Tax Rep Network podcast

Transcript:

Eric:

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Hey guys, it's Eric. And, in this week's podcast, I actually wanted to address a lot of the comments we're getting about the podcast Number 91, which is Darren Guillot, our Deputy Commissioner for Small Business Self-Employed Division joined us and talked about enforcement in 2021, what can we expect? And he talked about how criminal cases coming over from collection are up 42% already in the first quarter. And got into the discussion of artificial intelligence. And what they're doing is now that they have all the information from Coinbase on virtual currency, remember the IRS did a John Doe summons on Coinbase, where they got all of the taxpayers that held Bitcoin. They now have that database. They have the foreign asset information from the FACA treaties and everything that came over, over the last, say, 10 years.

What they'vre doing is they're taking those databases and with artificial intelligence, looking through all of the offers and compromises that have been filed for the last two years. All of the 433s where people have argued to be uncollectable, and also the bankruptcy schedules from taxpayers who filed for bankruptcy, listing the IRS as a creditor, to see if those people failed to disclose virtual currency or foreign assets. Those are the people who are now being referred over to criminal.

So, what is the impact of this? So a lot of you have been emailing me, "Can we not do offers?" Of course, you can do offers. Here's the deal. The clients that have been lying, filing false financials, are going to get caught if they have virtual currency, if they have any foreign assets. Quite frankly, the IRS also gets the homeowners policies and will see the riders. So what is the impact? The impact, I think, is on our practices. We need to be much more diligent about getting the information from taxpayers. I had a client who failed to disclose a very valuable collection. I won't go into it because you could then do a search and you'll find out who it is. But, pled guilty for that, and here's the thing. At one point, that tax payer attempted to blame us. "I gave you the information."

And despite knowing better, I on a Friday night at like 9:00 PM, after hearing that, ran back to the office, pulled the file, and went through it, and no, he did not disclose it. It was not in any of the notes, it wasn't in the scratched 433 he sent us, when we sent it to him and he reviewed it and said it was accurate and signed it, he never brought it up. However, we have two issues. One is, to protect the taxpayer from themselves. And two, to protect ourselves. So what we've done, now for those of you who are Tax Rep members, inside Tax Rep in the Checklist and Download, all of our forms and our templates are there. We have the one that we send out to clients saying, "Here's all the documents we need. For 433, whether we're doing an offer and compromise, uncollectible, whatever."

Well, what we have done now is added to that, foreign assets and virtual currency, and also under the homeowner for the housing, and under housing, the last question is usually, "Do you have any collectibles, whatever else?" We are now asking for a copy of the homeowner's policies with the riders. Partially this is to protect the client from themselves. We want to make sure that they're aware that this has got to be disclosed. But it's also protect to protect ourselves. Because, just like tax preparers, when special agents show up at that client's front door and knock at the front door, the first knee-jerk is going to be to blame you.

So one, make sure you have added that to the list of documents you're sending, if you're a Tax Rep member, it's already there, we've already done it. However, what we're also working on at our firm, is we're automating this. There is going to be a massive wave of work when the IRS finally drops the hammer again on taxpayers. Okay, now, when is that going to happen? I'll get into that in a moment. I'm betting late summer. It could be a little bit earlier, it could be the fall, but I'm banking around end of July, August.

The government is going to start enforcing. We are going to get crazy. We're already busy. We're going to get crazier. And again, I'll get into why, but we're going to. Now is the time to be automating everything that you can automate. It's what we're doing. We are in our CRM, a CRM is a client relations management system, we are automating our templates. The point is, on those items, I'm going to have the client submit everything electronically so they will get it electronically. Click on the link and they'll answer all of those questions and upload their documents. Those answers are going to be, yes/no. The client is going to have to affirmatively give us an answer on virtual currency, foreign assets, and any collections: artwork, jewelry, any of that stuff. And the reason being is that will be your get out of jail card free, if later special agents want to talk to you about your client's 433. But even beyond that, just to manage the inventory, you want to be doing everything you can.

