10 First Steps to Solving Your IRS Problem

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DARRIN T. MISH: That’s me, the IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL: You sounded like you had to think about that for a minute.

DARRIN T. MISH: There are a lot of Darrin Mish’s in the world, but I am Darrin T. Mish.

KATRINA MADEWELL: What?

DARRIN T. MISH: The IRS Solution Attorney.

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KATRINA MADEWELL: I’m your cohost, Katrina Madewell. There can’t be more than one of you.

DARRIN T. MISH: If you Google Darrin Mish and you’re a little loose about the spelling of my first name, there is a man in Iowa who in his spare time races stock cars. So that’s cool. That’s the only one I know.

KATRINA MADEWELL: You’re Darrin like Bewitched Darrin.

PAT GEORGE: How many Farmer Darrin’s are there? I think only one.

DARRIN T. MISH: The guy in Iowa, there’s a very good likelihood that he might have a side thing going.

KATRINA MADEWELL: Not only farmer Darrin but Farmer IRS Darrin that’s also an attorney.

DARRIN T. MISH: Probably none.

PAT GEORGE: You’re right about that.

KATRINA MADEWELL: There is another Katrina Madewell in California.

PAT GEORGE: But not like you!

KATRINA MADEWELL: Do you want to know how I found out? I had my URL registered katrinamadewell.com and forgot to renew it. She picked it up. She was a personal trainer. Don’t you know, I was on a wait list. As soon as that sucker fell off…

DARRIN T. MISH: Then she let it go?

KATRINA MADEWELL: She did, I got it back.

PAT GEORGE: There’s another Pat George because I did the same thing. Patgeorge.com in North Carolina. She’s a realtor. She is about 70 years old.

KATRINA MADEWELL: She’s not letting that go. You can do a back-order URL. Go to Godaddy, order it and pay for it. It’ll park itself there.

DARRIN T. MISH: The moral of that story is…

PAT GEORGE: If you snooze, you lose.

DARRIN T. MISH: If you own Katrinamadewell.com, why don’t you go ahead and spring for ten years at $10/year.

KATRINA MADEWELL: I did, I already have it.

DARRIN T. MISH: There are some people that believe, I included, that Google will pay a little bit better attention to a domain that’s been registered for ten years. As opposed to one that just pops up.

KATRINA MADEWELL: Well, it’s factual. It’s true.

DARRIN T. MISH: It’s hard to say if anything is factual when you deal with Google.

KATRINA MADEWELL: That was proven.

DARRIN T. MISH: Ok, that’s good. My website getirshelp.com, which you should visit for all your needs for information on handling tax problems, has been registered for a long time.

KATRINA MADEWELL: Which is probably where most of your clients start. I seriously doubt they just want to hop right on the phone with you. But if you do, his number is 888-GET-MISH.

DARRIN T. MISH: Not that there’s any problem with hopping on the phone. 888-GET-MISH. That’s 888-438-6474.

KATRINA MADEWELL: They like to research and read your content and watch your YouTube videos. You’ve talked about how they’ll watch hours and hours of YouTube videos.

DARRIN T. MISH: That’s true, a lot of people do. It’s a scary situation, dealing with tax problems.

KATRINA MADEWELL: It’s fear of the unknown, and they’re probably trying to learn about you and their issue. To educate them.

DARRIN T. MISH: I think it’s important to most people when they decide to get help, they’re going to spend good money on help. They want to make sure it’s somebody they can trust or feel comfortable with. I think communication style is also important. A lot of attorneys are focused and identifies as being attorneys that they don’t communicate in a clear manner that laypeople can understand. Two attorneys could go to the bar; we could have a conversation that nobody that hasn’t gone to law school would understand what we’re talking about. That’s not how you talk to regular people that have problems. It doesn’t serve them. It’s not good for business.

KATRINA MADEWELL: It’s no different in any other industry. Even my industry. It needs to be explained in a manner it can be understood. For most people, it’s their biggest asset is a liability and monthly payment. It doesn’t do a whole lot of good to be quoting a bunch of Florida statutes when they just need to know how it’s going to relate to them.

DARRIN T. MISH: For sure. Today we’re going to do a show, the 10 First Steps to Solving Your IRS Problem. I thought we’d try to break it down.

KATRINA MADEWELL: We have some Facebook love.

DARRIN T. MISH: We also stream the shows live on Facebook Live. Both on my page and the IRS Solution Attorney page. If you’re on Facebook, you should go ahead and like the IRS Solution Attorney page because we try to post the videos every week.

KATRINA MADEWELL: Yes, we do, with the rare exception, we have to throw a prerecord in there, we’re in here every week.

DARRIN T. MISH: In this first segment, it’s all about the pitch. We’ve been over the website, phone number, Facebook.

KATRINA MADEWELL: We don’t usually do that, but it’s not a bad place to start.

DARRIN T. MISH: We don’t, so we may as well go all the way and talk about the podcast. All the episodes are on the IRS Solution Attorney podcast. There’s an app in both stores for your phones or iPad. It’s also called the IRS Solution Attorney. It’s all the past episodes. A couple years’ worth now.

