DARRIN T. MISH: Good morning and thank you for listening to the IRS Solution Attorney show; I am THE IRS Solution Attorney and apparently I have a little frog in my throat.
KATRINA MADEWELL: Yeah I’m going to let you get that frog out and I’ll finish opening the show I’m your co-host Katrina Madewell good morning and welcome to the show and I thought it was going to be me this morning that started with a frog in my throat.
DARRIN T. MISH: Hey, at least you know it’s real and it’s live and because if we were tape recording that, that would be a do over.
KATRINA MADEWELL: I know you started to have this like little boy’s voice, gonna have to clean that thing up.
DARRIN T. MISH: I know; I’m just going through puberty.
KATRINA MADEWELL: Yeah, yeah, yeah.
DARRIN T. MISH: Just trying to get it all worked out.
KATRINA MADEWELL: Keep living with that and see how that goes. Men don’t have like a male version of menopause, do they?
DARRIN T. MISH: Ahh yeah it’s called mid-life crisis.
KATRINA MADEWELL: Oh yeah.
DARRIN T. MISH: It’s a corvette and a girlfriend.
KATRINA MADEWELL: Hope Heather is not listening this morning is all I’m saying or you are in trouble.
DARRIN T. MISH: I have neither, so it’s all good and I’m actually a little bit passed the mid-life crisis I think.
KATRINA MADEWELL: Oh you already have the girlfriend and the corvette.
DARRIN T. MISH: No I did not have the girlfriend or the corvette.
KATRINA MADEWELL: That’s the running joke in our house to, the corvettes the mid-life crisis.
DARRIN T. MISH: Corvettes are kind of nice, I can think of other cars that I would like more, you know those new Maserati’s are, they are like a, it’s a coupe but that just seems more cool.
KATRINA MADEWELL: I will pick the Tesla you know that.
DARRIN T. MISH: Yeah Tesla….
KATRINA MADEWELL: Of course I would pick the Tesla I have a Prius.
DARRIN T. MISH: In 5 years everyone is going to have a Tesla.
KATRINA MADEWELL: I know.
DARRIN T. MISH: So…
KATRINA MADEWELL: I just want to get ahead of the curve you know.
DARRIN T. MISH: That’s part of the allure of the fancy car is that not everyone has it. I follow another lawyer here in town that has a Jaguar and you know a Jaguar those are pretty neat cars I mean you don’t see a lot of them and they are pretty fancy, pretty special.
KATRINA MADEWELL: They’re fast too.
DARRIN T. MISH: Yeah I want to say he’s saying it has like 500 horsepower so for a 4 Seater.
KATRINA MADEWELL: Yeah they are like 12 cylinders they’re crazy fast.
DARRIN T. MISH: Yeah they look really fancy I think they probably still leak oil just like all British cars do but anyway…
KATRINA MADEWELL: It’s a little bit outside of my skill if we start talking cars.
DARRIN T. MISH: So today we are going to talk about; Who do you turn to when you have an IRS problem.
KATRINA MADEWELL: Mr. Darrin T. Mish 888-get-mish how is that for an answer, ok the show is wrapped up we can talk about next. What do you think about that Pat you don’t have nothing to chime in on that one?
PAT GEORGE: No that is exactly who I would call.
DARRIN T. MISH: Trying not to be quite so transparent about all that I think that it’s the right idea.
PAT GEORGE: Knowing you, I’m a lot more relaxed now.
DARRIN T. MISH: Oh…
KATRINA MADEWELL: Just in case the IRS shows up knocking.
DARRIN T. MISH: So, yesterday we had a couple come in, there was a couple that came in and had a consultation with me and it’s kind of a tough situation they owe, I want to say they owe about $75,000, but a family of 5 but their household income is about $145,000, so, they are not poor you know they have a nice standard of living…
KATRINA MADEWELL: How that’s a tax bill.
KATRINA MADEWELL: A housing payment.
DARRIN T. MISH: And, not quite, yeah like a lower end house.
KATRINA MADEWELL: Ok.
DARRIN T. MISH: And..
KATRINA MADEWELL: Like a rental property payment but instead it’s going to be an IRS payment.
DARRIN T. MISH: We still had some more questions so we couldn’t like come up with a game plan yesterday, they had to go to do a little homework and as the gentleman was leaving he kind of sighed and he says you know I feel better already, he’s like I don’t know why but I feel better already so that’s good, that’s part of the plan when people come in to see us, to try to ratchet the anxiety and stress down just a hair because you know these things do not have to be the end of the world.
KATRINA MADEWELL: You should put that on your door like when they are exiting, either put how do you feel today or how was your visit feeling better?
DARRIN T. MISH: I can actually see, I go out and meet every client in the lobby you know cause it’s, I don’t know it’s 3 steps from the conference room that we are going to meet them, and I can see when I go out and shake their hand and greet them I can see the anxiety and part of my goal is to have the total opposite body language and everything as they leave. Whether we take the case or not I mean all problems in life are really solvable and if you think about it I think all IRS problems are solvable too.
KATRINA MADEWELL: I hope so you better think all IRS problems are solvable or we are in trouble.
DARRIN T. MISH: I was in a, in a minor dispute with the Florida bar one time over one of my advertising pieces where I said all IRS problems can be solved if you are willing to take the first step. The IRS wrote, oh the IRS, the IRS and the Florida bar are kind of the same in my mind, the Florida bar says you can’t use the word can because not all problems can be solved and my retort was well yeah all IRS problems can be solved because if the solution is pay then that’s a solution and that is a solution for…
KATRINA MADEWELL: That is such an attorney answer.