The other thing is, you're going to, after tax season, you're going to want to really ramp up your marketing because the hammer is going to fall. And let me explain. So before Darren came on, I'm texting with him over the weekend, just confirming the podcast, whatever. And I said, "So Darren, when's the hammer going to fall?" now, when I say that, what I mean is, the government right now really isn't enforcing. Revenue officers in the field are doing some. But there's going to be a massive wave of final notices and levies that are going to go out to several million taxpayers who owe for '19 and/or '20, and are not paying.

The reason they're not doing it now is, the government cannot levy stimulus money. So right now we have the second round of stimulus that's wrapping up. It certainly looks like President Biden is going to be signing on to a third round of stimulus. They're saying they're going to have the Bill on his desk by March 15th. So you got to figure end of March, April, May, that's going to be going on. And let's assume that that's all wrapped up by June. Final notices of intent to levy have to go out, that gives the client 30 days. Normally, ACS will wait 45 days. So now we're ready. You're basically through June into mid to late July. That's the soonest I think you're going to see millions of levies go out. And I think there's going to be a week, it might be August, it could be September, maybe July if they really speed it up, where millions of people are going to get their bank accounts levied and their wages garnished. They're going to be online, freaking out, calling.

One, you want to ramp up your marketing. we're putting all kinds of new material inside Tax Rep on state and local topics now, blogging topics, and new sample newsletters, and non-filer topics. Ramp up your marketing through the spring into the summer, and figure out a way you're going to manage the inflow of work. This is what's going on right now at our firm, at Green & Sklarz. And this is what we're talking about with our Tax Rep members. Now, as we're automating, we're mapping our workflows. Those are all getting posted up inside Tax Rep. So if you're, again, if you're a Tax Rep member, you can go download that stuff and at least see what we're doing. And you may not like what we're doing, you could play with what we're doing, change it, tweak it, do whatever you want.

If you're not a Tax Rep member, you got to start thinking this stuff through and doing this yourself. But you're going to want to figure out how to do this because what I'm most fearful of, is not so much the work, there's going to be a ton of it, it's not getting paid. We get our money upfront. In fact, 2020 was a good year. 2021 is going to be a great year. It's already shaping up to be a great year. It's the chaos of managing the inventory that has got us worried, is how we manage and track all of this. What's missing, what's not missing, what's outstanding? All of that. Powers of Attorney, did they get faxed to [inaudible 00:12:46]? So we're working with our folks and our IT folks, and we're automating through our CRM, as much of this as we can automate. It's been a long time coming, we've spoken about it, but we're doing it now. I highly recommend you consider the same.

So, to summarize, we need to be careful. If you listen to Darren carefully, what the message I think is, is we need to be careful when we're doing this because collection cases do go criminal. Most people think of criminal coming out of audit. That's not the case. Offers, uncollectable, the false 433 that fails to disclose assets, those cases go criminal. And in fact, they're almost worst criminal cases because they usually come in under evasion of payment. And in an evasion a payment case, you not only have the tax loss, but penalty and interest is included in the tax loss. None of the other crimes include penalty and interest, except for evasion of payment. Evasion of payment or evasion of collection includes penalty and interest, so the tax loss number is even bigger.

So one is, we got to be leery of that, we have to make sure that we ask these questions. But on top of that, given what I think that the incoming tidal wave of work looks like, now after you get past April 15th, this spring, I would suggest you buckle down, do your marketing, and really focus on automating your practice, because I think it's going to be critical to your success, managing the inventory and making money doing this.

So listen, short podcast this week. I've got a very cool guests coming on next week, which I'm very excited about. We've been going back and forth, we're working on the questions, and I think you're going to really enjoy it. So, anything anyway, enjoy that, everyone stay safe and be healthy, and talk to you next week. Bye-bye.