5 IRS Questions That Darrin Gets Asked Most as a Tax Attorney

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DARRIN T. MISH:  Welcome to the IRS Solution Attorney show. I am the IRS Solution Attorney Darrin T. Mish.

KATRINA MADEWELL:  I’m your co-host, Katrina Madewell, thank you for joining us this morning.

DARRIN T. MISH:  How are you doing today, Katrina?

KATRINA MADEWELL:  Doing great and the weather feels fine, even though it’s cloudy.

DARRIN T. MISH:  I usually talk about how beautiful it is outside and today not so much.

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KATRINA MADEWELL:  Well, it’s kind of yucky out but it’s not hot, it’s not humid.

DARRIN T. MISH:  It is humid, it’s just not hot.

KATRINA MADEWELL:  I wish the sun would be out for a while.

DARRIN T. MISH:  I think it’s going to get better later today.

PAT GEORGE:  He is right, it is going to be sunny this afternoon and nice and tomorrow real pretty. Sun all day, then a little bit of a front coming in on Saturday but no rain so it’s going to be nice. A little bit cooler on Saturday. How about that for a weather report?

KATRINA MADEWELL:  I just had my cars cleaned, my interior and I need to open it up and let it air out and I haven’t been able to.

PAT GEORGE:  When you come to work at 4:30 in the morning like me and it’s raining and it’s wet and you start feeling like a mushroom.

KATRINA MADEWELL:  Shrivel up.  So, this is the IRS Solution Attorney show.

DARRIN T. MISH:  It is, in fact, the IRS Solution Attorney show but before we start…

KATRINA MADEWELL:  We talk about other stuff besides that.

DARRIN T. MISH:  Exactly, before we start talking about tax stuff which is what I do all day every day, I want to talk about the Pasco County fair in Dade City Florida.  It’s on State Road 52, right there next to Pasco High School.

KATRINA MADEWELL:  Ok, so we have a wide, wide range in the station. Pat, correct me if I’m wrong, but we go from North or Newport Richie all the way into Sarasota, all the way over to Orlando?

PAT GEORGE:  Yes, we do.

KATRINA MADEWELL:  It’s a pretty big circle so…

PAT GEORGE:  It depends on what station you are listening to.

KATRINA MADEWELL:  Tell somebody why they should come to the Pasco County fair and Pat go ahead and promote the channel so 1010 am.

PAT GEORGE:  And 103.1 fm and then there is another one 92.1 but that’s on like a top of a mailbox right around Delmabry and Lambright.

KATRINA MADEWELL:  So, it’s not ready yet?

PAT GEORGE:  Well, they were going to put it on and the story has been told by Mason and Charlie on their show that they were going to put it on a nice high transmitter tower that has been around for a long time right by Egypt Lake Elementary. You probably in that area see that antenna that’s been there but it’s rusting away and falling apart. When they went up to put the antenna on the pieces were breaking off in their hands. So, they go oops this has got to be fixed before we can do this so it is now on top of a mailbox and you can hear it in any direction for about a block.

DARRIN T. MISH:  Is that true?

PAT GEORGE:  Yes.

DARRIN T. MISH:  It’s literally just sitting basically on the ground someplace.

KATRINA MADEWELL:  So, they are going to fix it?

PAT GEORGE:  I think you know it could be 11 feet, 15 feet in the air.

DARRIN T. MISH:  Interesting.  So, that’s real radio for you right there.

KATRINA MADEWELL:  We get the 411 with Pat because you know he produces for Charlie and Mason.

PAT GEORGE:  But it’s going to get better.

KATRINA MADEWELL:  I’m excited.

DARRIN T. MISH:  So, the significance of the Pasco County Fair this particular weekend of, what’s today February 23rd?

KATRINA MADEWELL:  4th, I think?

PAT GEORGE:  23rd.

DARRIN T. MISH:  So today is February 23rd.  Tomorrow, February 24th 2017 is the hog show at the Pasco County Fair and there will be 2 Mish’s exhibiting hogs there.

KATRINA MADEWELL:  Wait is that a dish or a Mish? A Mish.

DARRIN T. MISH:  A Mish, there will be two Mish’s exhibiting hogs there.

KATRINA MADEWELL:  Like baby Mish’s.

DARRIN T. MISH:  The one is Ryan Mish, age 14, his hog’s name is Porky or Porky Pie. Rachel, Miss Rachel Mish who’s 12, she will be exhibiting oh boy, her hogs name is Black Beauty.  Almost forgot it.

PAT GEORGE:  At least for another four days and then their names are going to be dinner.

DARRIN T. MISH:  So, there is a hog show on Friday evening at 6 p.m. and the auction is on Saturday, I’m not really sure when.

KATRINA MADEWELL:  Ok, Darrin, explain this to non-farm people like. Who buys a pig? Because I buy bacon at the store but I can’t imagine buying a pig.

PAT GEORGE:  They have Publix and Winn Dixies.

DARRIN T. MISH:  Well interestingly enough Publix buys a large number of these hogs at the auction to support kids in FFA and 4H.  But the idea behind the fair is to teach kids agricultural practices and teach them how to raise an animal and have the respect for the animal. But also, some capitalism skills, some financial skills because they have to budget money for feed and other care. Sometimes you need a vet to come out during the course of the project. The project lasts about 4 or 5 months so we’ve had these hogs at the house for 4-5 months. And then they go and there is a show where there is a judge. Usually from someplace like Iowa or Nebraska where there are a lot of hogs and a judge. All the kids go out in different weight classes and they get judged. The hog gets judged and the kid gets judged as a showman and their ability to show the pig.  Then the next day there is an auction and the pigs, therefore the kids are ranked in order of finish in the show so the best. The grand champion goes first and he gets the highest amount and no hog after that can get even the same amount as that grand champion.

KATRINA MADEWELL:  So, what are they looking for? I saw all the pictures of you on Facebook where the kids were walking the pigs.