KATRINA MADEWELL: We’ve had some fun stuff. It’s not all IRS stuff, all the time.

DARRIN T. MISH: I think we could do a morning show and be fine. I’ve seen some of these people’s paychecks at the radio station, and they’re a little bit scary.

KATRINA MADEWELL: You don’t want to quit your day job?

DARRIN T. MISH: Pat’s got a great job, it’s fun. I don’t know very many people happier than Pat George. At least in outward appearances.

KATRINA MADEWELL: That’s because he has his best friend named Tequila.

DARRIN T. MISH: He has a lot of things going for him. He has a lovely wife.

KATRINA MADEWELL: No comment from the peanut gallery this morning?

PAT GEORGE: I’ve been good, I just got back from Dallas. They gave me a nice present. I enjoyed that for the Memorial Day weekend, and I’ve been good ever since Sunday.

DARRIN T. MISH: I have a bottle of fine tequila in my liquor cabinet that’s unopened. I need to bring it to him because I’m not going to drink it.

KATRINA MADEWELL: You also have a bottle of fine rum.

DARRIN T. MISH: I haven’t opened that either. A quick pitch for Pat George. He’s looking for a refrigerator. If you have a refrigerator you want to get rid of, call the station at 888-404-1010.

PAT GEORGE: Most important thing is the thermostat works. I have one; the thermostat never shuts off.

DARRIN T. MISH: He needs a working garage refrigerator. Not sure if he’ll pick it up.

PAT GEORGE: Oh, I’ll pick it up!

KATRINA MADEWELL: He’ll get it. He has a truck. Either that or I’ll find you one. We always find stuff.

PAT GEORGE: Somebody says, hey does the refrigerator go with the house? I don’t care.

KATRINA MADEWELL: No, it’s not like that.

DARRIN T. MISH: I got a washer and dryer with the house we bought last summer. That’s cool.

KATRINA MADEWELL: He’s saying if there’s a property and somebody asks if the refrigerator comes with the house and the refrigerator disappears.

PAT GEORGE: Could you do that?

KATRINA MADEWELL: No.

PAT GEORGE: Did you notice the patgeorge.com owner is with Keller Williams?

KATRINA MADEWELL: Should we invite her on the show?

PAT GEORGE: So, you work with two Pat George’s.

DARRIN T. MISH: Not my show, you can invite her on your show.

KATRINA MADEWELL: She might have an IRS problem, Darrin. You talk about how realtors are your biggest clients. That is not how we met. Full disclosure.

DARRIN T. MISH: Is that right?

KATRINA MADEWELL: You said you have a lot of realtor clients. Don’t you?

DARRIN T. MISH: No, I was trying to tease you about having a tax problem, which you didn’t have. I would guess most real estate agents have tax problems. Think about how you get paid. It’s screwy.

KATRINA MADEWELL: Not me.

DARRIN T. MISH: You have multiple closings today, right? That’s not how most real estate agents roll. Most real estate agents don’t have a radio show and all that stuff either. You’ve got it going on.

KATRINA MADEWELL: It’s the layperson. People don’t care about any of that stuff. They just want to make sure I can talk to them and sell their house.

DARRIN T. MISH: You know what we all care about? Bottom line. What’s in it for me? That’s what’s going through every single person’s mind. I’m talking about clients or customers. If you can fill in the what’s in it for me question, you’re going to do great. If you can’t, you’re not going to do as well.

PAT GEORGE: We’re close to the break now. You’ve just chit-chatted. Before we get to the break, you must tell me about your lake trip.

DARRIN T. MISH: Last week we were talking about going to Bob’s River Place. It’s like the redneck water park near Perry, FL. Branford is the name of the town. It was a trip. The place is cool. The one thing I had while we were there, was “This is America, man.”

PAT GEORGE: There’s no charge for that, is there?

DARRIN T. MISH: It was $35 to park. We had a car load of seven. But that was it. So, it was $5 each. There were tall water slides and were ridiculous rope swings.

KATRINA MADEWELL: My kids would love that.

DARRIN T. MISH: 50-70 feet off the water. People jumping off them doing quadruple flips and stuff.

PAT GEORGE: Were there any cutoff jeans?

DARRIN T. MISH: I did not see any cutoff jeans probably because jeans cost $100/pair now. There were a lot of crazy people dressed. There were tattoos…

KATRINA MADEWELL: Everybody has a tattoo. If you don’t have a tattoo, you’re the minority.

DARRIN T. MISH: I’m not saying anything bad about tattoos. I would say the average age was young. Around 20.

PAT GEORGE: How far did you have to walk from the parking lot to where the water was?

DARRIN T. MISH: 50 feet. There were a couple of hundred people there. Short lines. The place was cool. Bob, the owner, he’s like 82. Bob just hangs out having fun. There are very few rules. Very little supervision. There are signs everywhere that say this property is homesteaded; you can’t sue me for anything.

KATRINA MADEWELL: Fabulous.

