Lien’s, levy’s, 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. That’s 800 TAX-LEVY. That’s 1-800-829-5389. Now the Levy Tax Help Show.
Lawrence Levy: Good Morning South Florida and welcome once again to the Levy Tax Help Show. We hope that everyone is having a enjoyable week. However, we did want to start off the show by mentioning and passing our condolences as we did have President Bush pass away and actually IRS was closed. Federal agencies were closed on Monday due to his passing. So we did want to make a public statement, um, and pass along our condolences to President Bush and his family. And we are not here though to talk about politics. We are here to talk about what you do if you have a tax problem? What do you do if you haven’t filed your tax returns in a few years? What do you do if you’re a business owner and you owe back payroll taxes. What do you do if you’ve got yourself into a jam with the IRS in a civil matter, not criminal, and you can’t afford to pay back the IRS? Well, you give us a call. The local phone number is (561) 865-7800 and the toll free number is 800 TAX-LEVY and yes, by the way, Levy really is my last name. Well, let’s start off this show today, by reintroducing everyone to one of the Levy team members. Claire Coffey is going to be joining us today and Claire used to work at the IRS for a long time. Claire, how long were you at the IRS?
Claire Coffey: 37 years
Lawrence Levy: 37. I always tell people 32, that was Greg. I know Greg was always says 32 and a half years. 37 years. And I know you split up your career and did a couple of different things. You were a revenue officer for a while, right?
Claire Coffey: Yes, a Revenue Officer for the majority of the time. That would probably be total, it’s about 30 years.
Lawrence Levy: Okay. And then seven of the years you were an offer specialist?
Claire Coffey: No about 15,
Lawrence Levy: 15 years. Okay. Got It. All right. So, um, and just out of curiosity, I’ve never asked you actually, but um, what did you like best before you answer that to people who are listening? A revenue officer is the one that would knock on the door. If you are a business and you owe back payroll taxes or you’re an individual, they’re in the field, they are field collection, uh, IRS employees and offer in compromise specialist, they’re the ones who evaluate the merits of an offer in compromise. I think two different jobs obviously, but what one was easier and which one did you like better? If those are even valid questions, what did you like doing.
Claire Coffey: That, you know, they both could be easier or difficult. But, in regards to what I personally liked better was the offer in compromise sides?
Lawrence Levy: Why
Claire Coffey: I could say yes. I could tell, yes I could get an offer in compromise and say yes, you know, there’s some that would not work. But the ones that I could, I could say yes to and that I always enjoyed that.
Lawrence Levy: But that probably made you feel good because a lot of our clients, they need a way out. They need a path to resolution. And of course everyone who walks in these doors, they obviously want an offer in compromise. But since you used to do that for living for uh, 15 years or so, can you just explain to everyone what an offer in compromise is? So a client owes the IRS pick a number, $100,000. What does an offer in compromise mean to the average person out there? In layman terms,
Claire Coffey: An offer in compromise means that they are going to settle for x amount on the dollar, whatever x amount is. You’re looking, the IRS will typically be looking at your equity and assets, um, money in the bank and your ability to pay and doing a combination in the calculation of those. So we could be anywhere from, I know we had one for a dollar and that actually worked. That was a little different, but we went on, you know, we’ve gone all the way up to 80,000, $100,000 that have offers that we’ve looked at and gotten accepted. So yeah, but it could be anywhere in, there could be $2000, $5000, you know, $2100. it all depends on what the picture is, right?