DARRIN T. MISH: That is, that is the solution for a very small portion of people that the answer is if you make half a million dollars and you owe 5 grand to the IRS my answer is going to be write the check.
KATRINA MADEWELL: Pay the 5 grand. Speed bump.
DARRIN T. MISH: Because it’s just not worth your time, effort, anxiety and all of that so.
KATRINA MADEWELL: Just curious with being an attorney if you have a dispute with the Florida bar how, how, what does that look like because I imagine the people at the bar are former attorney’s so they…
DARRIN T. MISH: No they are actually attorney’s.
KATRINA MADEWELL: So they are current attorneys ok.
DARRIN T. MISH: So if I have disputes with the Florida bar typically this time I did not, this is a very minor thing.
KATRINA MADEWELL: Just know how attorney’s like to argue we all know that.
DARRIN T. MISH: I actually hired an attorney that specializes in bar disputes and I, I have his number in my phone and I can call him and you know we can get it handled. And the reason, it’s not that I have a lot of problems with the Florida bar, I have not had hardly anything with the Florida bar in over 20 years but the real deal it that when you have a problem, or when I have a problem or when I have some sort of legal problem I typically unless it’s very minor I don’t handle it myself because I cannot be detached. I can’t be objective, I get stressed and nervous and afraid and scared just like everybody else and so I typically reach out to usually someone I know who’s specializes in that kind of thing and I hire a lawyer.
PAT GEORGE: You know how to solve those problems, stay away from the bar.
KATRINA MADEWELL: You knew that one was coming in there somewhere.
DARRIN T. MISH: That’s something that Pat has trouble with, judging by his Facebook posts.
PAT GEORGE: No I don’t really go to a bar I go to a porch.
KATRINA MADEWELL: The Tibby’s back porch.
DARRIN T. MISH: That was a nice back porch this weekend.
KATRINA MADEWELL: Should say Amy’s back porch.
PAT GEORGE: Yeah that was a nice one that was, that was, I have a lot of nice porches on the weekend.
DARRIN T. MISH: So to, to explain what we are talking about Pat posted some pictures he was staying out over on the other side of the bay with nice waterfront property.
PAT GEORGE: Well it was in Apollo Beach right about 2 miles from the Chico power plant you could see that in the background and it’s on one of the little fingers on Apollo beach and it’s a friend of mine that has a home that’s like if you can’t make it to Key West you go to his house and you are pretty much there.
KATRINA MADEWELL: Close enough.
DARRIN T. MISH: Yeah that’s great.
KATRINA MADEWELL: They do have a lot of Key West style homes over there.
PAT GEORGE: Yes they do.
KATRINA MADEWELL: My dad used to live there.
DARRIN T. MISH: That power plant is quite picturesque.
KATRINA MADEWELL: You’ll see the Manatee’s in the winter.
DARRIN T. MISH: Yeah that parts nice that’s for sure. So let’s talk about…
KATRINA MADEWELL: Our topic…
DARRIN T. MISH: Let’s talk about what we are talking about today and that’s you know who do you turn to when you have an IRS problem. I wanted to go over the 3 basic types of professionals that are entitled to represent tax payers before the IRS that means when the taxpayer has a problem or an issue with the IRS, there’s 3 types of professionals. The first, of course, I’m going to mention is Attorney’s, Attorneys are licensed in particular states and you know you don’t have to be licensed in the state that you are in in order to represent a client before the IRS so in another words our train wreck, our train wreck of the week those people actually live in North Carolina and they happened to see one of my videos or something online and they decided they liked my communication style and what I had to say and so they just hired me over the phone and it turned out great.
KATRINA MADEWELL: So how does that work like if it’s a state tax issue you just research whatever that thing is in that state and the IRS is a national thing?
DARRIN T. MISH: Yeah honestly I don’t handle that many state tax issues but most of the states, I have not run across a state yet that won’t allow you know an attorney that’s licensed in another jurisdiction handle the state tax matter so I have handle matters in Virginia, New York and California….
KATRINA MADEWELL: All over.
DARRIN T. MISH: Variety of different states. The biggest reason I don’t like to do it is because every state is different and so you have you know 50 or 51 different jurisdictions that will have different rules pertaining to their income tax in the department of revenue and what not. Some politicians think there’s 57 states but there is only 50 plus the district of Columbia.
KATRINA MADEWELL: Interesting. It’s a math problem.
DARRIN T. MISH: So he actually had claimed to have visited all 57 which was really spectacularly interesting but anyway so Attorney’s we have on going continuing legal education requirements much like I think real estate agents do…
KATRINA MADEWELL: Oh yes and then some. We have to take our core law; we have to take our ethics every couple of years.
DARRIN T. MISH: Yeah we have to take a I’m licensed in Colorado as well but here in Florida we have to take 30 hours every 3 years but in Colorado I have to take 45 hours every 3 years, luckily for me they kind of overlap and they are acceptable in both jurisdictions for the most part.
KATRINA MADEWELL: So you take the same 40 something hours for both?
DARRIN T. MISH: Yeah and I always exceed the 45 it’s never a problem because if you are just trying to stay up on this one particular area of law, I take 16 hours a year without fail and then there’s anything else that comes along.
KATRINA MADEWELL: That’s kind of how I am to it’s hard to find a class that keeps my attention so if I find one that meets the requirements I try to sign up for it right away.
DARRIN T. MISH: Yeah and you probably do the automobile university thing right?
KATRINA MADEWELL: No.
DARRIN T. MISH: No you don’t listen.
KATRINA MADEWELL: What is automobile university…
DARRIN T. MISH: You’ve never heard that phrase?
KATRINA MADEWELL: That’s online?
