Tax Rep Network - Eric Green | IRS Representation

 

Want to do IRS representation but don’t know where to begin? In this episode, Eric Green breaks down a simple, proven roadmap for handling audits, balances due, penalty abatement, and non-filers—starting with the one step that drives every successful case: compliance. Learn how to think strategically, avoid common mistakes, and build a scalable, high-value representation practice with confidence.

Download our free guide “Where to Begin: A Roadmap for IRS Representation” HERE.

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Where To Start?

A Simple Roadmap For IRS Representation

I know what you think. I have been there too. I do not know where to begin. Eric, I have this client call where I would love to start doing this. I would love to do representation. I would love to solve people’s tax problems. I would love to make that extra 100,000 in 2026. I would like to build that million-dollar practice and sell out for multiple 3 or 4 and pocket 3 million or 4 million on my exit out the door. I want to be able to downsize my practice and run it from anywhere.

Everything I have been telling you to do now for years. You do not know where to begin. Fear not, you can do representation. The roadmap is basically the same. What I am going to lay out for you right now is the step-by-step approach. I do not care if you say, “Eric, I have got a client that is being audited,” or “I have a client that owes a million dollars to the IRS,” or “I have a client that needs penalty abatement.” It does not matter. There is a very clear roadmap for this.

Thankfully, because the IRS does not trust its 60,000 remaining employees to make decisions, its entire process is very linear. It is all set in stone once you understand that there is a very clear process to this. I am just going to tell you something, to be honest, because of the way I feel about you. We get these cases here, too. I will get a call, Eric, and basically it is a car crash and a dumpster fire, a train wreck, you name it.

Start With Compliance

There are times I am thinking, “Where do you even begin?” You go back to the framework. As long as you follow those steps, the approach is always the same. What is the first step? Compliance. A taxpayer is required to be in compliance. If it is an audit, the first thing the auditor is going to look at before you make contact with them is. Is this taxpayer in compliance? What is tax compliance? We have talked about this before.

It means that you have the returns that are due on file with the IRS, and you have made your current year’s payments. Let us talk about that. You have the returns on file. It has to be at least the last six years. That is policy statement 5-133. It requires at least the last six years. If you have a client who has not filed since 2015, 2005, or 1775, it does not matter. The last six years are due.

If you don’t know where to begin, fear not. You can start with representation. Share on X

Determine The Best Approach Based On Taxpayer Benefit

What is due? When I am recording this, 2025 is not due yet, but if you wait another week or two, you could get that in. There is a possibility that you could file 2025, 2024, 2023, 2022, 2021, and 2020. 2020 to 2025 on file with the IRS, your client is in compliance. If they have other returns missing, can they do those? They could if it benefits them, but they do not have to. Why would you file them? When would it benefit them? Let us talk about that.

If the government has made a substitute for the return. Let us say your company is in America, the client has not filed since 2015, but there is a balance as of 2018. It is like 200,000. We do not know what it is. Your client did not file. I bet it is a substitute for return. The reason it is so large is that the government just takes income numbers and sends a bill, adds on the failure to file penalty, and the failure to pay penalty. That is 50%.

It is 25% for each of those. By the time we are now, the failure to pay penalties has happened at half a percent a month for 50 months. That will have been completely assessed. You are looking at the tax that they have calculated, which is probably overstated without any expenses. You have a 50% penalty for failure to file and failure to pay. You have an interest in all of them.

In that case, that client might want to file the actual 2018 to reduce the liability, but here is the deal. You only do that if it benefits the taxpayer. What I would tell you in that scenario is, “Hold your horses. Why do we not get the returns prepared from 2020 to 2025, and let us see what the balance and what the damage is?” If the client can fully pay, if an offer in compromise or uncollectible is not an option, and the client is going to have to fully pay, I am going to want to file that actual 2018 and get that balance corrected and brought down because it will save my client money.

If the client is going to do an offer in compromise, I would not do anything. I would not waste the time and the effort. Leave 2018 there alone, leave it there. Who cares? We are going to compromise it anyway. No one is going to pay it. Screw it. Leave it there. The point is that what we are going to do depends on where this thing is headed.

Regardless of the type of case, we always start with compliance. Share on X

The point is, we need to start with compliance. Whether it is the auditor looking for those missing returns within the last six years or if it is that balance due, the first thing to do is to get the client into compliance. Your client comes to you, and they want to do penalty abatement. We always pull transcripts. The reason we do that upfront is whether the client is in compliance. If they are not in compliance, they are not even eligible. You cannot get the first-time abatement.

If you even qualify, you cannot get first-time penalty abatement, and reasonable cause is going to go out the window because you are not in compliance. The other thing is we need to look at the reason for transcripts. I need a penalty abatement to look at the history. Have they gotten other abatements? How many years have they been penalized? Do they have a good history or a really bad history? All that is going to come into play there.

The point is, regardless of the type of case, we always start with compliance. When the client first shows up, and they are telling you about how this happened, and they saved the queen, but then the world collapsed, and they were out fighting in a war, whatever, they are going to tell you this whole story. In a way, you have got to give them a few minutes because I find the clients want to unburden themselves. It is a little embarrassing to be coming and talking to me about tax problems.