DARRIN T. MISH:  It’s funny judges, hog judges have different things that they look for but basically, they are looking for an Arnold Schwarzenegger of hogs.

KATRINA MADEWELL:  Oh, a big one ok.

DARRIN T. MISH:  A big bulky, I’ve been to enough hog shows now and the funny thing is I wasn’t raised in agriculture, I really don’t know much about agriculture, honestly…

KATRINA MADEWELL:  I know, he is a California boy if you can believe that.

DARRIN T. MISH:  We bought the farm because I think it’s cool and that’s really the only reason and because I wanted to raise kids with wholesome values and you know small town…

KATRINA MADEWELL:  Yes.  But what I think of a Californian, I don’t think of you.  Which is why you are a Floridian.

DARRIN T. MISH:  I think that might be a compliment. I’m not really sure.

KATRINA MADEWELL:  It was a compliment.

DARRIN T. MISH:  I’ve been to enough hog shows now that I kind of get what a good show hog looks like. And the best thing I can equate it to is if it looks like it would be good to eat, it’s a good show hog.  I mean people don’t know this but you always think of Boston butt is the rear of the hog, that is not the case. It’s actually a shoulder and the butt of the hog, you know those big round-like glutes, that is actually the hams. So as the hog is walking away from you, if you look at their rear and you could imagine just a big beautiful ham in your oven. That’s how I judge a hog and of the two hogs that the kids have this year, porky pie is amazing because he’s, he just looks like he is going to be good to eat. Somebody is going to get really lucky with him.

PAT GEORGE:  Normally when I see stuff like that, I start looking for coleslaw to go with it.

DARRIN T. MISH:  Yeah, you need some corn on the cob you need some chick peas….

KATRINA MADEWELL:  I will never look at ham the same way again.

DARRIN T. MISH: Some barbecue sauce, that kind of thing.  So, if you’ve never been to a livestock show this is your opportunity at the Pasco County Fair this week.

KATRINA MADEWELL:  What if somebody has no intention at all of buying a pig?  Will they enjoy the show?

DARRIN T. MISH:  Yeah, it’s still really interesting because it’s so foreign to us.  You know most people, and us included our family, we kind of equate food that comes from the grocery store. I mean you go to Publix and there are steaks wrapped in Styrofoam plastic and you look at them and you are like, ok, that is a good one. I’m going to take that and it’s just a way to kind of get back to your roots a little bit. And see that this is where your pork comes from.

Like I said, Publix buys an awful lot of these kids hogs at the auction and that pork ends up in the case at a grocery store somewhere. I’m not really sure where but you know Publix is based in Lakeland and Lakeland is only 20 minutes from Dade city so they buy a lot of hogs.  It’s also a way for business owners to show their support to the community and when business owners buy a hog at the auction their business name gets said over and over and over.

KATRINA MADEWELL:  Nice.

DARRIN T. MISH:  That is probably pretty good for their business as well, at least in that local community.

KATRINA MADEWELL:  That makes sense to me.

DARRIN T. MISH:  That has absolutely nothing to do really with tax problems or taxes.

KATRINA MADEWELL:  Well we’ve got to keep it real.

DARRIN T. MISH:  But I’m just really proud of the kids and this is their third year and you can see the progression they are getting better and better and better.

KATRINA MADEWELL:  Or if you just want to come out and meet Darrin Mish, he will be out there with the kids so you can come out and say hello.  He is a real person. I’ve been out and about and many of you have walked up to me and said hello. Sometimes people don’t even know who I am. Like we did that (inaudible) board planning thing awhile back and I was talking to a couple of people and they had no idea that I was Katrina. I guess they thought I was somebody else.

DARRIN T. MISH:  After about noon there is an extremely high likelihood that I will be enjoying an adult beverage at the fair so….

KATRINA MADEWELL:  Trust me, he is more fun to talk to after he’s had some adult beverages, so come afternoon I would highly encourage that.

DARRIN T. MISH:  If you want to seek me out it won’t be that hard. I will be hanging around the pig barn, I will be the guy in cowboy boots.  Oh except for at this fair it won’t really be that big of a defining difference.

KATRINA MADEWELL:  I was going to say you are in Pasco county, Darrin, everybody is going to be wearing cowboy boots especially at the pig show.

DARRIN T. MISH:  And it’s too hot to wear my cowboy hats, I mean it’s just too hot. I do have a number of cowboy hats but they are just too hot to wear in Florida.

KATRINA MADEWELL:  Alright, so, what time will you be there and where can they find you?

DARRIN T. MISH:  I will be there probably almost all day Friday and then almost all day Saturday honestly and I will be hanging around the pig barn. It’s not that hard to find there is only one.  The fairgrounds are so small there’s only really one barn in the entire place and…

KATRINA MADEWELL:  Just follow the smell.

DARRIN T. MISH:  Yeah it has to be, they do the cows early in the week and they do the pigs at the end of the week so the last day of the fair is Sunday and…

KATRINA MADEWELL:  How many pigs are entering, do you know?

DARRIN T. MISH:  Oh, it’s amazing like 300.

KATRINA MADEWELL:  Oh wow…

DARRIN T. MISH:  Yeah, there are a lot of pigs.

KATRINA MADEWELL:  Next week when we come in, we will find out how the pigs did and where they placed.

DARRIN T. MISH:  Absolutely.

PAT GEORGE:  We’d like to find out how they taste.

DARRIN T. MISH:  We grow an alternate too.  We raise three because if you are going to raise two, you might as well raise three because you can have one for the family. After that, hog gets slaughtered and butchered and all of that and it ends up in the freezer. It takes like a year to eat it because it’s just a lot of pork.

PAT GEORGE:  Not for me.

KATRINA MADEWELL:  I love bacon. I don’t know what part of the pig that it comes from but I love it.