Lawrence Levy: So to water that down a little bit for everyone listening, a client comes in and if you’re listening and you owe the IRS money, pick your number. 50,000, it could be $500,000. In fact, I’m just pulling up a file right now that will give us a good example. It was a large dollar amount. We’ve talked about it a couple of times, but I’m going to give you, because it was pretty recent that we just got this acceptance letter in for this gentleman. I think he owed about a million dollars. This was about a month old. Actually, November 8th to be specific. Uh, so exactly a month. Uh, November 8th was the date of the acceptance letter. “Dear Taxpayer, we’ve accepted your offer in compromise you signed and dated. The acceptance letters is the of this letter we applied 17 thousands towards the payment” and I believe this offer for this gentleman, and this went back a long time, went back over a decade. This guy owed taxes back to 2004 and he owed, I’ll tell us in a second, I believe it was about a million, maybe a little more, maybe less, but his offer was 85,000 and change. So not the pennies on the dollar, but assuming he owed a million. And I’ll see if I can find what that number is in a second. But as Claire was saying, it’s basically income versus expense. And then after you get the income versus expense component, what do you make? What do you spend after that? You then go down to equity and assets. So what do you have that’s got equity in? And actually I was about right as of Monday, the 17th of September, 2018 the gentlemen owed over a million dollars. Just over one just over a million dollars, we’ll call it $1,000,030 and to be able to get rid of this for whatever I just said, what was it, $85k, right? That’s a pretty good deal. So is it pennies on the dollar? Well, less than 10 cents on the dollar. So that’s not a bad deal at all to get rid of something that has lingered and plagued this family literally for over 14 years. Claire I think getting back to the comment I asked you, It probably did make you feel good to be able to say yes and to be able to give someone their life back when they had been riddled with IRS issues for years. And surprisingly enough, this offer in compromise was relatively smooth sailing. This was actually submitted, I believe it was in, let’s see, it was in May. So within six months, this offer in compromise was in, evaluated and that there was some back and forth by the way, but this was one that was relatively fast tracked. No reason why. And one of the things we always talk about Claire, is why? Why are some, uh, revenue officer’s easier to work with? Why are some offers getting through the system a lot quicker, a lot smoother. And why is it that some revenue officers are just the epitome of unfriendly and not helpful and almost the antithesis of what you would expect a resolution oriented approach to be? Is it just human nature? You know, Claire, you always, I always say this, you have a, you have a calming, soothing phone demeanor. Your voice is soothing to the client. You are always a level headed. You don’t get elevated. And that’s the way, you know, I’ve, you know, in person, even when we’ve we talk non-business related, whether it be about family, loved ones or just life in general, you’re just uh, very happy, upbeat, friendly person. And I assume that’s how you carried on your job when you were working for the IRS. But is there any insight you can give as to why some cases just make you want to pull your hair out and you know, sometimes what you’re getting some revenue officers and it’s not right. And that’s probably one of our biggest frustrations and not only our office, but in talking to other tax resolution firms nationwide, there was just such an inconsistency in the interpretation and the application of the rules and also how you go about it. Now, Greg and I talk a lot on the show and it could be no different, Claire. You and I go out to dinner and you order a steak medium well and it comes out well done. And you say to the waitress or the waiter, hey, you know, I ordered it a medium well and, and it came back and, and maybe the person says, oh my God, you know, what are you told me Well done. And they’re just rude and obnoxious about it and it really ruins your whole dining experience. Uh, and just the personality issue. Or maybe the person says, Hey, I’m really sorry ma’am. Uh, you’re right. Uh, the kitchen is really backed up and it was just a mistake. And let me, let me bring you out, uh, a glass of wine or a, an ice tea or a Perrier just to say we’re sorry. While we’re waiting on that. So there’s a way to handle it differently. Is it just human nature or working at the IRS for 30 years? Can you shed any light on it? Because clients, oftentimes, they always say, why does this person have it out for me? Why are, why are they doing this to me? Any insight?
Claire Coffey: Mm. Sometimes it’s, sometimes it’s the nature, you know, it’s human beings and how they react to things. Sometimes I think it’s training and how they’ve been taught to go out and aggressively, there was a time in my career when we were taught to go at things a little bit more aggressively and I finally realized, you know what? I don’t need to be that person to, to do my job. And I made that change a long time ago and made my life a whole lot easier. So, and I’ve just carried it over into my whole life. So that’s my quick answer cause I don’t have a really good one for that of why people do certain things.
Lawrence Levy: Yeah. You know, and we talked about it, we actually brought on about four or five months ago, Mindy, uh, who was a GM, which is called a group manager in a collection group. And just talking to her about it, one of the biggest things that she’s seen being in the private sector now for the time that she’s been out of the IRS is just the difference in personalities and the difference in case approaches. I’m going to give you a good example of that just cropped up. So we have a file now on the gentleman hasn’t filed his taxes in about four years and it’s not a very straight forward filing. He’s self-employed, he’s a contractor. So in essence he’s got to do 12 months worth of bookkeeping to get to the final end result of a tax return x four years.