DARRIN T. MISH: In my lawyer brain, I was thinking how would I organize this guy’s stuff if I was his attorney. How would I protect whatever assets he does have?

PAT GEORGE: Was it cash only?

DARRIN T. MISH: Oh, yeah.

KATRINA MADEWELL: I want to go tubing. We haven’t been in so long.

DARRIN T. MISH: He has tubing. Innertubes are $3.

KATRINA MADEWELL: How long is the river?

DARRIN T. MISH: It’s slow. It wasn’t long, and it’s real wide. There are people doing it; it looked fun.

KATRINA MADEWELL: This is the IRS Solution Attorney show. It’s not all IRS stuff all the time! Mr. Darrin T. Mish and I will be back in just a minute.

(commercial break)

(Sweet Home Alabama playing)

DARRIN T. MISH: Tear it up!

KATRINA MADEWELL: I had to think about that for a minute. Oh, yeah, we’re live.

PAT GEORGE: That’s for my in-laws in Colorado.

DARRIN T. MISH: I have a question. Sweet Home Alabama, right? Why would people in Florida sing Sweet Home Alabama at the top of their lungs?

PAT GEORGE: It’s the theme song…

DARRIN T. MISH: For Redneckia. I want to clarify.

KATRINA MADEWELL: Can we please look that up and see if it’s a real word?

DARRIN T. MISH: I want people that are listening to realize that I am not making fun of redneck culture when I say Redneckia.

KATRINA MADEWELL: You’d be making fun of yourself.

DARRIN T. MISH: It’s a term of endearment. There are a lot of things about the country lifestyle that I think are fabulous. People who have been living in the suburbs or the city, like me, pretty much their whole lives, there’s a lot to learn.

KATRINA MADEWELL: Isn’t there a song called the Red Neck Yacht Club.

DARRIN T. MISH: There is.

PAT GEORGE: Redneck girl. That could be you, Katrina.

KATRINA MADEWELL: Maybe. Maybe not.

DARRIN T. MISH: We’re eventually going to have to talk about tax stuff, but I have something to say. I was introduced to the country lifestyle by my wife.

KATRINA MADEWELL: I knew you were going to say that.

DARRIN T. MISH: She’s also from Colorado. It’s been a slow and gradual progression to where I am now. I have special boots for the farm.

KATRINA MADEWELL: Heather, you converted him to Redneckia!

DARRIN T. MISH: We’re in the second segment, we haven’t even mentioned the word IRS except in my title. We’re going to talk about the 10 First Steps to Solving Your IRS Problem.

KATRINA MADEWELL: If you have one, you can get Darrin at 888-GET-MISH.

#1 Step to Solving Your IRS Problem

READ ALL THE LETTERS FROM THE IRS IMMEDIATELY

DARRIN T. MISH: 888-438-6474. The first thing is simple. A lot of people don’t do it. Read all the letters from the IRS immediately. Do not let them pile up on your bureau.

KATRINA MADEWELL: You should have made number one, open the envelope.

DARRIN T. MISH: Usually people don’t even open them. I get large stacks of mail I get to open at the office. It’s no problem, but it’s kind of interesting that people don’t open them. That shows you the level of fear that people have about the IRS.

KATRINA MADEWELL: I’ve seen people that owe a significant amount of debt, and they just don’t even want to open their credit card statements because they got a place where they can’t pay them. Same concept.

DARRIN T. MISH: It doesn’t help that the IRS letters are confusing to regular people that don’t look at them every single day like I do. Sometimes the hardest part in dealing with the IRS is overcoming that feeling of dread and reading what they have to say. It might not be that bad. You may have made a simple mistake you can clear up quickly. I’ve gotten lots of those letters to myself over the years. Just little things. Not even big. If you change your address with the IRS, you get a letter that says you’ve changed your address.

KATRINA MADEWELL: I just got that letter. It said something about changing your address.

DARRIN T. MISH: Did you open the letter? You must have.

KATRINA MADEWELL: My staff opened it and gave it to me.

DARRIN T. MISH: Here’s another helpful hint. If you’re a small business owner and other people normally open your mail. Tell them not to open letters from the IRS.

KATRINA MADEWELL: They didn’t open that one, but they usually open the mail.

DARRIN T. MISH: These problems aren’t going to go away by themselves. You can’t ignore your way out of an IRS problem, typically. I do have lots of stories where people did. That’s not the way to solve them. Just read the mail. If you get the orange slip in your mailbox that says come on down to the post office and pick up the certified letter. Do it. Don’t ignore it.

KATRINA MADEWELL: Why not?

DARRIN T. MISH: Usually the certified mail is important. There are letters that come in the mail that are certified, and you have appeal rights. If you appeal them, you can keep levies from happening. If you don’t appeal, then you’ll get levied. They’re going to clean out your bank account; they’ll clean out your wages. You’re going to be very unhappy and come to me with a gigantic mess that I can’t easily solve because you didn’t open your mail.

KATRINA MADEWELL: Wouldn’t they have the argument, oh I never got the letter?