DARRIN T. MISH: Yeah you can listen to audio books in the car and what not.
KATRINA MADEWELL: Oh yeah I always listen to books but it doesn’t count for CE hours.
DARRIN T. MISH: Oh so…
KATRINA MADEWELL: Does that count for attorney’s?
DARRIN T. MISH: We actually have, yeah we can take our CLE it’s like self-study you can listen to it and what not…
KATRINA MADEWELL: That is such a sham I cannot believe attorneys are allowed to listen to audio books as CE.
DARRIN T. MISH: I actually listen to every single moment because it makes my job easier and anything that makes my job easier I’m all about that.
KATRINA MADEWELL: Well you know real estate agents have to take real CE hours like that count for certain parts not just audible books but anyway.
DARRIN T. MISH: Listen as the co-host I’m not sure you are supposed to be saying negative things about your…
KATRINA MADEWELL: I’m just picking on you. And you know the old saying you pick on the ones you like so.
DARRIN T. MISH: When we come back after the break we will talk about the other types of professionals that can represent you if you have an IRS problem.
KATRINA MADEWELL: Don’t go anywhere it’s going to be fun, if you want to call us 888-404-1010. Back in a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney show I am THE IRS Solution attorney Darrin T. Mish.
KATRINA MADEWELL: And I am your co-host Katrina Madewell and I have to say we were talking during the break and I stand corrected I am sorry because it is just not any audio book it is specifically for continuing education for attorney’s.
DARRIN T. MISH: Yeah.
KATRINA MADEWELL: My bad.
DARRIN T. MISH: If it was any audio book I would have hundreds of hours I think every three years. Because I do listen to a lot….
KATRINA MADEWELL: Ok, that’s the way I heard it the first time.
DARRIN T. MISH: There’s, that’s just a trick that I use I listened to a lot of spoken word in the car and that’s probably one of the reasons why we are doing the show is because I like spoken word radio but the reason I do it is because it keeps my mind active and it keeps me awake and I think it makes me a better driver, if I listen to too much music it puts me to sleep.
PAT GEORGE: Where do you find all these books, or spoken word or audio…
KATRINA MADEWELL: Audible.com
DARRIN T. MISH: Audible.com
KATRINA MADEWELL: I have audible too.
PAT GEORGE: Ok, just on your phone?
DARRIN T. MISH: Yeah you can just go ahead and stream at via Bluetooth in your car and….
PAT GEORGE: Yeah cause I’m thinking about as fun as this show is that I should start getting some IRS audio books and start a course…
KATRINA MADEWELL: Well we could give you a list of other books it doesn’t have to be just you know IRS books. There is a ton of other business books that you could add to your list like we could do a whole show on books don’t you think…
DARRIN T. MISH: Yeah right now I’m listening to a really good book on negotiation and you would think that you know in what I do and learning new and better negotiation tips would be important right?
PAT GEORGE: And then where do you get your traffic reports from or do you just audio book yourself right into a backup.
KATRINA MADEWELL: He looks at ways before he….
DARRIN T. MISH: Yeah so I feel bad this to Pat George who is like legend here in the market but yeah I use my phone on ways that tells me how traffic is and today it brought me a very interesting way to…
PAT GEORGE: Yeah let me hear this one…
DARRIN T. MISH: The station today it was down I live in Zephyr Hills now and it brought me down 301 to 579 to I4 to 275 to the station.
PAT GEORGE: That’s a nice route.
DARRIN T. MISH: Yeah it’s reasonable, it’s all, it’s all back roads and country until you get onto I4..
PAT GEORGE: Right.
DARRIN T. MISH: And the only traffic there was, which was a little bit of congestion on I4 which of course Pat knew about before.
PAT GEORGE: Always around Macintosh, (inaudible) and then of course coming in by the Selmon connector there.
DARRIN T. MISH: That is exactly where it was.
KATRINA MADEWELL: See I like to look at the traffic map and just kind of figure out my alternate route before I go.
PAT GEORGE: While you are driving you like to look at that.
KATRINA MADEWELL: Well I look at it before I go and then I just kind of glance at it on the way.
PAT GEORGE: Changes quickly.
KATRINA MADEWELL: I know, it’s good you are right.
PAT GEORGE: We are up to the second on this radio station.
KATRINA MADEWELL: I know and I do, I don’t always listen to book, it depends on what mood I’m in, I do listen to talk radio a lot.
DARRIN T. MISH: So we are very happy that you are listening to 1010 money talk and not listening to an audio book or using ways to determine how to get to your destination…
KATRINA MADEWELL: Yes. I go in and out and I have periods where I don’t listen to a lot of books and then I have periods where I will listen to a ton back to back. I don’t know about you but.
DARRIN T. MISH: Yep I do the same thing, sometimes I forget that I have it and I am sort of out of practice but my commute is twice as long now so I have a lot more time in the truck.
KATRINA MADEWELL: It’s a good use of time.
DARRIN T. MISH: I think so absolutely. Just listening to you know political talk or music or whatever just kind of a waste of time.
KATRINA MADEWELL: And the other thing, well the other thing to like with the point behind the audio books is usually you are listening to whatever the relevant topic is for yourself at that time like if you are having a fit with your teenage kid you might listen to a parenting book.
DARRIN T. MISH: Absolutely.
KATRINA MADEWELL: Right something like that.
DARRIN T. MISH: Here’s another little tip I have trouble listening to slow speakers. I get bored really easily and most of the narration on audio books is really slow but they have a speed setting that you can turn it up and some people sound great at double speed but the book that I am listening to today to today sounds good at 1.25.