Lawrence Levy: And when the IRS says you have 30 days to do it, well, what if he doesn’t have enough money to be able to pay a bookkeeper to do bookkeeping for 12 months, times four years? You know, do the math. Let’s just say it’s basic bookkeeping. And here’s my shoe box of receipts. Here’s my bank statements separated out into expenses, materials, supplies, auto expense, insurance, cell phone, communication, advertising, office expense, right? Give me the breakdown. And he says, here you go. So now we’re going to have to do data entry. Some bookkeeper’s going to have to put it into an excel or into QuickBooks. So pick your number, $100 a month, pick whatever number you want. $1,200 a year, times four years, where there’s $4,800 just in bookkeeping. Well, if the IRS is levying him or if he doesn’t have the four to $5,000 to do the books, even if it’s half as much, let’s say it’s two to $3,000. What happens then? So Claire, when you would run across that as a revenue officer, where you had, I’m sure you came across taxpayers who didn’t file their tax returns and had delinquent tax returns, did you take a more human approach and more practical approach?
Claire Coffey: That was, you know, sometimes that was tough. Um, you, you tried to do that and you tried to do that approach of, you know, saying how, how can we get these returns completed with the minimal information, you know, minimal but correct information and the best way possible. Um, unfortunately we could not actually complete the tax returns for them. So that was kind of a problem, you know, and, and that respect. So they had to find a way to get the return files. It’s usually time, you know, and asking where things were
Lawrence Levy: and that’s, and that’s always a challenge that we run into where you have clients who just simply can’t afford to get the tax returns done. Well, let’s explain to everyone listening out there how that works. But before we do, let me give the phone number out one more time. The local phone number 561-865-7800 or toll free 800 TAX-LEVY. And yes, Levy really is my last name. But Claire, you’ve got clients and you’ve been working here. You’ve got clients deem with the call currently non-collectible, right? You’ve got to put them into what’s called CNC. Can you explain what CNC means?
Claire Coffey: Well, when someone else has a liability, the options that they have is one to enter into an installment agreement with the, this is what the options with the Internal Revenue Service to into an installment agreement. There’s a stream lined and then there’s other installment and other amount. Um, just very quickly, but currently not collectible is stating that, you know, here I’m giving you my information and I don’t have the ability to pay right now. They put the account on hold, however interest and penalties always continue to accrue, but they put the account on hold and do not pursue collection.
Lawrence Levy: Right? And currently not collectible. It’s sometimes also a good tool to use, especially if you have a tax payer that can’t afford to pay for tax returns. You can get placed into currently not collectible in an individual case, not business typically, uh, if you have delinquent tax returns. So if you’re truly in a hardship, you just have to be able to prove that you’re truly in that hardship. And that happens. In fact, right now, Greg is literally this week he’s been dealing with a doctor that has multiple years of unfiled tax returns. When we initially call this gentlemen, he had a, this was back in September when we called the, and they have this gentleman, he had a delinquent tax returns for 2012 onwards. And unfortunately he’s got very little funds to try and get these done. And from an old business, he also owes trust fund taxes of just under $25,000. So in order to get those returns done, he’s got a file his personal income tax returns first, I’m sorry, his corporate first in order to file the individuals because undoubtedly there’s going to be some flow through. And uh, IRS actually had issued a levy against his wages and Greg was able to get that released. Unfortunately, he never came through with a tax returns. And there’s other issues that are going on. Things like that are very, very common in the tax resolution world. And you want to be proactive and you want to be able to deal with this head on where you are in a position where you can be more proactive than reactive. And this time a year, by the way, is a good time of year to take the proactive approach. It’s the holiday season. So by the way, let’s say a big happy holidays, happy Hanukkah. Uh, also it’s going to be up to a happy new year. Merry Christmas. Happy holidays to everyone from the Levy office. And I want to say a happy holidays to my staff. And Claire, I want to give you a little bit of a shout out. Uh, you have really been, and we’ve talked about it recently, you have really been a great sounding board because as a former IRS employee, what do we always call you? We always say, Claire, what would you have done? Right? What would you have done in this circumstance? In fact, earlier this week, it was on, on Wednesday, on the 5th of December, we called you with a client that owes, I think it was about $400,000 right? And Yeah it was, Danielle wanted a, another POA in the office, and we called you and said, Claire, what would you have done? This is a tough situation that the guy has because of his age, his medical, his wife’s medical issues, and his earning capacity, his future earning capacity. It’s a, it’s a tough dilemma he’s in. And you said that it seems to fit the criteria for an ETA offer. Can you just explain, it’s a little technical, we don’t need to go into too much detail, but the conventional, what you hear advertised a lot. I owe the IRS $100,000 and we settled for pennies on the dollar and ETA. The acronym stands for effective tax administration. Can you just explain to everyone the gist of what that means?