DARRIN T. MISH: If that worked, then nobody would ever go pick up their mail. The IRS law says they must mail it to the last known address. Sort of an interesting issue. Here we are in Florida; people move all the time. The last known address is the address on your last tax return. If you’re one of my clients, that was 27 years ago. They don’t know where you live. That’s all they must do is just certified they mailed it to the last known address.

#2 Step to Solving Your IRS Problem

CALL THE IRS

KATRINA MADEWELL: The second step in solving the IRS problems is to call. Like, call Darrin? Yeah, call Darrin at 888-GET-MISH, he’ll help.

DARRIN T. MISH: If you have one of the small issues, or if you don’t understand the issue, it could be a good idea to call the IRS and find out. If you haven’t filed a tax return in 17 years, you probably should call the IRS.

KATRINA MADEWELL: We should do a whole show on the simple things you can take care of immediately that people ignore. Wouldn’t you agree that people get these simple letters and just don’t want to deal with it?

DARRIN T. MISH: My content guy, who’s watching the show right now on Facebook should take notes on that. The top 7 things you can handle by yourself.

KATRINA MADEWELL: There’s a whole lot of content on your website, on your podcast, on the information. A lot of times they wouldn’t even have to pay you. They could just go on there to answer their quick question.

DARRIN T. MISH: Some people that are listening are wondering why he would do that. I think it’s cool. I try to treat people the way I want to be treated.

KATRINA MADEWELL: If it’s simple, then why not?

DARRIN T. MISH: Websites anymore are all about content and the more content I have on my website, and there are tons. We’re going through a rework on the website that’s long overdue. Probably ten years overdue. We’re reorganizing it so people can find the questions they have in an easier manner. There are I think thousands of pages in the website. That’s another reason we put content up there.

KATRINA MADEWELL: You should add a search bar to your site too.

DARRIN T. MISH: We’re adding breadcrumbs so you can go back to where you came from. Things like that.

#3 Step to Solving Your IRS Problem

KNOW YOUR RIGHTS

KATRINA MADEWELL: Our third tip is to know your rights.

DARRIN T. MISH: There’s something called IRS Publication 1.

KATRINA MADEWELL: Really?

DARRIN T. MISH: It is Publication 1. I think that is to demonstrate how important it is to the IRS that taxpayers understand their rights. You have rights to privacy; you have the right to professional, courteous service. We’ve done a whole show on what your rights are as a taxpayer, many of which are violated routinely by the IRS. In an organization as big as that, there’s going to be some problems from time to time.

KATRINA MADEWELL: Can we go back to number one? We had a question from one of our Facebook viewers. She wants to know if all the letters are always sent certified mail. To answer your question to the letter I got, it wasn’t. It was just regular mail. Is everything where they owe money sent certified?

DARRIN T. MISH: Absolutely not. The reason I encourage you so strongly to get the certified mail is that’s usually bad news.

KATRINA MADEWELL: Who wants to go pick up bad news?

DARRIN T. MISH: Because we can prevent it from becoming worse news.

KATRINA MADEWELL: Point taken.

DARRIN T. MISH: Usually you’re not going to get a certified letter until you’re well along in the process. I would encourage you to get the letter. Otherwise, we’re in a situation where we’re guessing and trying to figure out what’s going on. Some of these things need to be dealt with today. I was meeting with a gentleman yesterday; I like this guy, I represented him in the past. He brought in a notice of deficiency, which comes certified mail. He had tax court rights. So, he could have filed a tax court petition, except for the deadline was the day before yesterday. It turns out we weren’t going to file a tax court petition anyway.

KATRINA MADEWELL: Had he needed one, he would have been SOL.

DARRIN T. MISH: Yeah, he would have been straight out of luck, for sure.

KATRINA MADEWELL: That’s what I meant. You got me.

DARRIN T. MISH: What are your rights? Let’s go back to know your rights. One of your rights is to file an appeal of certain decisions and actions that the IRS can take. One of those is they must send you a final notice of intent to levy before they can seize your paycheck or garnish your pay or seize your bank account. If you go down and get that letter, called the final notice of intent to levy, you can come to someone like me and appeal it. Hopefully, improve the situation before they do that. Prevent them from taking your money. Or you can even file that appeal yourself.

KATRINA MADEWELL: On the topic of know your rights, we did do a whole show on this, and it is available on the podcast. One would have thought it would be a boring show, but it wasn’t. You have a lot of rights as a taxpayer.

DARRIN T. MISH: If someone like me who knows what’s going on, we can tie the IRS in knots for months. Sometimes years just by exercising taxpayer rights.

#4 Step to Solving Your IRS Problem

DETERMINE IF YOU ACTUALLY OWE THE MONEY

KATRINA MADEWELL: That’s half the battle is knowing what the rights, or rules are. Number four, this is an interesting one: Determining if you actually owe the money.

DARRIN T. MISH: Don’t panic and pay now, hoping to know if the IRS is right. The IRS does make mistakes.

KATRINA MADEWELL: Wait, you said don’t panic and pay now?

DARRIN T. MISH: Yeah, some people do.