KATRINA MADEWELL: Don’t listen to Gary Vaynerchuk…
DARRIN T. MISH: At like double speed?
KATRINA MADEWELL: Yeah.
DARRIN T. MISH: Yeah I would think that would sound like a helium voice.
KATRINA MADEWELL: You will be a, you will probably have to re-listen to the whole book but.
DARRIN T. MISH: But when he swears it probably sounds really funny.
KATRINA MADEWELL: Perhaps, I don’t know I don’t usually double the speed up, if the book is that slow I will usually just skip it.
DARRIN T. MISH: So getting back to our topic it’s who do you turn to when you have an IRS problem and in the last segment we talked about how attorney’s obviously are licensed in a particular state typically one sometimes more and they can represent tax payers all across the country and I do have in fact represented tax payers in all 50 states and…
KATRINA MADEWELL: And that’s exactly what Darrin does and so his number is 888-get-mish..
DARRIN T. MISH: Or you can visit the website at getirshelp.com, you can download the podcasts from ITunes or our app from ITunes as well but the second type of paid professional that can represent clients before the IRS is a certified public accountant a CPA. CPA’s are licensed again in every state and all the territories and the District of Columbia and all of that and they have had to pass a very rigorous course of study usually in the University and they have to take a really pretty rehearsed test and they have to, you know CE requirements and what not as well.
KATRINA MADEWELL: Now is this your CPA or any CPA?
DARRIN T. MISH: Any CPA is technically able to represent clients before the IRS and the one thing that I want, I want to get this message out ok and that is that CPA’s or account types, there’s actually a third type of professional, let me go over that really quick and then I will go over the difference between hiring an attorney versus a CPA or enrolled agent. The enrolled agent is the third type of paid tax professional that can represent clients before the IRS. An enrolled agent is someone who is licensed by the IRS and my understanding is there is 2 ways to obtain this license, 1 is by passing again a pretty rigorous test, it’s a 3-part test called the Special Enrollment Examination or the other way to become an enrolled agent is to have been an IRS employee for a certain length of time.
KATRINA MADEWELL: Well that’s what I was going to say I was just curious like who are enrolled agents because I was thinking that basically they were CPA’s and there was one guy that used to do my taxes a long time ago that was a retired IRS guy and I remember him saying that he was an enrolled agent.
DARRIN T. MISH: Yeah so it’s my understanding that former IRS employees after a certain amount of time, and I’m sorry I don’t know how long that is, but they can become enrolled agents very relatively easily based on their work experience. Ok so an enrolled agent is somebody Federally licensed by the IRS to practice before them and they can also obviously represent clients in all 50 states. Now I think the big difference between having an attorney represent you and having a CPA or an enrolled agent represent you is the way we think in our background and experience and our education. I’m not saying my education is any better than a CPA or an enrolled agent although…
KATRINA MADEWELL: It’s different.
DARRIN T. MISH: An enrolled agent has no special educational degree requirements as far as I know, they do have to pass the test or they have to have worked at the IRS and I not denigrating anyone here ok but the difference between attorney’s, CPA’s and enrolled agents is attorneys were trained in school, in law school, by the way law school is a traumatizing experience ok it really is. I, not taking away from people who have been in the military and I was not brave enough honestly to serve but it’s a very much like a boot camp experience, it’s a very traumatizing, they really did say on the first day look left, look right you know one of you guy’s is not going to be here and that’s in fact what happened in my law school is they cut half the class after the first year…
KATRINA MADEWELL: Wow. Why because they didn’t pass the testing requirements or they just left on their own or both?
DARRIN T. MISH: We only have one exam in each course all year, the final, that’s all there is so if you had a bad day and you didn’t pass you got kicked out. So you know talk about some stress but…
KATRINA MADEWELL: So you have to retake the whole thing or are you just gone?
DARRIN T. MISH: Well you are gone from that school. I know of some individuals who failed that first year and they went to another, you know they went to a different school but then you are typically you are gonna get into a lesser school you know…
KATRINA MADEWELL: Each time.
DARRIN T. MISH: Each time because especially if you didn’t make it the first time. But not to segue to far I actually had nightmares for 7 years over the law school experience because they changed, fundamentally changed the way my brain works and it took me 7 years to just sort of come to grips with ok you are not going back to that, to that guy you were before you went to law school. They have actually rewired your brain. And so my biggest point here is that attorneys are trained to think in shades of gray…
KATRINA MADEWELL: Yes.
DARRIN T. MISH: Right so…
KATRINA MADEWELL: There’s no black and white there’s a whole lot of in between right?
DARRIN T. MISH: Yeah so the goal for attorney with their client is how do we get to a win, now win is defined as in my mind is whatever makes the client happy, whatever the client defines as a win is a win in my world but to accountant types they are trained very much in a world of black and white, 2+2 to an accountant equals 4 every single time.
KATRINA MADEWELL: Right. It’s more of a fact, logical math this is the answer.
DARRIN T. MISH: Yeah and so that’s exactly right they take a math based approach to resolution of tax cases. I don’t take a math you know based approach to the resolution tax cases cause quite honestly math is not my strong suit, I don’t want to be, I don’t want to attack the problem using the math, the math is almost always bad for us right so we take a very gray approach whatever it takes to win. I call it my holistic approach, I’m not, I’m not stuck with well we got to do an Offer in Compromise in every case, sometimes, a lot of times an Offer in Compromise where you make a deal to settle with the IRS is not the best approach, you are not going to work, just not going to work the math is against us we have to take a different approach. So sometimes the best approach is a bankruptcy, sometimes the best approach is to just wait and let the statute of limitations expire, sometimes the best approach is to get into a minimal installment agreement and just wait.