Claire Coffey: An offer in compromise for effective tax administration usually means they have some ability to pay the tax liability. Um, but they’re not able to really pay it over because they’ve got expenses coming up. And usually a lot of times it’s, you know, medical and caregivers and age is a big factor within the, within the effective tax administration. You know, I mean these clients were 70 and 68 years old, if I remember correctly. They’re not going to be having an income, you know, they’re working right? He was working right now, she was not, but they’re not going to be working forever. You know, at some point they’re going to stop working if they’re 70 years old. So it’s something that needs to be taken into consideration.
Lawrence Levy: Right. And just reading right from some of the IRS manual sections, taxpayers may qualify for an ETA offer when there are RCP, which is Reasonable. Collection Potential is greater than the liability, but there are economic or public policy equity circumstances that would justify accepting it for less than the full payment. Tech Pairs may qualify for a DCSC when they cannot fully pay, but has special circumstances that warrant acceptance that was collectively with special circumstances, factors establishing Special circumstances under DATC are the same. So for an example, taxpayer owes 20,000. The RCP reasonable collection potential is 25,000. They could have accepted it for less than the liability under the ETA if the economic hardship or public policy issues exist, which should support and acceptance recommendation. So the ETA is a, is a way to deal with it. When, and I’ll read right from the manual, the definition of an economic hardship as it applies to ETA offers is derived from the treasury regulations. Economic hardship occurs when a taxpayer is unable to pay reasonable basic living expenses to determination of reasonable amount for basic living. expenses will be made by the commissioner and will vary according to the unique circumstances of the individual taxpayer. Do not include the maintenance of an affluent or luxurious standard of living. So for anyone out there, if you’re driving a fancy sports car, if you have a fancy motorcycle or a boat or you live in expensive home rent or mortgage, that doesn’t necessarily work. Reasonable, uh, economic hardship is defined as an inability to meet living expenses that applies only to individuals. Compromise on an economic hardship grounds is not available to corporations or non-individual entities. So in this particular case where this gentleman that we’re talking about because of his age, because of the medical issues he has and his wife has, um, it’s an option to be considered. Now, whether that’s going to be the end all save all and the be all and going to make it a game changer for him. You know, at, at this time it’s a little bit premature to figure that one out because it’s still being developed. The point to explain these stories to everyone listening today as we come to the top of the hour here is that there are options. So far we’ve talked about an offer in compromise. We’ve also talked about what’s called CNC currently non-collectible and there are issues that are out there with all taxpayers. You just need to be able to resolve it. Or by the way, what about the good old fashioned payment plan, Claire? Sometimes that’s just the way it works and you don’t qualify because you make too much or spend too much or have too much. Right. And we just haven’t crossed a file like this. Um, last Saturday and we could go, we were talking to a client and we, by the way, we love Saturdays. We love weekends, we love the weekend appointments, we love the weekend phone calls. We love that we can client interaction. We love weekends. We truly do. So we’re open seven days a week. We never sleep like Vegas, as they say. Certainly I can say I don’t sleep much. I wish I slept more on, but I don’t. Claire, you’ve got emails from me, a crazy hours, right? Not that you’re going to respond to them, but I will tell you the funny thing is friends of mine or even clients, they’ll send an email or a text. It could be three in the morning, four in the morning. And I’m a light sleeper. And I literally will respond. And I said, what do you guys do up? You didn’t think how you get such a response back. Play, especially with clients, friends, they, they obviously know me. Clients don’t expect the response if they can’t sleep thinking that, that uh, we’re not gonna respond, but what we do. But, uh, this client, he’s got about $60,000 in a retirement account. He hasn’t filed his taxes in four or five years. So we had to have a heart to hock and said with a heart to heart talk and say, look, you got to get the tax returns filed. You have the money, you’re going to have to cough it up. And if we go through your income and your expenses, you appear to have some disposable income based upon the fact that you have that disposable income. You gotta be able to do something. Where does it go? Now look, as a father, I would want to do the same thing, help out the family. Help out the kids? But we said, you’re a great dad, no question. But unfortunately IRS is going to not see your great qualities as a father and your wife’s great qualities as a mother. I mean, cause they’re going to see you spending on the kids. They’re in college. Yep. You’re going to pay for the cars. Yes, you may pay for the tuition. Again, you’re great parents, but IRS doesn’t allow that. And back to that, when you were a offer specialist or a revenue officer, I’m sure as a mom, right? For you, that was hard to see that you have to tell uh, uh, well you call them tax payers when you worked there, but clients that, hey, we don’t allow you to spend money on your kids college. We don’t allow you to keep your kids in private school. We don’t allow you to pay for a car payment when your kid is 16 or 17 years old. That was probably a tough one. I mean for me it would be, did you find that challenging?