KATRINA MADEWELL: We’ve talked about file even if you can’t pay. It’s interesting. You’re saying don’t panic and pay.

DARRIN T. MISH: When we come back, we can talk about some examples of those people. I don’t run into them all that often. If you’re the panic and pay kind of person, you’re not going to ask me for advice because you just solved the problem by paying. I’ve seen it, where people are worried.

KATRINA MADEWELL: It could have been a big check they wrote, and now they’re curious if they actually owe it and come to you.

DARRIN T. MISH: Could be. And there might be chances if you panic and pay of getting some of that money back if you didn’t owe it.

KATRINA MADEWELL: That’s what I was going to ask you. You’re listening to the IRS Solution Attorney show. Today’s topic is all about 10 First Steps to Help Solving Your IRS problem. If you have one or know someone that does, you can connect them with Darrin T. Mish at 888-GET-MISH.

DARRIN T. MISH: 888-438-6474.

KATRINA MADEWELL: We’ll be back in just a minute.

(commercial break)

PAT GEORGE: Bob called, he wanted to hear this one.

KATRINA MADEWELL: Pat George is ever so entertaining. We were talking about, not Bob’s Water Park, what was it?

DARRIN T. MISH: Bob’s River Place. In Branford, FL.

KATRINA MADEWELL: Pat George is pulling up videos of Bob’s.

PAT GEORGE: I’m looking for Darrin and the family.

DARRIN T. MISH: I posted a couple of videos to my Facebook page. I’ll go ahead and post them to the IRS Solution Attorney page too.

KATRINA MADEWELL: You can’t have a water slide on your property because homeowner’s insurance won’t insure it. I guess Bob is self-insured?

DARRIN T. MISH: Yes, Bob is self-insured because he’s taking advantage of the Florida homestead law.

PAT GEORGE: Are they swimming in ice tea?

DARRIN T. MISH: The water is brown, and it was kind of cold. I would say the water is in the 70’s.

KATRINA MADEWELL: I don’t like water like that. I wouldn’t get out of the tube.

DARRIN T. MISH: It was too rough and rowdy for gators. Nobody was really worried about it. There’s no alcohol allowed on the premises, and there’s no food. There aren’t even any trash cans.

KATRINA MADEWELL: Or swearing.

DARRIN T. MISH: If you bring food, you must bring your trash bag. What I found refreshing about the place is it’s all about personal responsibility, which I’m a big proponent of. If you get hurt at Bob’s, you assume the risk.

KATRINA MADEWELL: Suck it up, buttercup.

DARRIN T. MISH: If you’re going to jump off a 20-foot rope swing, you might get hurt. I am Darrin T. Mish, the IRS Solution Attorney; welcome back, by the way, did not partake in any of these rope swing activities because I’m smarter than that.

KATRINA MADEWELL: I broke my toe in my pool, I might break something there. Especially if there was alcohol involved.

DARRIN T. MISH: Let’s get back to the ten first steps to solving your IRS tax problem. We were talking about determining if you owe the money. There are a lot of instances that the IRS has the opinion that you owe the money. I’ll give you an example. Cancellation of debt. This is a big example. You might have 1099 for cancellation of debt for $289,000 canceling your primary residence mortgage. For people who aren’t aware, let’s explain the concept. Congress has decided if a debt is canceled to a taxpayer, so let’s say a bank cancels a debt you owe, the Congress has decided…

KATRINA MADEWELL: Like a quick sale or foreclosure.

DARRIN T. MISH: Or for any reason. It could be to write off a big credit card. Congress has decided that is just like you having the money and paying it off. Then they’re going to tax as income the cancellation of debt. This always makes me scratch my head. It’s the scurrilous thing I’ve ever heard of.

KATRINA MADEWELL: Glad I’m not the only one.

DARRIN T. MISH: There are a lot of exceptions to cancellation of debt as taxable income, and one of those would be if it was the primary mortgage on your house. There are timing rules.

KATRINA MADEWELL: If you’re insolvent.

DARRIN T. MISH: Or if the debt was discharged in bankruptcy, then you don’t have to pay the tax. The IRS might send you a letter called a CP-2000 and said you owe them a bunch of money. If you panic, you might just stroke the check and pay them. But in my scenario, let’s just say you were insolvent at the time the debt was canceled and you can prove that. All we must do is fill out some papers and send them in and they’ll go ahead and negate that notice they just sent you that you owed them money. Understand if you owe the money. That’s all we’re trying to say. Because you might not.

Another example that comes to mind is if you didn’t file a tax return, the IRS prepared a substitute for return; there’s a huge number on there. It might be $80,000.

KATRINA MADEWELL: Which would not be right because they didn’t take any write-offs.

DARRIN T. MISH: People come in and say, the IRS prepared this return for me and its phony baloney. I don’t owe this much. I don’t owe anything.

KATRINA MADEWELL: You didn’t do it, so they did it for you.

DARRIN T. MISH: I say, well you’re in luck, we can file that tax return and wipe that out if what you’re saying is true. Just don’t automatically panic and pay.