DARRIN T. MISH:  Well when we come back I think we actually might talk about taxes or tax problems or attorney stuff…

KATRINA MADEWELL:  We are, we are, we are going to make it fun, I promise.  We are going to talk about the fie questions that Darrin gets asked most as a tax attorney.  I wouldn’t actually call that your name but yeah, I guess he’s a tax attorney. But he’s your attorney to help you out if you’ve got a little beef with the IRS or in your case most of the time it’s a big beef with the IRS.

DARRIN T. MISH:  Yeah, usually it’s a big deal.

KATRINA MADEWELL:  You are listening to the IRS Solution Attorney show I am your co-host Katrina Madewell.

DARRIN T. MISH:  And I’m Darrin T. Mish the IRS Solution Attorney…

KATRINA MADEWELL:  Stick around we will be back in just a minute.  If you’ve got a question you can call us at 888-404-1010 again save that number in your phone 888-404-1010. We will be back in just a minute.

DARRIN T. MISH:  Welcome back to the IRS Solution Attorney show. I am the IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL:  I’m your co-host Katrina Madewell. I’m throwing Darrin off a little bit as I just pushed his phone to him and I said here quick turn it on we are going to stream live on Facebook.

DARRIN T. MISH:  And then just as I was doing that re-entry, I hit the volume button and I couldn’t hear myself and then I got kind of freaked out again. So, it’s further proof that I am not a radio professional.

KATRINA MADEWELL:  Pat just pops them on when we are not looking.

DARRIN T. MISH:  Yeah well, he just has to mess with us, that’s his deal.  But today we are talking about the five questions that I get the most as a tax attorney or as an IRS tax attorney as Katrina likes to call me.  Sometimes I just call myself a tax attorney because it makes it easier for people to understand what I do.  The first question…

KATRINA MADEWELL:  I actually prefer the IRS guy. It’s usually what I call you.

DARRIN T. MISH:  The first question that I get most often is, am I going to go to prison because I owe the IRS taxes?  I get that question several times a week. People call and they are petrified, sometimes, this is kind of funny. They won’t even give us their real name and/or address they just want a consult and you know it’s like what’s your name?  John Smith, where do you live? 123 Main St.

Over the years, I have not had real good luck with those people who won’t give me their name. Because it’s just usually an indicator of other stuff that is kind of wrong and going on in their lives. The answer is, no, you are not really going to go to prison as a result of your tax debt. Unless you’ve committed tax evasion or fraud of some sort then it’s theoretically possible. In this country, no one goes to jail for owing taxes.

We don’t have debtors prisons in the United States of America.  You can go to jail for cheating on your taxes, which means lying on your taxes. So, lying can equal jail but the failure to file a tax return?  I guess theoretically it’s possible, you can go to jail for the failure to file a tax return. It’s a Federal misdemeanor and you can do up to a year in Federal prison for that.

KATRINA MADEWELL:  But isn’t that kind of only with those crazy people that don’t file taxes because they think it’s unconstitutional?

DARRIN T. MISH:  I’ve met some US Attorney’s that used to prosecute tax crimes. And I always ask them “so all of my clients are non-filers why don’t you prosecute everyone?”  They basically said we just don’t have the resources every non-filer.  The percentage of the population that doesn’t file a tax return is something like 10%.  So, I mean you are talking…

KATRINA MADEWELL:  That’s a big number.

DARRIN T. MISH:  You are talking 20 million people probably every year that don’t file a tax return. So, the Federal government simply doesn’t have the resources to prosecute all those people. And the IRS has a written policy that says if you are a non-filer and you eventually file your tax returns.  If they were not investigating you for the crime of failure to file they will not prosecute you for that so.  I think the simple answer is you are not going to jail unless you’ve done something really, really bad or you really kind of worked at it.

KATRINA MADEWELL:  I can see where the general population would think that. And you and I have talked about this several times about how when people come in they are petrified or scared. They’ve driven themselves near to the point of insanity because they are so worked up and consumed and worried about this.

DARRIN T. MISH:  Yeah, we see a lot of people at that level of anxiety and it really breaks my heart because it’s really not needed. I’ve told this story before on air and I know you’ve heard it more than once Katrina about the gentleman who came in…

KATRINA MADEWELL:  That is why I brought it up because I was hoping you would tell it.

DARRIN T. MISH:  The gentleman who came in he was quite a bit older than I was but he was physically trembling, shaking, he was just wracked with anxiety. It wasn’t hard to read his body language and understand that this was somebody who was just not feeling comfortable.  So, I tried to nail him down. I said tell me why are you so nervous here what’s the problem here and he says well I haven’t filed a tax return in a while and I got a big smile you know because I hear that all day right…

KATRINA MADEWELL:  What’s awhile…

DARRIN T. MISH:  So, what’s a while and he says well a long time.  I’m like hey a long time is relative, like how long? He says, he tells me this big long story bit it boiled down to well since 1960.  I couldn’t help but I started laughing and the reason. I started laughing was I was born in 67. And so, it was just kind of funny like this guy has not filed a tax return for the entire length of my life and I’m going to be the guy that gets to help him fix it.  Now before people start to freak out about this guy didn’t pay taxes for his whole life he was always…

KATRINA MADEWELL:  Yeah because we get the haters…

DARRIN T. MISH:  He was always a W-2 wage earner. He always had taxes withheld he just didn’t file.  It had something to do with some bad experience he had back in the Army….

KATRINA MADEWELL:  Something that started something that was a snowball to where he got…

DARRIN T. MISH:  He had this mental block about filing. So, long story short, we helped him file the past 6 years returns. We got him current, we got him up to date and it all worked out. But that was my favorite story about him, am I going to go to prison because that is why he was so anxious.

KATRINA MADEWELL:   You have another one to what about the rocker guy or the guy in the band that thought people were waiting outside of his window remember, remember?