KATRINA MADEWELL: The other thing to with experience is you just can’t put a price on that because I would imagine, I mean maybe enrolled agents but like CPA’s I imagine that is not their everyday thing to practice in front of the IRS so it’s a specialized thing and very math based facts and arguments so you know when you, it’s no different in my business it’s going to be a lot different preparing somebody new or someone that has sold a couple of properties a year or one property a month or somebody like me I’m going to see a lot of things before we get there.
DARRIN T. MISH: Very true and as a consumer as a tax payer we assume that CPA’s practice before the IRS everyday all the time that is not the case most CPA’s do not practice before the IRS, most are not very comfortable practicing before the IRS and I would say CPA’s are probably my biggest referral source because quite frankly they don’t want to deal with the headache.
KATRINA MADEWELL: Yeah makes sense to me. Well you are listening to the IRS Solution Attorney show today’s topic is all about who to turn to when you have an IRS problem, big or small we answer them all and we are live in the studio so if you have an IRS question you can get it answered now 888-404-1010, 888-404-1010 thanks for listening to Money talk we will be back in just a moment.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney show I am THE IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: And I’m your co-host Katrina Madewell and we had somebody that was waiting for a question after the break.
PAT GEORGE: We had Vickam but he hung up, so Vickam call back we are out of the stops, we are out of the break call back.
KATRINA MADEWELL: Ok.
DARRIN T. MISH: I know that break was awfully long Vickam but you can call back and we will try to get to your question.
KATRINA MADEWELL: It was, we are sorry about that we are sorry for the little break in the interruption but so let’s talk about, let’s recap really quick on the people you can turn to if you have an IRS problem and then we are going to talk about some tips to help you choose the right tax professional for your situation.
DARRIN T. MISH: Exactly so there’s 3 types of tax professionals that can represent tax payers before the IRS, there are attorney’s, CPA’s and enrolled agents. Enrolled agents are people who are Federally licensed by the IRS to represent clients before the IRS. Now there are a couple other types of people that can represent clients before the IRS, it’s not really relevant here, your tax preparer are what’s called an un-enrolled tax preparer, they can represent you in a very limited circumstances about the return that they prepared only.
KATRINA MADEWELL: Yeah limited means there is stuff missing.
DARRIN T. MISH: Well they can’t, they can’t do an Offer in Compromise for example, they couldn’t do an innocent spouse claim for example but they could deal with audit letters and things like that for returns that they actually prepared.
KATRINA MADEWELL: Gotcha. So what are some things that we can do to help the person listening pick the right tax professional based on their situation?
DARRIN T. MISH: I think you should check the professionals qualifications so one of the things you can do is verify like CPA’s I believe there’s a website you can go on and make sure they are actually licensed, I think there’s a similar website for enrolled agents there’s certainly one for attorney’s, the one for Florida attorney’s is called floridabar.org and you can go and check out any attorney’s disciplinary record and make sure they have a license and make sure that they are who they say they are. If they are in the local area and not licensed in Florida, there is at least one gentleman that I know of that does tax problem resolution here in the area then you are going to have to figure out what jurisdiction he’s actually licensed and check that jurisdiction to see if there are any problems. I know of no problems; I’m not insinuating that there are problems…
KATRINA MADEWELL: Right but if there where they would be there.
DARRIN T. MISH: If there were that is where you would find it. The other thing you should do is you know try to check into their history, I was kind of alluding to that with their disciplinary history if any and you can always go to the Better Business Bureau you know that’s not a bad place to go. In my business there’s lots of companies that have toll free numbers that are located all around the United States and you want to make sure that they have a decent BBB rating or the very least that they actually respond to any complaints that they receive because that’s something that seems to be rampant in the industry.
KATRINA MADEWELL: So when you talk about professional qualifications are there any designations that you think are more helpful then another if someone has a tax issue or for certain different types of tax issues?
DARRIN T. MISH: Well you know there is something, this is interesting, a law degree used to be and L.L.B which stood for Bachelors of Laws and ok that was like the generation before mine so guy’s that are like 70 years old probably have an L.L.B. In sometime around I think the 70’s or the 80’s law schools started to decide, I guess they got together and decided that you know law school was an advance degree, it was at least on par with a doctorate and so they called it a J.D a Juris Doctorate that’s what I have, it’s the same degree as an L.L.B from somebody who is older. So that’s the entry level sort of law degree and then there’s one called an L.L.M which bizarrely is called Masters of Laws so if you were going to get a Master an L.L.M, which is the advance law degree which I don’t have and I don’t think I need but if you were going to get an L.L.M then you actually get your J.D first, you get your doctorate first and then you go and get your master’s degree which is kind of awkward.
KATRINA MADEWELL: I don’t know why you would need it unless you were teaching law school.
DARRIN T. MISH: Well even then you don’t need it but there are certain areas, like there is an L.L.M in taxation, quite honestly, and that would be great for somebody who is putting together complicated transactions and maybe international tax things and things of that nature and I just don’t think an L.L.M would be helpful to me or my clients at all because all I handle are these tax problem resolution type cases.
KATRINA MADEWELL: Right.
DARRIN T. MISH: So and there are no L.L.M’s in that so I don’t see…
KATRINA MADEWELL: So there’s really no specific designations that would make somebody call…
DARRIN T. MISH: Not in the tax problem area that I know of.
KATRINA MADEWELL: Ok. So, service fees would be an important thing to ask as well right what are the fees?
DARRIN T. MISH: Yeah there are some tax preparers who base their fees on a percentage of their client’s refunds. I don’t like this.
KATRINA MADEWELL: I didn’t think they were allowed to do that.