KATRINA MADEWELL: Do you think they audit something like that?

DARRIN T. MISH: No, they don’t. It’s amazing. They prepare a substitute for return; you prepare an original return, you would think the audit rate would be high. It’s not high at all. If you file an original return and it looks like unicorns and rainbows were involved in preparing the return, you might get audited. You probably will. If it looks legit, if it looks good enough, you probably aren’t going to be audited.

KATRINA MADEWELL: Tax expense: Unicorn food!

DARRIN T. MISH: I’ve seen some unicorn food in my day. People come into the office because they got an audit notice, you look at the return, and you’re like, wow, that’s fascinating!

KATRINA MADEWELL: Give me an example of a unicorn on a tax return.

DARRIN T. MISH: You’re totally putting me on the spot.

KATRINA MADEWELL: The next time you’re looking for returns, just jot it down.

DARRIN T. MISH: I’ve seen some that are so wrong, your jaw just drops. An example that is running through my mind right now and I can’t say because it’s too unique.

KATRINA MADEWELL: Ok. I just meant an example of something someone tries to write off. Like unicorn food, ha ha ha.

DARRIN T. MISH: The reason kids get social security numbers in the hospital is that 20 plus years ago, people used to write off Fido. They would list their dog as a dependent.

KATRINA MADEWELL: People were making up socials or taking deductions on dependents.

DARRIN T. MISH: Yeah, they would do that. You didn’t use to have to have the kid’s social security number.

KATRINA MADEWELL: I’ve got 12 kids!

DARRIN T. MISH: Yeah, that’s what would happen.

#5 Step to Solving Your IRS Problem

IF YOU OWE THE MONEY, DETERMINE IF YOU CAN PAY IT OFF IMMEDIATELY

KATRINA MADEWELL: If you owe the money, decide if you can and should pay it off immediately. Aren’t you always supposed to pay it immediately?

DARRIN T. MISH: Well, if the IRS says you owe $1,000, and that’s about how much you have in your checking account, and that’s what you need to use for rent. Don’t take the rent money and pay the IRS. I did have a client that went without air conditioning in the middle of summer so he could pay my fee. By the way, we rewarded him generously by allowing for the rest of the case to be pro bono. Once I heard that I didn’t have the heart to make him pay the rest of the fee.

KATRINA MADEWELL: That’s an example of responsibility.

DARRIN T. MISH: It’s an example of responsibility for sure. That was a guy that went above and beyond.

#6 Step to Solving Your IRS Problem

IF IT’S MORE THAN YOU CAN PAY, YOU HAVE SOME OPTIONS

KATRINA MADEWELL: We talk about this next one a lot, but if you do owe the money and it’s more than you can pay, there are some options.

DARRIN T. MISH: You have a certain amount of time you can respond and pay according to whatever letter you got. Every letter you get has a deadline on it. It’s always fascinating to me. There are some personality types that don’t care at all if there’s a deadline. There’s another kind of personality that says, you know I have a 10-day deadline, and it’s panic time if that deadline comes and goes. The real answer is somewhere in the middle of those two extremes. The answer is not completely panic and freak out over the deadline, and the other answer is to not completely blow it off, and we’ll deal with it never. It’s somewhere in the middle. It depends on each case.

#7 Step to Solving Your IRS Problem

DON’T PAY SOMEONE ELSE’S IRS BILL

KATRINA MADEWELL: Number seven is kind of funny, and I can comment on this one. Don’t pay someone else’s IRS bill.

DARRIN T. MISH: Business partners and former spouses have a way of sticking other taxpayers with the bill. The IRS generally holds all signers of a return responsible jointly and separately for the entire amount due. However, you may be able to avoid liability in certain cases. If you find out your ex-spouse was involved in shady financial dealings that you didn’t know about and didn’t profit from, you may be able to qualify for Innocent Spouse. This is becoming more common.

I don’t personally do a lot of Innocent Spouse cases because I don’t get those cases. I think a lot of Family Law attorneys do them. Where you’re representing one spouse and the other spouse was self-employed or scheming about something you didn’t know about. There are a lot of cases where one spouse forges the name of the other on the tax return.

KATRINA MADEWELL: I have been in this position, and we owed some taxes to the IRS, and that’s exactly what they told me is you both owe it equally. When I had told my old business partner that, they were like, well, we’re not going to pay it, we just won’t file taxes. We’ll pull all our money out of the bank and live on cash. I knew I couldn’t live like that, so we ended up paying it off.

DARRIN T. MISH: That happens quite a bit. In the context of payroll taxes where let’s say there are two partners, both partners are going to be held jointly and separately liable. What the IRS does is they assess it for both people. Inevitably, one of those people has money and ambition and the other…

KATRINA MADEWELL: One is going to pay and one won’t.