I have just learned from doing this for 26 years. You need to tell them that you need to play psychologist for a little bit. I am not judging. In fact, I will usually give them a way out. Like, “I am sorry this happened to you. You have had terrible things happen to you. We may be able to argue for penalty abatement. I need some more information, dates, and stuff, but we can deal with this. We can solve this. Let us put this behind you and then we can look at what we do to minimize it? Can we compromise all of that?”

It makes them feel better. I have not come in and said, “You are a dirtbag. Why do you do that?” I find that even if I want to say that, it is not helpful. If people are just living a lifestyle that is out of whack, I say, “Look, we can solve this. I am also very concerned you are not saving anything for retirement. My goal is to look after you financially.”

“We can solve this problem, but let me bring in a good bookkeeper and an accountant. We need to get your lifestyle under control. I want you to take the money and put it away once we resolve this, so you can retire someday. Hitting the lottery is not a great retirement plan.” The point is, when they come in, we are going to do some immediate, “What do we need to do to stop the bleeding?”

 

Tax Rep Network - Eric Green | IRS Representation

 

We are going to get you into compliance. I am not going to be judgmental. Once we have that sorted out, we have the compliance sorted out. If it is an audit, we have to respond to the auditor. If it is a correspondence audit, which more and more of them are now, we have a 30-day deadline. In that case, we have to get the records, I need to review them, and we have to get them out the door.

You do it in a way that you can track it, and please do track it. Make sure the government gets it. If it is a balance due, I need to get the client gathering information. If they are self-employed, we need a profit and loss statement. I have clients say, “My accountant will work on that usually during the summer.” “No, I need it now, or I cannot help you.” We need your income. Your income is going to drive everything. If it is penalty abatement, now I need to really dive into the facts.

Do you have documentation? Was that a medical issue? Was there an accident, a fire, a flood, or Hurricane Sandy? I told this story. One of my clients, their house literally got washed off its foundation. It was on the news, floating in Long Island Sound. Everything was gone. Can we document this? I am going to start down that path. You will get into each individual what to do.

Follow The Procedure & Don’t Fear Mistakes

The other thing I wanted you to take away, First of all, you start with compliance. You go through the checklist of your Tax Rep member. We have checklists for all this stuff. We are rolling out software, RepWorks, which will be launching this coming spring with all of our workflows for you. I try to just make this as easy as possible. The next step is simply to follow the procedure.

Get the government what it needs and begin working toward that solution. There are very few things I have found in IRS representation that you can screw up. Maybe missing a refund deadline would probably be the only thing I can think of. For a refund, you have to file the refund within three years of the due date of the return, the claim for refund, within three years of the due date of the return, or within two years of when the tax was paid.

That is a real deadline, and that cannot just be overcome. Once that is gone, it is gone. Other than that, though, pretty much everything else can be fixed. If you miss a notice of deficiency to file a Tax Court petition, it is not great, but there is audit reconsideration and the doubtful liability offer. The client could potentially pay it and then file for a refund. There are many ways that you can still get it fixed. If you miss a collection due process, that one is tough.

Hitting the lottery is not a great retirement plan. Share on X

The client cannot take their collection case to Tax Court, but there are other opportunities to fix it. We do not need to go to appeals. I can deal directly with collections now. I have lost a little bit of my leverage, but we can still get it sorted out. There are very few ways you can really screw things up. I know this is a short talk, but what I would urge you to do is understand that you can do this. There is nothing it is not rocket science.

If you are a Tax Rep member, you can use the help desk, of course, and ask us, but more than that, we have all this stuff, all the checklists, and all the training in the members’ area. If you are not a Tax Rep member, but you think you can get work in this, it might be time for you to join. Help us help you market. Go get into all of our marketing stuff and start building that practice you have always wanted.

The takeaway, I am going to quote Henry Ford, despite the fact that he was an anti-Semite. He was a brilliant manager. His quote is very on-point to this day. “Whether you think you can, or you think you cannot, you’re right.”

Meaning, if you want to do this, you can do it. If you come and hang around with Jeff and me, and you shadow us for a week, here is what I think you would find. I think we are fun guys to hang around with for the most part. We get stressed at deadlines too, but you know what I mean. You would probably discover that we are incredibly average.

I am not brilliant, never was, never will be. This is something I was interested in. This is something I have learned to do. You can too. I am going to put the link below. You can go get our mini-guide on the workflows on this stuff. You can download that. I think it will be a huge help to you. If you are a Tax Rep member, go to the members’ area and go to the help desk. There is no reason you should not take any case. If it is a criminal case or big litigation case, you can still be involved.

We can refer it out to somebody who does that. If it is something in our area that the firm can do, we could help work with you on it. The point is, there is no reason you cannot build a very large practice doing this. You have everything you need. All you have to do is take the first step. Download that free mini-guide. I think that will help, and I will see you inside Tax Rep. Thanks for checking this out and listening in this week. See you next week on the podcast. Bye.

 

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