DARRIN T. MISH: Yeah they’re not really allowed to do that but you see this more in ethnic communities where there’s perhaps in the Hispanic community or the African American community or in other parts of Florida there’s like a little Caribbean communities. What happens is there’s people who decide to do tax preparation for their communities and sometimes those things, just they’re not 100% legit because there’s unscrupulous people who go in there and pray upon those in those communities and do things that they are not supposed to do and what happens is a lot of times when those tax preparers are basing their business on being able to get the biggest refunds that leads to fudging and fudging and cheating and then pretty soon enough of those returns get righteously audited by the IRS and then the IRS goes in and audits every single one of those tax preparer’s returns and what do you think happens to his business I mean…
KATRINA MADEWELL: He’s under.
DARRIN T. MISH: Yeah he’s done.
KATRINA MADEWELL: Because everybody got audited.
DARRIN T. MISH: If everybody gets audited I mean what’s your loyalty to that particular tax preparer, it’s zero because the audit was painful and you don’t want to do that so you just have to be careful about service fees and you don’t really want to do that.
KATRINA MADEWELL: So ask to E-File your return.
DARRIN T. MISH: Yeah a professional tax preparation people they pretty much have to file electronically unless they have fewer than 10 clients. There are some exceptions so if the person is not at least offering to e-file your returns it’s kind of a red flag. You might want to get that checked out.
KATRINA MADEWELL: Another thing to is availability. I know that’s important in my business you, people want to know what is your availability, how can I contact you, who do I contact if I have an immediate question or need?
DARRIN T. MISH: Yeah and I would say this is my biggest complaint about the tax or the store front sort of tax preparation operations you know the H&R Blocks the Liberty taxes the Jackson Hewitt’s, there not typically they are year round of course they have some year round staffed locations but a lot of locations are not staffed year round and so it could be really confusing for someone who has a question or what not, they want to go back to the person who prepared their return and talk to them and sometimes they can’t.
KATRINA MADEWELL: I think of them as like tax mills like I just wouldn’t want to, I’ve never had my returned prepared by anyplace like that.
DARRIN T. MISH: You know I think they serve a function and that function is to prepare….
KATRINA MADEWELL: Like a drive-thru McDonald’s…
DARRIN T. MISH: Kind of you know it’s, again not denigrating anyone but…
KATRINA MADEWELL: No it’s just different like I wouldn’t…
DARRIN T. MISH: Those simpler returns for people who get a W-2 you know those people, a lot of those people want a faster refund. They want the biggest refund that they can get you know while having someone do their return instead of doing it themselves. I’ve seen more audits caused by self-prepared returns then by anything else and that’s just because they, people get the software and then they don’t know how to answer the questions, the questions are all good, but if you don’t understand the question and you click yes and it shows your refund go up or you click no and it shows your refund go down most people are going to click yes.
KATRINA MADEWELL: Of course yeah, I mean you know they want to go from paying money to not paying money.
DARRIN T. MISH: Exactly.
KATRINA MADEWELL: So what about records and receipts?
DARRIN T. MISH: You know good tax prep people are going to ask to see some records and receipts, they are going to ask you some questions to figure out you know how to prepare the return. There are instances in our type of practice where we don’t ask a whole lot of questions because we are trying to do what we call compliance returns so if you come in and you haven’t filed a return in 6 years and, we are not going to ask you a whole bunch of questions about the returns that were 6 years old…
KATRINA MADEWELL: Just trying to get them filed.
DARRIN T. MISH: We are trying to get them filed because we know we have some other solution, we have some other option so we’re not trying to get the absolute lowest you know possible tax debt in those cases all the times so we won’t ask a whole lot of questions typically. In fact I just had to get rid of a tax preparer in my office who was a CPA who came from an auditor background and she just couldn’t get her head wrapped around the fact that we were not going to pre-audit every return and we just couldn’t get them done because she didn’t understand what we were trying to accomplish here so.
KATRINA MADEWELL: Makes sense and then the next thing on the list, which just baffles my mind I just can’t imagine that someone would actually do this, but it’s never sign a blank return.
DARRIN T. MISH: Yeah.
KATRINA MADEWELL: Do you really see that should be a total red flag.
DARRIN T. MISH: Don’t sign a blank return, that’s a huge red flag. Haven’t say it, can’t say that I’ve seen it but I have heard of it happening you know I’m all about trusting people.
KATRINA MADEWELL: Like why would someone even sign a blank, that doesn’t even make sense.
DARRIN T. MISH: Well you would not believe; it also doesn’t make sense the lady who got talked into giving what was it $43,000 in ITunes gift cards.
KATRINA MADEWELL: Yeah.
DARRIN T. MISH: By someone who said they worked for the IRS but things that don’t make sense happen so don’t sign a blank return.
KATRINA MADEWELL: And the next one is review your tax return before signing and this is probably, I can see how this is a legitimate one because A there’s your tax return, sign them and send them back or the tax preparer who says come in let’s take 15 minutes together and like go through your returns with you.
DARRIN T. MISH: Yeah I think this is pretty big really, you know if, if more tax payers just reviewed there return and try to understand what each number on the return really meant, you would solve, you would prevent a lot of problems ok, because, I know that most people don’t review their return, I know what they do, they go to the bottom line, how much do I owe or how much am I getting, that’s kind of like the answer that everybody wants to know and I have to admit I don’t prepare my own return I have somebody that works on my staff do it and I do the same thing, the first thing I look at is the bottom line, how much do I owe, how much am I getting back what’s the bottom line what’s the deal and then I go through it you know line by line, schedule by schedule and correct any errors that I might find and you would think that, that there wouldn’t be any errors on my returns right I mean the person works for me…
KATRINA MADEWELL: See I don’t even know if there would be an error Darrin like literally it’s a whole bunch of numbers and they provide all the stuff to the bookkeeper, the bookkeeper gets the stuff to the accountant so if there’s a number in there that is wrong I am not even going to notice that.