DARRIN T. MISH: I represented a guy recently, great guy. He owned a business, he sold the business, but he was still working in the business after. The new owners decided they weren’t going to pay the payroll taxes; they were going to do other stuff with the money. My client was still involved in the business; he got tagged. He was one of four people who was held responsible by the IRS for the part of the payroll tax. We ended up doing an offer in compromise. I think the total balance due was 400 or 500 grand and we got it settled for around $43,000. That $43,000 is going to come from the bill of those other three people. But those other three people weren’t going to do anything. There are probably better answers than living off cash for the next ten years.

KATRINA MADEWELL: Some people could do that, we never could.

DARRIN T. MISH: I don’t understand that. There are better options almost always.

KATRINA MADEWELL: This was many years ago, I’ve shared it on the show before. But I was pregnant with our oldest daughter, and the revenue officer came to our office, and she saw me, I was pregnant. It was a rough time financially for us; we were young.

DARRIN T. MISH: There are revenue officers that fall across the spectrum from reasonable to unreasonable. Just like everyone else in society. Driving out from the studio today, I might encounter the most courteous drivers, or I might encounter the worst drivers in the world.

KATRINA MADEWELL: The lady I got was nice. She took pity on me. She abated a lot of the penalties and interest.

DARRIN T. MISH: I wish I knew who that was, but I’m sure you don’t remember anymore. I’ve been doing this so long that I’m sure I know who that was because I knew all the people 14 years ago.

KATRINA MADEWELL: She was nice to me. I didn’t know what to do. I was scared and in my 20’s. It was a big deal.

#8 Step to Solving Your IRS Problem

DON’T PUT YOUR TAX BILL ON YOUR HIGH-INTEREST CREDIT CARD

DARRIN T. MISH: Number 8 is important and a bit controversial. I’m going to waffle on it a little. Don’t put your tax bill on your high-interest credit card. That’s because the IRS charges interest and penalties, and that is true, but the interest they charge is nothing compared to a high-interest credit card. A high-interest card is over 20%.

KATRINA MADEWELL: I think they’re all high interest because you can’t get that return anywhere else.

DARRIN T. MISH: Dave Ramsey would say 0.9 is high. Anything over 19% is probably high.

KATRINA MADEWELL: I just can’t imagine people would put an IRS tax debt on a credit card.

DARRIN T. MISH: There might be scenarios where it’s a good idea. Tax debt is hard to discharge in bankruptcy. Credit card debt, easy to discharge on bankruptcy. I’m not saying anybody would intentionally do that.

KATRINA MADEWELL: Maybe they’re hoping their financial situation would get better and get the money off their back.

DARRIN T. MISH: Could be.

KATRINA MADEWELL: Sometimes it doesn’t happen as planned.

DARRIN T. MISH: Again, it’s like don’t panic and pay. That’s the theme of the show today. Don’t panic and pay. You need to know what your options are.

#9 Step to Solving Your IRS Problem

DOCUMENT EVERYTHING

KATRINA MADEWELL: When we come back, we’ll talk about number nine, which is document everything, in the ten first steps to solving an IRS problem. We’ll be back in a minute.

(commercial break)

(Living in America song playing)

KATRINA MADEWELL: We’ve been here for two hours, we’re ready to go!

DARRIN T. MISH: Thomas Jefferson once said the price of freedom is eternal vigilance. I’m not sure what that has to do with anything, other than I like that quote. I do think it has to do with we need to watch as citizens, our politicians and government to make sure they don’t get out of hand. I think we’re well down that path.

KATRINA MADEWELL: This is an interesting one, it’s probably one that gets skipped over all too often. We left off at number nine, which is document everything.

DARRIN T. MISH: You need to document what you’re doing. If you call the IRS, write down the name and employee number. Write down what you agreed to so you have some record of it. If you mail the IRS something, which is typically how I deal with them. I do a lot of stuff in writing with them. You’re going to want to make sure you keep copies of it. You’d be surprised; people say they sent them a letter but can’t show me a copy.

KATRINA MADEWELL: You must document what you sent, when, how, the calls you made.

DARRIN T. MISH: If you mail them something, you should send it certified mail. If you don’t they’re going to say they lost it or didn’t get it, so you’re going to have to have all that stuff. It’s like dealing with any other giant bureaucracy. If you were dealing with your car insurance company for a claim, are you going to send them a letter with no copy and just hope it works out? Probably not.

KATRINA MADEWELL: You need to buy a spiral notebook and document everything in a mess.

DARRIN T. MISH: I’ve had I.D. theft claims against myself in the past.

KATRINA MADEWELL: That makes me want to throw up.

DARRIN T. MISH: It takes some time to get it all worked out. I had a little file and copies of everything, and all the certifies to make sure it got taken care of right.

#10 Step to Solving Your IRS Problem

GET SOME HELP

KATRINA MADEWELL: Number 10 on our list of 10 First steps to solving an IRS problem, is to get some help.

DARRIN T. MISH: This stuff can be hard. Some of the examples we came up with today were easy. Easy. If you get a letter from the IRS that says you owe $587 you probably shouldn’t call me. It’s probably not going to make a lot of sense. Unless you know, there’s more to come, which is common. If you get a bill for $578 and you haven’t filed a tax return in 20 years, you might still want to get some help.