DARRIN T. MISH:  Yeah, I still represent him and so I won’t give away to many clues about who he is, but he was absolutely convinced, he heard. You know he was really fixated on the anxiety of not filing and the IRS and all that stuff.  He was really convinced that they were closing in on him. And I don’t remember if it was because he got some of those phishing emails or maybe he got one of those bogus phone calls or something. But he was really fixated that this was going to go down. And so, one night he was having trouble sleeping and he heard some noises outside his window. And he was convinced it was the IRS was going to raid his house and take him away and take him to jail.  That hasn’t happened and that is not going to happen…

KATRINA MADEWELL:  But people get so get caught up in your own thoughts and they can run wild and they just get away from you sometimes.

DARRIN T. MISH:  And we all do that I am not criticizing at all the people who feel like that…

KATRINA MADEWELL:  But it’s the fear of the unknown.

DARRIN T. MISH:  Yeah that is what humans actually fear the most is uncertainty. You said it great, the fear of the unknown as one of our biggest fears and if you dig deep and you think about well what are you afraid of and it always comes down to well I don’t know what is going to happen and…

KATRINA MADEWELL:  Yeah, you don’t know what is going to happen next so that is the big….

DARRIN T. MISH:  And people, a lot of people come in and they are very anxious and they don’t know what’s going to happen with the IRS. And it’s not really fair because how would they know what’s going to happen? They’ve never been in this problem before. They don’t know how to deal with this massive government bureaucracy.

That is why they come to us because I can tell them what’s going to happen with a fairly high degree of certainty. We can just run them through our process and kind of walk them through step by step you do this and you do this.  Incidentally the people who follow our reasonable advice get much better results than the people who kind of half way follow advice or don’t follow advice…

KATRINA MADEWELL:  Imagine that.

DARRIN T. MISH:  People who follow our reasonable advice, and I say reasonable advice because I don’t give unreasonable advice. They follow our reasonable advice then it’s all going to work out 9 times out of 10.

KATRINA MADEWELL:  The other question that I know you get a lot too and a lot of times. This is what brings them into your office or prompts them to make that first call is “what happens if they garnish the wages?”

DARRIN T. MISH:  Yeah, this is a hard question, so it’s like what do I do if the IRS is garnishing my paycheck well….

KATRINA MADEWELL:  And that means?

DARRIN T. MISH:  Basically they take…

KATRINA MADEWELL:  They send a letter to the employer, right?

DARRIN T. MISH:  They send a letter they send a notice called a notice of Levy it’s a form 668 W just in case you wanted to know

KATRINA MADEWELL:  You don’t have to memorize, no quiz later.

DARRIN T. MISH:  They send that levy notice to the employer and basically the government is going to take about 80% of your paycheck and it depends on how much money you make and that kind of thing…

KATRINA MADEWELL:  80%? Wait a minute I’ve never heard this?

DARRIN T. MISH:  They are going to take this huge percentage of your paycheck. There is no basis in reality for you could live on this tiny amount that they are going to leave you living with.

KATRINA MADEWELL:  So 8-0?

DARRIN T. MISH:  Yeah, there is a table I think it’s publication 1494, and it basically says if you are single and you have X number of dependents and you get paid weekly or bi-weekly or bi-monthly or semi-monthly or monthly then this is how much you get to keep.

KATRINA MADEWELL:  But if you don’t do that in advance then they are going to swoop 80%?

DARRIN T. MISH:  Well, they are going to swoop almost 80% anyway regardless. Unless you are very low income. In which case, you might make so little money that you are what we call levy proof which means they can levy you but they are not going to get any money. But if you are levy proof you have other issues like it’s already hard to live on these tiny amounts of money that you earn.

The IRS doesn’t really levy you in the hopes that they are going to get all that you owe them they are levying you to get your attention. It’s like whenever I think of a wage garnishment I think of the IRS grabbing you by the shoulders and shaking you like a shaken baby. They are like, hello, like wake up, you’ve got to pay attention to us.  One of the things that is hard about a wage levy is you have to have your missing tax returns filed before they are going to agree to release the levy.

KATRINA MADEWELL:  Ouch.

DARRIN T. MISH:  Now here’s the challenge…

KATRINA MADEWELL:  That’s the deal killer.

DARRIN T. MISH:  Yeah, here is the challenge. What if it’s been 5 years, what if it’s been 10 years since you have filed a tax return and you’ve got to get 5 or 10 tax returns prepared…

KATRINA MADEWELL:  You don’t have to do that many, do you?

DARRIN T. MISH:  Well you might, you might. You are right you are saying well you only have to file the last 6 but there are some circumstances where you might have to file all 10, I don’ really have time to explain that circumstance but…

KATRINA MADEWELL:  And everybody’s scenario is a little different.

DARRIN T. MISH:  Everybody’s scenario is certainly different but here is the point I am trying to make. Let’s say you have three tax returns that you need to prepare and they just took your paycheck and you don’t have anything in reserve, this is very common. There is nothing in reserve for a rainy day or emergencies and now you are kind of stuck, you are in this vicious loop.

So, what do you do? You either call a tax attorney who can help you with this or at least give you some advice about how to get it released, or you can call the IRS. If all else fails call the IRS and just tell them hey, this is causing me a hardship. If you release the levy I will file the missing returns and…

KATRINA MADEWELL:  Yeah, but what is the likelihood that they would do that?

DARRIN T. MISH:  It’s all over the map.  It’s probably my least favorite task in the firm to call and try and deal with wage levies. It’s just hard. I’ve had wage levies that just went on for very long periods of time and it was just not that resolvable.  There is a couple of little secret things that we can do to try to get the wage levy released, but it’s a challenging thing.

KATRINA MADEWELL:  Oh, maybe we can talk about some of the secrets when we come back. Can we get those out of you on air?

DARRIN T. MISH:  There’s secrets because we don’t talk about that on the radio.

KATRINA MADEWELL:  Oh, snap did you hear that? He just said no.  Alright so we will move onto the next topic then and maybe Darrin will tell you if you make an appointment with him if you’ve got a tax issue. But we will talk about what happens if the IRS levy’s your bank account and what that means and how ugly that is when it happens right?

DARRIN T. MISH:  It’s not a happy thing.