DARRIN T. MISH: Yeah and that is kind of one the problems that we have in our tax system right it’s so complicated that nobody even understands what’s it about and because it has the reputation of being so complicated, that we don’t even try.
KATRINA MADEWELL: Makes sense. I mean I do ask questions and skim through it but I’m just saying like if the numbers were a little off or something was in the wrong place I probably wouldn’t notice that.
DARRIN T. MISH: I agree. You are not going to notice if it was especially on a Schedule C if you were doing a Schedule C and the line was on advertising instead of you know I don’t know miscellaneous.
KATRINA MADEWELL: I only know my tax returns are more complicated than I am qualified to prepare.
DARRIN T. MISH: I agree and that’s a great recognition that you have is that you should not be doing your own return.
KATRINA MADEWELL: No.
DARRIN T. MISH: Not only because they are more complicated then you are prepared to handle but also because your time is worth more in different areas then it is crunching those numbers out.
KATRINA MADEWELL: Yeah it would take me hours to do what it would take a good CPA less than an hour probably.
DARRIN T. MISH: Exactly he or she is going to get the numbers and put them in the right places using their software and it’s going to get banged out and it’s going to be right for the most part. But I would just encourage you if you see really big numbers that you are not, you don’t understand what those numbers are then you are going to want to ask some questions.
KATRINA MADEWELL: That makes sense.
DARRIN T. MISH: You know or if you are, if you have an S corp like I think you do and you don’t see anything on that 1040 on the line for Schedule E that’s a problem.
KATRINA MADEWELL: Oh yeah.
DARRIN T. MISH: You know that’s a problem and we see it and it’s like wow…
KATRINA MADEWELL: You would notice stuff like that.
DARRIN T. MISH: You wouldn’t think you know Mr. Taxpayer you didn’t notice that all of your Schedule E income from your corporation is not on the return…
KATRINA MADEWELL: We missed some stuff.
DARRIN T. MISH: You didn’t notice. Ok alright I guess, especially when he didn’t pay himself any salary.
KATRINA MADEWELL: Yeah.
DARRIN T. MISH: Kind of interesting so. Just review the return and make sure that you have a basic fundamental understanding of what’s going on.
KATRINA MADEWELL: So the last little tip on here is professional, make sure they sign it and provides a PTIN, I don’t even know what that is but why is that even important.
DARRIN T. MISH: A PTIN is there; it’s there paid tax preparer identification number with the IRS. You want to make sure they sign it because they are vouching for it to a certain extent.
KATRINA MADEWELL: And if you don’t have a signed copy then it’s not really…
DARRIN T. MISH: If they are not signing it that means they are not proud of it and there can potentially be a problem with it.
KATRINA MADEWELL: Alrighty then. Well you can reach Darrin at 888-get-mish again that’s 888-get-mish he’s also on Twitter @dronish and couple other places.
DARRIN T. MISH: You can visit the website at getirshelp.com or the phone number is 888-get-mish that’s 888-438-6474.
KATRINA MADEWELL: And when we come back we are going to answer some questions from some of our listeners thank you, we got a couple of questions from Roger and Chris. When we come back in a few moments we will answer them if you would like to call in we’ll do it this time as well 888-404-1010, 888-404-1010.
KATRINA MADEWELL: And we are back welcome to the IRS Solution Attorney show thanks for listening, thanks for sticking around with us through the break and as promised we had some questions that we are going to be answering from some of our listeners thank you for tuning in we are here every Tuesday morning at 9 am and you can catch up with Darrin at getirshelp.com you will find links to the show there and on the podcasts.
DARRIN T. MISH: Podcasts that you can also download the app from the ITunes store and the Android store.
KATRINA MADEWELL: And so Roger wants to know can I claim the earned income credit on 1040 EZ?
DARRIN T. MISH: Roger, I have a confession to make I don’t do a lot of returns and I don’t do a whole lot of earned income credit tax credit returns so I had to look this up myself, yes you can in fact claim the earned income tax credit on the form 1040 EZ and if you can get away with filing a 1040 EZ I say more power to you that’s great. That form literally is so easy you can, most people can probably fill that out in about 2-3 minutes.
KATRINA MADEWELL: And so Chris had another question as well. He wants to know what forms do we file to report a loss on the sale of a rental property?
DARRIN T. MISH: Well, interestingly that’s that same Schedule E that we were just talking about in the last segment, a Schedule E is where you put either your small business corporation profits or in this case your rental property sort of income or losses in this case. It’s interesting that rental losses are subject to a whole bunch of rules, passive or active investor, that kind of material participation there’s a whole bunch of rules regarding rental losses so you are going to want to make sure that you pass all those before you go ahead and put a big loss on that Schedule E for a rental.
KATRINA MADEWELL: And those things can change pretty often so you definitely want somebody that is up to speed on current trends and changes in the tax law.
DARRIN T. MISH: And that kind of brings me to another point about tax preparers that we didn’t talk about in the last segment and that are actual specialists for different niches so you know truck drivers, you know owner operator type truck drivers, there returns are actually pretty complicated, if you know all the ins and outs about truck driver returns and so there are some preparers that just specialize in these little niches and are good at it and they know the ins and outs of each industry and if you are in one of those specialized types and niches talk to your friends and competitors who are in the same niche and find out who they use to prepare their returns because you know it could be really important.