Claire Coffey: That was extremely challenging actually to do, to try to balance that. Because in my, in my own life, I was a single mother with two kids and I had all those expenses and worked on all those expenses. But unfortunately we did have to follow the IRS rules, but you know, tried to see if there was anything we could do to make, to make the best situation.
Lawrence Levy: Well, and again, it’s nice that people are hearing you say that because I think often times the, loss of humanity and the loss of a reality based, approach is concerning to me. There’s so many things that seem much more practical and a better, easier, quicker, more equitable manner to address things. And it’s really amazing to me why things are made to be so difficult and so unreasonable. I’ll give you a good example. We had a client that owes the IRS, again, a lot of money, probably $1 million ish, give or take, but he offered, I want to say maybe it was $200,000. So his down payment was 40,000, maybe more. And the offer specialist just like you and we’ll ask you what you would’ve done, said we’ll pick a time on a Monday. You know, they asked for probably 20 different items and they said, we’re just going to give you till Friday to dig up items of which it’s not going to be easily at your fingertips, unfortunately. And they threatened that if the client didn’t have those items by Friday within five days, uh, one of the days that it could have even been a holiday in between, there may have been July 4th or something that they were going to return the offer. So in essence, this guy would have blown $40,000. Now in order to combat that, Danielle had to get on the phone with the offer specialist then with the manager and explain how unreasonable that was in a matter of what would be four remaining days to get all this information back or the threat of a return. I mean, what person is going to waste $40,000 to buy time? Which it wasn’t an intentional delay by the way. This was just the offer specialist saying I want this information back within what in essence was four days. It was so unreasonable. The fallout from that is us having to explain to the client. Then us having to go back and readdress this with management at the IRS. How about say look, I’ll give you 14 days. What’s the harm in being reasonable? That’s what is most mind boggling to me. Any insight to that one Claire or can we chalk that one up to personality again?
Claire Coffey: Sorry. It has to be personalities cause that was that one. You know the only other thing I can think of who else? There was something else then in play that we might not have known about.
Lawrence Levy: Well as best as I know, nothing else was in play and I won’t tell you again. It’s how sad it is. You chalk that one up to personality again but unfortunately, yeah, that’s, that’s pretty crazy. Well here we go and I appreciate everything you do and it is the holiday time. So let’s end on a nice positive note and the Levy office. We would again like to wish everyone a happy and healthy holiday season. You want to eat healthy, stay healthy. We’re big into trying to be healthy. At least I am. I’m married to a health nut and I want to try and live a nice long life and be healthy and we want to again pass our condolences out to the country for the loss of President Bush and his family. And we certainly wish the family well there. It’s been in the news a lot and want to bring that up. Uh, it was actually very nice to see that. And again, I don’t want to get political because I’m really am not and don’t do it on the show, but it was really nice to see on TV where you had the Democrats and the Republicans and the presidents all sitting next to each other and interacting. And it was nice to see sad that it had to get to the death of the, uh, president. But it was nice to see, needless to say. And that note for all of you that have had accepted offer in compromises this year. Congrats and keep up the good work. The IRS has a rule, you have to keep your nose clean for five years. We always say keep your nose clean for the rest of your natural tax paying life. But on the show today we have had Claire Coffey and I always say coffee, like the coffee you drink. Although that’s not how she spells it and that’s how I always introduced her. I’m a tea guy myself, although I do drink coffee. But Claire, you’ve been a tremendous asset to the Levy from and after having been at the IRS for how long? You said 37 years, 37 years. A revenue officer for part of the time and in the offer in compromise units for about 15 years. Thank you for all you do. I look forward to the Levy holiday luncheon that we’re having and I always liked that. It’s a special time of year me to look back and reflect and say thank you and appreciate everything that we have and I really appreciate my staff and how much they help out taxpayers across the United States of America. Signing off for now, from the Levy Tax Help Show you have Claire Coffey, the former IRS employee for over 30 some years, 37 to be specific. Thank you again, Claire and Lawrence Levy in the house. Enjoy the rest of the weekend. South Florida. You take care. Happy holidays.