KATRINA MADEWELL:  Alright you are listening to the IRS Solution Attorney show.  You can get Darrin at 888-get-mish.

DARRIN T. MISH:  That’s 888-get-mish that’s 888-438-6474 or you can visit our website at getirshelp.com.

KATRINA MADEWELL:  And we are here in the studio in case you don’t remember 888-get-mish and you just want to talk to us it’s 888-404-1010.  We will be back in just a minute.

(commercial break)

DARRIN T. MISH:  Welcome back. I am the IRS Solution Attorney show, no I’m not the show but I am the IRS Solution Attorney…

KATRINA MADEWELL:  You are the show today, Darrin, you are the show today.

DARRIN T. MISH:  Darrin T. Mish.

KATRINA MADEWELL:  I’m your co-host, Katrina Madewell, this is in fact a live show.  I love it when we can trip on our own words.  You’d see the beauty of this as Darrin you wouldn’t have been able to do that a couple of years ago.    But now you can just keep going.

DARRIN T. MISH:  I probably would have ran away and started crying and sucking my thumb.

KATRINA MADEWELL:  Well it was funny for the first year that I was on radio I pre-recorded all my shows.  Did you see that post that I made yesterday?  I pre-recorded all of my shows and like literally yesterday 3 years ago was the first time I ever went live on the air and now we do it all the time.

DARRIN T. MISH:  Well you got good fast so there’s that…

KATRINA MADEWELL:  I can talk.

DARRIN T. MISH:  I can also remember our first show as not pre-recorded that on the IRS Solution Attorney.

KATRINA MADEWELL:  We were pre-recorded.

DARRIN T. MISH:  We were?  The very first show?

KATRINA MADEWELL:  When I had you as a guest on Tampa Home Talk many moons ago we were pre-recorded. And we were also pre-recorded I believe for your show when we started, I thought we were?

DARRIN T. MISH:  Anyway, ok, so show number 2 we were live and it was a little bit intimidating a little bit scary but not so much anymore.  Today we are talking about the answers to the 5 questions that I hear most as an IRS tax attorney.  I think we are on question number 3 and it’s what can I do to keep the IRS from levying my bank account, interesting.

Well what is an IRS bank levy ok? Well if you were listening in the last segment you heard that a wage levy or a wage garnishment is when the IRS can take huge proportion of your paycheck.  A bank levy is when the IRS can swoop in and take a hundred percent of your bank account.  Did you get that percentage?

KATRINA MADEWELL:  100.

DARRIN T. MISH:  100% of your bank account.

KATRINA MADEWELL:  But it’s not permanent, is it?

DARRIN T. MISH:  They are entitled to a hundred percent of the, or the amount of the money that is in your bank account on the day that the levy is processed by the bank. The bank holds that money for 21 days and cannot turn it over to the IRS for the 21 days. And the reason that the 21 days is there is for the taxpayer to contact the IRS and try to, basically make a deal.

KATRINA MADEWELL:  But we’ve talked about this before too. Just because they went in and took a hundred percent of the money in the bank that day doesn’t mean that they can keep doing it anytime you put money in the bank is that correct?

DARRIN T. MISH:  You know what’s great about doing these shows…

KATRINA MADEWELL:  And that’s what I would think they are going to do.

DARRIN T. MISH:  You are learning, you are learning very well, that’s a very…

KATRINA MADEWELL:  Don’t ask me if I will work for you because the answer is no.

DARRIN T. MISH:  I don’t think I could afford you either.  A bank levy, unlike a wage levy. A wage levy is continuous. So, a wage levy goes on and on and on every pay day until either the tax debt is paid or you get the IRS to release the levy. Or the statute of limitations expires I guess.  A bank levy is a one-time levy.

That doesn’t mean they can only levy you one time it means it’s not continuous. So, they are entitled to the money in the bank account on the day that the levy is processed and that’s it your bank account is not frozen. This is a common misconception, people think oh my bank account is frozen I’m not going to be able to use my bank account anymore, no it’s not frozen.  Now the bank is going to charge you some fee like $50 or $75 to process the levy kind of like if they were to charge you if you bounced a check.   You may, it might be severely negative by the time the levy is processed and what not. But if you cure that negative balance with the bank then you can go ahead and use that bank account again.

KATRINA MADEWELL:  Well, think about that, Darrin, if the IRS just took a hundred percent of the money in the bank account, how likely are you going to put your next paycheck in there. I don’t think that is going to happen, do you?

DARRIN T. MISH:  Oh, I’ve got a great story about that.

PAT GEORGE:  Not only not put your paycheck in there but get in your car and disappear for the rest of your life.

KATRINA MADEWELL:  Imagine if you had direct deposit. I would be freaking out like I don’t even know. I would probably open up a bank account in someone else’s name and figure out what I could do to hire an attorney.

PAT GEORGE:  In the Cayman Islands.

DARRIN T. MISH:  It’s a funny story, guy calls me up one day and he’s got a bank levy and he hasn’t filed in many years but he makes a lot of money and he calls me up and he says I just got a bank levy and there’s 50 grand in the bank. I’m like oh, ok, well that’s unfortunate and long story short we used one of those secrets and we got the money back ok…

KATRINA MADEWELL:  The secrets that he won’t tell on air. We just talked about this last segment.

DARRIN T. MISH:  They are going to remain secret but he won’t come into the office, this guy would not come into the office to resolve the entire problem and we tried and tried and tried and it went months and months and months, long story short he calls me up again, I don’t know 6-8 or 10 months later and he’s like angry like ok what’s the problem he says they levied my bank account again…

KATRINA MADEWELL:  Oh, they can keep doing it at different times?

DARRIN T. MISH:  Well they can, they are not supposed to do it continuously but they can do it periodically.

KATRINA MADEWELL:  Kind of like they poke you and then they poke you again.