KATRINA MADEWELL: I mean it makes sense to me you would think people would do that because if you are very familiar with a trade you have a very clear understanding with the allowable expenses are.
DARRIN T. MISH: Yeah, and frankly it’s probably worth a few hundred extra bucks to pay that professional specialist in your niche because you are going to easily make that up in owing less or having a big refund…
KATRINA MADEWELL: They may find a deduction that you didn’t even think about.
DARRIN T. MISH: They will certainly find deductions that you didn’t think about because unless you’ve got your nose in the tax books all the time you are just, you are busy doing what you are doing, particularly truck drivers there busy on the road there driving, driving, driving all the time. They are actually hard clients for me to represent as a tax problem resolution guy because they are so busy it is really hard to get a hold of them, they can’t put their hands on records or papers because they are not at home they are only at home you know 2 days every 2 weeks or something and they can talk on the phone but that’s about it.
KATRINA MADEWELL: Digital storage. So what about…Ran out of time for the headline story but maybe next week so.
DARRIN T. MISH: It’s a pretty interesting story we will get to it next week. Today’s train wreck of the week this is actually the segment of the show where we talk about somebody came into the office with a financial train wreck they owed the IRS a bunch of money and they had no idea how they are going to solve it. In many cases they are the type of person who comes in and are sitting in my lobby and there just, you know they are biting their fingernails, they’re really nervous they don’t know what to do and usually we get together with them and we help them get it worked out. In this particular case it was a nice couple that had actually seen some of my video’s, on YouTube probably and then ended up on my website and decided that they, since they lived in this rural area of North Carolina, frankly up in the Appalachian Mountains they didn’t have a lot of options locally and so they contacted me. They owed $56,873, they both have regular type jobs, they are not earning a whole lot of money and what we did for them is we decided to go ahead and file an Offer in Compromise, an Offer in Compromise is that program that we talk a lot on the show where you can make a deal to settle for less with the IRS and it’s based upon relatively simple math. I’m going to go over it really quick, the way the amount of the offer is calculated is by taking monthly disposable income multiplied by 12 plus the value of the assets and that equals the amount of the offer. In this particular case we were able to identify that they had very limited assets and they have basically negative disposable income and so we offered I think about $500, knowing that the IRS is probably going to come back with a higher number and that’s ok with us. We wanted to start the negotiations right, at around $500 and so we filed that offer in November of 2015 and it was about 6 months before the IRS contacted us and started discussions and negotiations and what not, they asked us for some additional documentation and it came back they had $6,064 in assets, I think it was an extra car, it was a car that they had that was worth around that much so the offer went from $500 or so to $6,064, the coolest thing is most of the time we talk about cash offers those are offers that are going to be paid within 5 months of the acceptance of the offer. In this particular case because all of that $6,064 was based upon the value of the assets, we were able to get them into what’s called a short term deferred offer, they are going to make those payments that $6,064 they are going to make those payments over 24 months that’s $253 for 24 months with no interest and penalties.
KATRINA MADEWELL: Sweet.
DARRIN T. MISH: So that’s a pretty good deal. You know even though they had negative disposable income they are going to be able to figure out how to cash flow that $253 and it’s going to be a happy ending for them.
KATRINA MADEWELL: But they didn’t make them sell their car or anything like that?
DARRIN T. MISH: No, I mean they certainly have the right to sell that extra car if they want to go fund this offer but they are not required to do that you know. Frankly I think they are probably going to get the $253 from friends or family or something you know take out loans from you know informal loans not bank loans because these people wouldn’t be able to qualify but you know 6 grand on 56 grand pretty good deal.
KATRINA MADEWELL: I think so.
DARRIN T. MISH: And for them it’s going to be life altering, it’s going to really change that state, that emotional state and what makes really, what makes me really happy is it is going to put an end to that tension in their household, that tension that probably exists to some extent in their marriage you know where, I can tell you that I’ve been through money problems with you know in my life since I’ve been married and it had nothing to do with my wife but it causes, it causes friction and tension that’s not good for your household and so if you can get those things worked out them by all means you should.
KATRINA MADEWELL: That’s right and if you got that you can always listen to Dave Ramsey in the morning or the afternoon he will teach you how to get out of debt that’s for sure.
DARRIN T. MISH: You know I don’t think there is any big secret about how to get out of debt, it’s a will to it’s a want to.
KATRINA MADEWELL: And you live within your means like that’s a big part that nobody wants to do. Right Pat? That means you can’t go to the bar.
PAT GEORGE: We only live once.
DARRIN T. MISH: And if you can’t live within your means then maybe you should expand your means.
KATRINA MADEWELL: Yes one or the other but either way you are still living within your means.
DARRIN T. MISH: To many people in America go home every night after work and watch between 4 and 5 hours of television.
PAT GEORGE: That’s all?
KATRINA MADEWELL: I never watch TV but I do know that football season is coming up because we have fantasy football this weekend so I will be watching a little more TV.
PAT GEORGE: I normally live within my means but everything is expanding.
DARRIN T. MISH: The waistline, the credit card debt all of that.
KATRINA MADEWELL: We should have talked about the RV roofer but we will have to save that for next week.
PAT GEORGE: Well we will just put it this way in about 45 minutes I will be $4,000 poorer.
DARRIN T. MISH: That’s the RV roof story right there in a nut shell the things we talk about here in the studio that have nothing to do with taxes.
KATRINA MADEWELL: They might that one might.
DARRIN T. MISH: It might it could be.
KATRINA MADEWELL: You are listening to the IRS Solution Attorney show we got to go for this week.
DARRIN T. MISH: We are out.