everyone. Literally, his company grossed over $1,000,000. We looked at his tax return and it was self-prepared. We said, “Why are you doing this?” These accounting 101 basics, as we come to the top of the hour here. If anyone is listening, if you take just your corporate bank statements, in theory, if you add up all of your 12 months-worth of bank statements, the deposits, that should equal your income. Assuming all of the deposits are income. That is a basic question we always ask out clients, “Are all of the deposits income?” He came back to us and said, “No. It is not”. He actually had merchant cash advances. He had loaned his own company money. So, when he prepared his own corporate tax return, he actually overstated the income. It is well over $100,000, so he said. I said, “Why would you not have hired someone to prepare your tax return?” This was before us, obviously. It makes absolutely no sense to me. He couldn’t afford it at the time. Mind you, he is doing over one million dollars of income.
Here is the interesting part. A company can be grossing one million dollars, but they could also have one million dollars of expenses. Oftentimes, whether it is the IRS, or whether it is the Florida Department of Revenue, they are looking just at the gross revenue, and saying, “Here is a company that grosses one million dollars”, but they are not necessarily looking at the other side of it, which is the expenses.
As Greg mentioned, if the income is overstated because some of the deposits are loans, you are doing yourself a tremendous injustice. The moral of this portion of the show is to make sure that you have your financial house in order. Make sure that you have your books in order. Make sure that you have book-keeping being done. Make sure that you reconcile your bank account. You really want to make sure that all of that financial component of your business model is in order.
Greg mentioned the plumbers, the electricians, and the HVACs, what about the self-employed lawyers, the self-employed doctor?
Greg, you are dealing with a podiatrist now that hasn’t file corporate tax returns in 3 – 4 years, and his practice grosses $800,000 – 1,000,000. Is he a dermatologist, I don’t know? Anyhow, he is a doctor. He is a nice guy. Again, he just hasn’t filed his taxes.
We are dealing with a roofer and he has got a tremendous amount of volume and transactions, and his very nice right-hand assistant, we will call her, she is his right hand and his left-hand assistant. She does everything. She is office manager. She probably helps out with the sales. She does everything for him, but she doesn’t have enough time in the day, wearing multiple hats like that, to do the books. So, now we have to go back and clean up on one and a half years of books because the revenue officer is asking for a year, to date profit and loss statement. You say to the client, “What do you make?” He says, “I don’t know”. It is because he doesn’t have the financial statement to support the answer to that question. What do you make? What do you spend? What do you have?
As we have about three-minutes left, and we come up to the top of the hour here, if you are listening live on a Saturday, let me just recap, briefly. At the top of the show at 08.30 hours, we talked about how much we wanted to say, “Thank you” to the firefighters out there. The firefighters out there probably don’t get enough credit, in my opinion, and lately the police have been in the news and getting a bad rap too, but I will tell you from the Levy Office, we want to say, “Thank you” to all of those who serve. Whether that is firefighters, police officers, first responders, paramedics, those in the military, former and retired military like Greg. The Levy Office wants to say, “Thank you” because, I will tell you something, these firefighters were at our place in less literally a matter of minutes, and we appreciate it. That gave us the peace of mind.
Going into July 4th, a little bit of celebrations. It is interesting, when that holiday falls mid-week like that. People are taking Monday and Tuesday off and coming back on Thursday or Friday. They are going to take off on Wednesday and make it a long weekend.
In the Levy Office, we don’t sleep. We are open seven days per week, and we actually enjoy the weekend calls. In fact, this past weekend, one week ago today, at 09.00 a.m. we had a call with a gentleman who hasn’t filed his taxes in about six years. He is in the middle of a quasi-audit where they are SFR. That is an acronym for substitute for return. They are saying that he owes one million dollars and he hasn’t filed. He asked them, “Why?” He is a really nice guy. His wife passed away. She had cancer. He ended up being a single dad and raising kids, and one thing led to another and he just buried his head in the ground and ended up actually moving from somewhere up north to sunny Florida. He now is trying to get his life back in order. He is a real nice guy. He is just a down to earth guy. You hear these tragic stories. Does the IRS care that his wife died nine or ten years ago, and he had to focus on being a single dad, probably not, but when you explain it to the IRS, maybe the person who is assigned the file is going to have a bit of a heart and is going to understand and give us the time to get the six years-worth of delinquent tax returns prepared? There is some accounting and book-keeping needed. It is not just quite as straightforward as one would have thought, but, Greg Mahaffey and those in my office who are the POAs advocate for the tax-payers.
If you have an IRS tax problem, you want to hire the Levy Office. You want a bench that is deep. I am not a sports guy, but we have the former IRS revenue officers, like Greg and like Claire, both of whom worked at the IRS for over thirty years. Claire Coffee has actually been on the show. She ended her career for the past ten years before she retired, working exclusively in the offer and compromise unit. Not everyone is going to qualify for an offer and compromise, but, a lot of people do.
Again, to recap for this show. We said a big, “Thank you” to the firefighters out there. We talked about what you do if you owe the IRS and what do you do if you haven’t filed in a number of years. Don’t you want that piece of mind?
If you are listening now, call us right now. The show is going to end in about one minute or so, pick up the phone and call us.
Local: 561 865 7800 Toll free: 800-TAX-LEVY
Yes. Levy really is my last name. Greg, thank you very much for all you do, and I know you are going to be absolutely going on a little siesta and a little bit of a vacation for the 4th, coming up next week. So, thank you again.
For everyone listening out there, from the Levy Office and the Levy Family, to you and yours, we want to wish you a safe and happy 4th of July. Enjoy the rest of this weekend, and if you are taking some time off, be safe out there. Fireworks are always a little bit scary. That is the dad in me, coming out. So, be safe.
Signing off for now, Lawrence Levy, and Greg Mahaffey. Greg was a former IRS revenue officer for over thirty years, knocking on your door, and now he will help protect you and make sure that you are able to get some sleep at night and peace of mind.
Remember, you don’t fear a levy, you hire a Levy, and you want a Levy on you side, not one against you.
Call us, 800-TAX-LEVY, if you have any tax problems. We are here for you, seven days per week.
Enjoy the rest of the weekend, South Florida. Take care. We will talk to you next time.