DARRIN T. MISH:  I said, oh, well that’s unfortunate. How much money was in the bank? He says 50 grand. I’m like are you a slow learner? The reason I’m telling this story is because if you know you are potentially subject to a bank levy what’s the easiest way to prevent the bank levy?  Answer is don’t keep much money in the bank it’s really simple, right?

KATRINA MADEWELL:  Like I don’t know how much did they swoop the first time?

DARRIN T. MISH:  50 grand.

KATRINA MADEWELL:  The first time and the second time?

DARRIN T. MISH:  And the second time it’s like really you are a slow learner, ok, if you leave that money…

KATRINA MADEWELL:  His brain is a little bruised I think.  Man, that’s hard.

DARRIN T. MISH:  So…

KATRINA MADEWELL:  But for that amount of money like how much was his debt?  How much did he owe do you know?  Remember?

DARRIN T. MISH:  It was in the high hundreds.

KATRINA MADEWELL:  Yeah but for 50 grand I mean he could have hired you for a fraction of that and he would of already dealt with it.

DARRIN T. MISH:  He did hire me for a fraction of that he just didn’t, he just wouldn’t communicate or interact with me.  His anxiety was so severe that he could not face it.  It was like he would, you know how people are afraid of public speaking. Here we are on the radio right and speaking to lots of people but that’s one of the biggest fears. But his biggest fear was dealing or confronting the IRS issue period end of story. He just couldn’t deal with it and I understand and I’m compassionate about that but at some level you have to deal with your problems.

KATRINA MADEWELL:  But shouldn’t, I don’t know was he married could his wife deal with it?

DARRIN T. MISH:  No, he was single, he was in sales he made a lot of money which is part of the reason why he owed so much money. But he just couldn’t wrap his head around filing tax returns and dealing with the IRS at all so.  The point of the story was a slow learner.

KATRINA MADEWELL:  Very slow learner. Like I said bruised brain on that one.  The next point, which is interesting because certainly one of the things that I thought would not apply didn’t even realize it was an option until you and I started doing the show is you can in fact file bankruptcy in some instances to settle an IRS debt. Which is astounding to me because I thought you couldn’t include them like anything government.

DARRIN T. MISH:  This is kind of a scary statistic. I think 9 out of 10 bankruptcy lawyers will tell you that taxes cannot be discharged in bankruptcy and so here we…

KATRINA MADEWELL:  Why is that? Why is that you are saying that it can be and 9 out of 10 attorneys are saying no?  They just don’t know?

DARRIN T. MISH:  Ok, I have to be very delicate here…

KATRINA MADEWELL:  I said it, not him.

DARRIN T. MISH:  When we go to the doctor we assume that all doctors are basically have the basic same skill level right?  That’s not true….

KATRINA MADEWELL:  I would agree not…

DARRIN T. MISH:  That’s as polite as I can be…

KATRINA MADEWELL:  Not all professions were created equal.

DARRIN T. MISH:  The other problem is that bankruptcy law firms, because of the way the fees are set and the court sets the fees and the fees are very low. The bankruptcy law firms as a necessity to make a profit have to run kind of like a factory assembly line widget kind of practice ok so they have to like….

KATRINA MADEWELL:  It’s a volume thing.

DARRIN T. MISH:  It’s a volume thing, they can’t afford to spend much time on any particular case, I’m not knocking any of my bankruptcy lawyer friends…

KATRINA MADEWELL:  But that’s the model?

DARRIN T. MISH:  But that’s the business model. It’s very hard.  I failed trying to run a bankruptcy firm, trying to make if profitable. I could not do it.  I would spend too much time on the cases because I’m a fine detailed kind of guy. I’m a lower volume guy so the answer is, I’m not sure they don’t know that taxes can be discharged in bankruptcy or if they just don’t want to go down that hole.

There are three timing rules that are involved and they are kind of complicated but I’m going to hit them real fast.  The returns have to have been due for at least three years including extensions, the returns if they were filed late have to have been filed for at least two years and the taxes have to have been assessed for at least 240 days. So that was a bunch of mumbo jumbo. So the way to think of it is if you filed on time or roughly on time then you have to wait at least three years, if they were filed late you have to wait two years unless they are not that late…

KATRINA MADEWELL:  If they filed late, you are in like 1 as long as you are delinquent 3 years is that right?

DARRIN T. MISH:  Well, there’s lots of permutations and things that can happen that aren’t that interesting on radio, but if you needed to file 2012 tax return, 2012 was due in 2013 that would mean that the three-year rule would pass whether you filed or not in 2016 but if you didn’t file it until 2014 then you’ve got to worry about the two year rule so…

KATRINA MADEWELL:  Gotcha.  So, you look at those little nuances and see if it’s possible. What’s the biggest one that you’ve had?  The biggest tax debt you were able to wipe out in bankruptcy?

DARRIN T. MISH:  The biggest case that I can remember…

KATRINA MADEWELL:  Off the cuff.

DARRIN T. MISH:  Is a pretty interesting story it was a Canadian national who is living in Mexico with a United States source income. So, it’s a Canadian living in Mexico….

KATRINA MADEWELL:  That’s an interesting dynamic.

DARRIN T. MISH:  But his income is coming from the U.S. so he has to pay U.S. taxes. He was also a permanent resident of the U.S. but he was living in Mexico. He had gotten married and he was living in Northern Mexico. So, long story short he was a client of mine for many years, 10+ years he was kind of another slow learner kind of guy and we eventually got him on track.

He owed $1.2 million to the IRS and we filed a Chapter 7 in Tampa Florida and we wiped out like $1.1 million of it. I think he had 50 or 75 grand left because it didn’t meet the timing rules but then we put him in an installment agreement.

I think he is still current and because I hear from him every so often but it was a funny kind of circumstance because there was a really aggressive revenue officer who called me from Miami and she was basically threatening me personally about representing this particular individual and she was talking about…

KATRINA MADEWELL:  What?

