I have the good fortune of having professional friends and colleagues around the country who have law practices or accounting practices which specialize in defending taxpayers whom the IRS claims owe back taxes.
And so, when some thorny issue comes up I might talk to a brother or sister tax pro in Florida or Texas or New Hampshire or Washington State or a smattering of other places around the country, in both red and blue states.
Recently, I was working on a tricky issue relating the Trust Fund Recovery Penalty (to the uninitiated, this weird string of four words refers to one aspect of tax law that properly strikes fear into the hearts of business owners with employees everywhere or, if it doesn’t, either it should or the business owner has already dealt with the issue and taken steps to avoid or solve this problem; see, for example, https://pearlmanlaw.wpengine.com/not-just-for-bernie-madoff-or-king-tut-business-owners-build-devastating-pyramids-of-withholding-tax-debt-deducted-from-paychecks-but-not-sent-to-irs/).
After brainstorming a bit on strategy for my Trust Fund Issue, my colleague and I started talking about life, the world, and business, generally.
She complained bitterly (and hilariously) about our still-new president Obama (I couldn’t disagree with her more on this, yet we still are able to find common ground elsewhere and get along just fine – like the Jets and the Sharks go bowling together).
Then, to my surprise, she told me that she is doing less and less tax work.
Honest Analysis Loses Out to Empty Promises
Her explanation: We can’t compete with these tax resolution companies who promise the sun, moon and stars in their advertising and then have telephone sales people who don’t know anything about the tax rules and say whatever the taxpayers want to hear.
She gave an example: I talked to a taxpayer, he makes $200,000 a year, owes $40,000 in tax, interest and penalty, has a federal tax lien filed against him. Owns a house, has a lot of equity in it, she said. Now, she continued, “you know and I know that this taxpayer’s income and assets are big enough that settling for ‘pennies on the dollar’ just cannot happen.”
She added, “I told this taxpayer what was possible, what was likely, and what was not possible. Then, he spoke to one of these telephone sales people who told him, ‘oh, no problem, we can settle this $40,000 debt for $1,000 and get the lien released in 30 days.’”
Sophisticated Analysis: “Not Gonna Happen”
Her sophisticated (and correct, I think) legal analysis of the salesperson’s promise: Not gonna happen. No way.
Despite the reality here, she said, the telephone sales people told a tale that sounded so good the taxpayer could not resist, and so, instead of hiring her, he signed up with the telephone sales person’s company.
She said, this keeps happening again and again.
Tax Problem Gets Worse
She added: And then what happens is these taxpayers who talk to me, but then go with these pie-in-the-sky moon-promising companies, come back to me a year later.
Now, they want to hire me! Now! A year later. The problem isn’t solved. They still owe tax. It wasn’t settled for pennies on a dollar, despite the sweet story of the telephone salesperson sold a year earlier.
Plus, the lien was not released. And in fact, now they owe a lot more because a year has gone by, with interest and penalties accruing.
And, icing on the cake, they don’t have any money left to pay my fee.
So, what am I supposed to do, now represent them for nothing to clean up the mess that an unscrupulous company made worse by first making bogus false promises and then failing to do anything?
Finally, she asked, where is OPR (That’s IRS’s Office of Professional Responsibility)?
Who knows.
Meanwhile, taxpayers are getting fleeced day after day by unscrupulous companies promising too-good-to-be-true solutions that are driving honest professionals who give honest analyses based on their best understanding of the facts and the real rules right out of the business.
Leave A Comment