KATRINA MADEWELL: Darrin, can you look at this before I get the bill for $5 million because I know it’s coming.

DARRIN T. MISH: People are worried about how much it’s going to cost. This isn’t a commercial for me. I’m just going to talk about how we charge people fees, so you understand. A lot of people are really worried about how much it’s going to cost. I understand and worry about how much things are going to cost too. I don’t take every case. I’m down to taking only about 35% or so of the people that come in. I only want to take cases that are right for them and right for me. What we’re shooting for when we quote fees is we’re shooting to save you $10 for every $1 you pay us. That’s a good deal.

KATRINA MADEWELL: In some cases, substantially more.

DARRIN T. MISH: That’s what we’re shooting for, quite often it’s way higher. Sometimes it’s lower, it just depends. We’re shooting for a 10x ROI, so you have an idea of what we’re talking about here.

I think there’s at least one question I want to answer today. Craig had chimed in and wanted to know what I should do if I make a mistake on my federal return I already filed? If it’s an old federal return, so it’s been more than three years, then you can no longer amend the return. After three years you can’t amend, sometimes it’s two, it depends. Let’s call it three years and you can no longer amend. You know what? Just shrug. Oops, you made a mistake. Stuff happens.

On the other hand, if it can be fixed, by all means, you should fix it. If you notice the mistake, they’re going to notice the mistake. Their penalty will be 25% right off the top. If you amend, you’re not going to pay that penalty, so it’s going to save you money.

TRAIN WRECK OF THE WEEK

DARRIN T. MISH: It sounds like it’s time for the train wreck of the week.

KATRINA MADEWELL: Yep, the train came in and already crashed.

DARRIN T. MISH: This is the segment of the show where we talk about someone that came into the office with a big problem, they were a train wreck, and somehow it all worked out for the better. This case is kind of sad; it’s an older gentleman. He’s quite gullible and would admit it. He’s approaching retirement age, and he fell in love with somebody on the internet.

There was one of those football guys, linebacker somewhere that fell in love with an imaginary person on the internet. That’s what happened to my client. This person that he was in love with borrowed his entire retirement account. It was wired to someplace in the Middle East like Abu Dhabi or Dubai.

It was a couple of hundred grand. He borrowed the money and was supposed to pay it back. You’re in love with the person, so it seems reasonable. Except it was all a scam and he lost all the money. Super sad. It’s sad that he was that trusting and that gullible. So, he lost the money. He was not quite retirement age, so there was an early retirement withdrawal penalty, and that ended up being about $44,000. He came to me and wanted to know what to do.

KATRINA MADEWELL: Did he get to meet the real person?

DARRIN T. MISH: No, because it wasn’t a real person. It was probably lots of people. There was no real person.

KATRINA MADEWELL: I was just curious if it was one person that scammed him out of his money.

DARRIN T. MISH: It was probably a crime syndicate that did it. He owed about 44 grand and wanted to know what to do. What I decided to do was file an offer in compromise based on what’s called Effective Tax Administration, or ETA. It’s kind of a dumb name, but it’s a special circumstances case. Where the guy had enough equity in his house to full pay, but the IRS would cause him to sell his house to full pay, he’s being victimized twice. It just didn’t seem fair.

We filed that offer, and at the field level of the IRS, they blew me out of the water. “Nope, sorry, dummy.” That was their opinion. I wondered where the humanity was in all of it. We filed an appeal. I was surprised; I didn’t think the appeal would go through. In speaking with the appeals officer, as soon as she got me on the line, she said she was going to recommend it for acceptance, this is not right. This guy was the victim of a fraud; we have it well-documented. There were police reports.

We tried to fix that case by filing an amended return and reporting that as a casualty loss which meant he didn’t have to pay tax on it. And they denied the amended return, which is harsh.

KATRINA MADEWELL: Can they do that or can you appeal that?

DARRIN T. MISH: No, you can’t appeal that.

KATRINA MADEWELL: Why? You can appeal everything else. You can appeal whistleblower reward things.

DARRIN T. MISH: It’s bizarre. We lost the amended return, that was going to be the easy way. The offer was going to be the hard way. We don’t have the exact final letter yet, but it looks like the IRS is going to go ahead and go with this. It looks like it will settle for around $1,000.

KATRINA MADEWELL: And he owed almost $44,000?

DARRIN T. MISH: I don’t remember the exact amount. It’s still going to sting a tiny bit, but it’s way better than selling his house to pay off a tax bill he shouldn’t have anyway. That’s not a typical case. I liked that case because I don’t get to argue fairness very often. Because fairness is not a legal principle. Kind of, but not really.

KATRINA MADEWELL: I’m glad you got to win.

DARRIN T. MISH: He’s happy about it.

KATRINA MADEWELL: This is the IRS Solution Attorney show. You can get Darrin if you need him at 888-GET-MISH.

DARRIN T. MISH: That’s 888-438-6474.

KATRINA MADEWELL: Getirshelp.com. We’ll be here every Thursday at 9 am.

DARRIN T. MISH: 9 am, 1010am. We’re out!

 

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