DARRIN T. MISH:  She threatened me with prison and I just went off on her. I mean I went off on her in the most professional way possible. But I was like look you know I’m not engaging in criminal activity. And I don’t know who you think you are but you are not going to threaten me with prison like that. That might work with some tax payers but that’s completely inappropriate.  I was so angry about this I called her back a week later and did it again.  Anyway, we ended up winning that case.

KATRINA MADEWELL:  That’s like the mob threatening OJ’s attorney or something.

DARRIN T. MISH:  My example to her was you know Al Capone had a lawyer….

KATRINA MADEWELL:  There you go…

DARRIN T. MISH:  I’m not telling this guy not to file and pay his taxes. I have been involved for a long time but that entire time I’ve been telling him to file and pay your taxes. You know we’ve got to get you current and he just was a very, very slow learner and it just didn’t.

He ended up racking up a lot of tax debt but I got the last word on that one because as soon as he files bankruptcy, that case gets ripped away from her and goes to a different department she never hears whatever happens on the case.  I could have filed basically an internal affairs complaint about her…

KATRINA MADEWELL:  That is what I was thinking.

DARRIN T. MISH: I think it would have been sustained and you know you threaten counsel. You are not even allowed to threaten the taxpayer with prison let alone counsel. So, it was just kind of a bizarre situation. She did eventually apologize but it was kind of a halfhearted apology.

KATRINA MADEWELL:  Wow so the last point on the 5 top FAQ’s that you get as a tax attorney is it possible to settle the debt for less than you owe? Well if you’ve listened to the IRS Solution Attorney show more than once then you already know the answer to that question.

DARRIN T. MISH:  Yeah, I don’t think there would be a show if that wasn’t possible, almost everybody that comes in to see me wants to settle for less and we just talked about bankruptcy so that certainly, if you qualify for that then you can settle your tax debt for less I guess, I don’t know if that is settling or if that’s just discharging but…

KATRINA MADEWELL:  Well it’s settling I mean you scratched it out.

DARRIN T. MISH:  When we come back we can talk all about an offer in compromise which is where you can make a deal to settle for less with the IRS.  There is a little bit of horse trading and there’s a little bit of simple math but you can in fact in certain circumstances settle for less with the IRS.

KATRINA MADEWELL:  So we are going to talk about the offer in compromise when we come back which we’ve done a whole show on that. But we are going to also answer some questions that you guys have had that you’ve tweeted Darrin up at @darrin_mish.

DARRIN T. MISH: Stay tuned for the IRS train wreck of the week.

KATRINA MADEWELL:  That’s right and also on Twitter.  We are streaming live on Darrin’s page right now. We will share that over to The IRS Solution Attorney show and if you have a question for Darrin directly you can get him at 888-get-mish.

DARRIN T. MISH:  That’s 888-438-6474 or you can visit our website at getirshelp.com.

KATRINA MADEWELL:  And we are live in the studio so if you have a question or you want to talk to us you can get us at 888-404-1010. Save that number here to the studio 888-404-1010 back in a moment.

(commercial break)

DARRIN T. MISH:  Welcome back to the IRS Solution Attorney show. I am the IRS Solution Attorney I am a legend in my own mind as well.

KATRINA MADEWELL:  And I’m your co-host Katrina Madewell, thanks for sticking with us through the break. We’ve had fun today.

DARRIN T. MISH:  Yeah, we have for sure.

KATRINA MADEWELL:  We have fun every day.

DARRIN T. MISH:  We are running out of time because I have kind of a long IRS train wreck of the week.

KATRINA MADEWELL:  I know.  Alright so talk about your offer in compromise quickly because we have to answer the questions.

DARRIN T. MISH:  So an offer in compromise is where you make a deal to settle for less.  It’s based upon a relatively simple math equation that goes like this. “Your monthly disposable income multiplied by 12 plus the value of your assets equals the amount of your offer.”  So, quick example let’s say you had monthly disposable income like $100, 100 times 12 is $1200.  Let’s assume for just a moment you have no assets. You could settle your IRS tax debt for $1200.

It doesn’t matter so much how much you owe, it matters more about how much you can afford to pay according to this equation.  So, that’s the secret behind how we get these great deals for people who owe you know hundreds of thousands of dollars. If they are in a situation where their monthly disposable income is very low and their assets are negligible or very low, we can help plan to get their monthly disposable income down by using legal, ethical and moral means. Then we can get them a really great deal.

Very few people come in from off the street that are perfect, ideal candidates for an offer in compromise. I get people asking me all the time, can I do this on my own?  Yes, you can, and I can work on my own plumbing when it stops up too, but I’m not going to because I don’t want to create a mess.

KATRINA MADEWELL:  Alright, so let’s answer some questions from our listeners.  Ron had a good one he hit you up on Twitter @darrin_mish and that question is, can you claim your child if you pay child support?  Good question.

DARRIN T. MISH:  Well the rule is you are supposed to be only claim the child if you provide more than 50 or 51% of their support..

KATRINA MADEWELL:  Or if it’s split, don’t they rotate year to year something like that?

DARRIN T. MISH:  But as a practical matter you have to follow what’s in the dissolution agreement. The divorce decree. You have to follow whatever the court decided.

KATRINA MADEWELL:  Or child support order or whatever you’ve got.

DARRIN T. MISH:  Sometimes the court is going to give the kids for tax purposes to one spouse or the other or one parent or the other, sometimes it’s rotating it just kind of…

KATRINA MADEWELL:  Because every scenario is different, so they may have had 2 kids and maybe on spouse claims one kid and the other one claims the other one.

DARRIN T. MISH:  We just had a situation where it was better for my client to let his former spouse claim the child for reasons that I can’t explain right now, but I was like….

PAT GEORGE:  Hey, look out, look out.

KATRINA MADEWELL:  We had a question from Judy, we will answer that next week.

DARRIN T. MISH:  We just about got run over by the IRS train wreck of the week.  So, today’s train wreck is a little bit different than normal.  I get a little bit bored just talking about win after win after win so this is going to be a partial win story today.

I have a client where we filed an offer in compromise and it’s really timely that I just explained how an offer works. He had a rental house or he has a rental house, this case is still going on.  He has a rental house up north and the IRS wants to count the rental income as income but doesn’t want to count the mortgage or any of the costs of maintaining that house as expenses.  So basically, they want their cake and they want to eat it to.

KATRINA MADEWELL:  I was going to say, that’s not real math by any standards.

DARRIN T. MISH:  And there is an over-arching rule in the IRS problem resolution world, that any expense that is necessary for the production of income is an allowable expense.  So, what does that mean? If you’ve got to spend money to make money, you get that as an expense.

KATRINA MADEWELL:  It’s kind of like a real estate agent, if I don’t have a car and I can’t drive I probably can’t make a living.

DARRIN T. MISH:  Yeah so, I mean he wouldn’t have that rental house if he didn’t pay the mortgage. Would you agree with that as a real estate professional?

KATRINA MADEWELL:  Agree, yes.

DARRIN T. MISH:  If he doesn’t pay the mortgage, he is not going to have the house.  What if he didn’t pay the property taxes? What if he didn’t pay the insurance? He’s not going to have the house.  So, the IRS wants to attribute the income to him but none of the expenses. That means the offer cannot work. Because he now has the ability to pay in this like fictional weirdness land that they are interpreting this and this goes through two levels.  This goes through the field level, the initial level that decides the offer.  They make this bizarre sort of decision and I file an appeal because I am like this can’t stand, this is ridiculous.

The appeals on the phone kind of goes like this:  Well you lose. Well, ma’am, let me explain to you in all these different ways using the Internal revenue manual why I don’t lose. The whole time she is just completely closed off to me. She is like nope, you lose. A house is a house is a house you only get one house, you know we are going to take the income. We are not going to give you the expense you lose.

So this goes on for about 10 minutes and I’m starting to lose my patience. Finally, I take a deep breath and I said look can I just get the name and phone number of your supervisor? I just want to talk to this supervisor about it and we could probably get this resolved and she says absolutely. She gives me the name and stuff and she says something like, well, you know I would be absolutely shocked if my supervisor changes this decision that I’ve made.  I said I imagine that you would be shocked and, I’m saying in my mind, because you don’t have a clue what you are doing.

KATRINA MADEWELL:  Yeah, and it went through two people already.

DARRIN T. MISH:  So I hang up with her and I make another phone call. I call another buddy of mine who is a nationally renowned expert you know and I go hey am I off…

KATRINA MADEWELL:  Just to make sure you are not missing something.

DARRIN T. MISH:  I’m like, am I missing something? Is there something wrong here? This is what I think. He goes, Darrin, absolutely you are totally right that is what I would argue. So, I’m on the phone with him for like 45 minutes and I get this phone message and it was the appeals lady. She called back and she wanted me to call her back. So, I called her back and her demeanor has completely changed she is like….

KATRINA MADEWELL:  Oh she must have talked to somebody…

DARRIN T. MISH:  She is nice, she is nice so she says I went and talked to my supervisor and you know I’ve never handled this exact type of situation before and we need the following documents, XYZ 123 and we will give you a couple of weeks to provide those documents. It was all documents pertaining to the expenses associated with the rental. She says if you do that then we will reconsider our decision…

KATRINA MADEWELL:  Mortgage statement, tax bill, insurance…

DARRIN T. MISH:  Yeah, I can’t go into the particulars but just stuff…

KATRINA MADEWELL:  It’s just common sense, my guess.

DARRIN T. MISH:  And so this is not like a grand slam home run victory but I can tell you this with a high degree of certainty that very few…well no tax payer would ever have pulled that thing out of the fire ever because they would have just like well I’m wrong I lose.

KATRINA MADEWELL:  They said you lose, you are done.

DARRIN T. MISH:  And I would say a very high percentage of professionals that do what I do also would have lost. I was just so convinced that that was a wrong decision on so many levels I just was not going to go down lying down. I was going to go out swinging.

PAT GEORGE:  You’re the best, that’s why.

DARRIN T. MISH:  Well, thank you.

KATRINA MADEWELL:  Well, if you are right, you are right. I’m that way too, I will argue my point to the death if I am right.

DARRIN T. MISH:  The thing about an IRS appeal for an offer in compromise is that’s the final word, there’s no court to appeal to. There is no one else to go to. If you lose you lose and so that’s why I was grasping at straws on that.

KATRINA MADEWELL:  Darrin’s like, I am not losing.

DARRIN T. MISH:  Give me the supervisor I need a life line, like that old TV show.  But…

KATRINA MADEWELL:  I’m not giving up.

DARRIN T. MISH:  I have a very high degree of certainty that that case is going to work out just fine.

KATRINA MADEWELL:  Oh, so that’s one that we are in the middle of, it might be our train wreck.

DARRIN T. MISH:  So, we might come back in another month or so and do another train wreck.

PAT GEORGE:  So, about another month at least.

DARRIN T. MISH:  Yeah, it’s probably another month.  We have to get them their paperwork by Monday, I think we have it.  By the way his expenses were, not even counting the mortgage. His expenses on that house outweigh the rental, so all he wanted them to do is offset the rental or the rental income.   Just ignore the rental income, if you ignore the rental income, I win. That’s all I’m trying to get them to do. I’m not even trying to allow the mortgage.

KATRINA MADEWELL:  So, what I’m hearing is blah, blah, blah I’m trying to win, I’m trying to win that’s what I hear, how about you, Pat?

PAT GEORGE:  That’s what we are going to hear tomorrow at 9 a.m.

KATRINA MADEWELL:  That’s right.

DARRIN T. MISH:  Who doesn’t want to win?

KATRINA MADEWELL:  Alright, so join me tomorrow for Tampa home talk I’ll  be here with Make it burn another really cool real estate related homey topic for you.  This week we are listening to the IRS Solution Attorney show.

DARRIN T. MISH:  For this week we are out.

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