DARRIN T. MISH: Hello, hello, hello good morning. This is the IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: And I’m your co-host Katrina Madewell. welcome to the show.
DARRIN T. MISH: How are you doing today on hurricane eve?
KATRINA MADEWELL: You know, it’s going to hit the east coast. it’s not going to bother us we are going to have some wind and some rain and that’s it.
DARRIN T. MISH: Our illustrious producer Pat George just announced that there is a hurricane warning for Orlando. Now that’s getting a little bit close.
KATRINA MADEWELL: Well yeah, but Orlando is way closer to the east coast then they are the west coast.
DARRIN T. MISH: Not when you live in Zephyr hills. I bet you I only live I don’t know 45 or 50 miles from the mouse as the crow flies.
PAT GEORGE: We are only one hour away.
KATRINA MADEWELL: I’m not worried about it. I have some water and some food and a hurricane party.
PAT GEORGE: Yeah, she doesn’t worry you know she likes to sell homes.
DARRIN T. MISH: Yeah, for sure.
PAT GEORGE: You know if the bad wolf comes and huffs and puffs and blows away your house she will just sell you a new home.
KATRINA MADEWELL: Listen Pat. I’ll tell you just like I tell my husband there is nothing stressful in my job about anybody being homeless. Don’t worry there is nothing stressful about that at all right Darrin?
DARRIN T. MISH: Well if you say so.
KATRINA MADEWELL: You would know you lived in your camper.
DARRIN T. MISH: I did what she is talking about is for, when we were between houses for over 5 months we lived in our RV, in an RV park here in Florida and at first we were kind of a little bit, I don’t know we, we didn’t know what to expect and we kind of felt like it might be a strange experience other than living with a family of four you know 2 kids and 2 parents living in 400 square feet. That was kind of a strange interesting experience in of itself but the people that lived in the RV park that we were staying in were super nice.
KATRINA MADEWELL: Yeah there, there’s a big difference between RV park and a trailer park. Just saying.
DARRIN T. MISH: I mean they were, I mean I made some lifelong friends and I’m better for that experience.
PAT GEORGE: Do you notice the traffic, are the snowbirds here yet in Zephyr Hills?
DARRIN T. MISH: Oh for sure every day as I’m driving north on I-75 trying to get to 52, you see just like caravans of RV’s on I-75 coming south and they get off to get to Zephyr Hills. They get off at 52 and kind of weave their way through San Antonio and Dade city to get down there.
KATRINA MADEWELL: They might be delayed a week or so you know because of hurricane Matthew.
DARRIN T. MISH: Yeah there’s probably, I bet you there is not a lot coming today but probably next week, this weekend.
PAT GEORGE: You know, speaking of living in an RV I have friends coming from Maine next week and my wife said they are going to sleep in all the rooms that we have so you can sleep in the RV.
KATRINA MADEWELL: You are getting kicked out of your own house Pat? Is that what you are saying?
PAT GEORGE: Yes I have to go too; I’m going to have to turn that into my man cave.
DARRIN T. MISH: Well at least you know where her priorities lay.
KATRINA MADEWELL: We always joke and say that our camper is literally like the dog house but my husband has never slept in there. He might not come back if stayed in there.
DARRIN T. MISH: We have a pretty good size 5th wheel and it’s in our barn now so it’s covered and ultimately the plan is to make that the guest house you know once we have water and sewer and electricity hooked up to it it’s going to be probably nicer than the guest room.
KATRINA MADEWELL: Let me tell you what I have seen some rock star barns like totally built out. At one point some friends of ours they literally bought, they built this barn that I don’t know had several horse stalls and like a tack room and all kinds of stuff a barn has, but up above they made this entire living quarters. Like literally 3 bedrooms, 2 bathrooms, living room, kitchen, it was pretty amazing.
DARRIN T. MISH: So, when I hear the word barn, I don’t think of like a place where you keep horses and hogs and stuff like that I think of like the ultimate man cave like Pat was talking about. To me that’s what a barn is there’s like, there’s I don’t know maybe there’s some livestock in there maybe but there has got to be some dude space in there, right?
PAT GEORGE: Lots of it.
KATRINA MADEWELL: Dude space isn’t that the male word for a male horse isn’t it called dude?
DARRIN T. MISH: I don’t think so but we will probably get a call any day now or any moment telling us what, a male horse is called a stallion of course.
KATRINA MADEWELL: Correcting us…. I have said since…
DARRIN T. MISH: In intact male.
PAT GEORGE: I knew exactly what it was called because I was called it many times in high school.
KATRINA MADEWELL: What stallion?
DARRIN T. MISH: Oh but think about it.
KATRINA MADEWELL: Yeah I guess.
DARRIN T. MISH: Stud.
KATRINA MADEWELL: You know what I had, my friend had this horse named Dude maybe that’s why I am thinking that but I’m totally not the farm person so I’ve said that a million times.
PAT GEORGE: By the way, we would like to welcome you to the farm show this morning.
KATRINA MADEWELL: Well, you know the outlines a little thin just for the record Darrin doesn’t always prepare them and so sometimes when we get here it’s always the first time that I have seen the outline and sometimes we look at this and go oh yeah we are going to be a little bit off track today.
PAT GEORGE: You know to segue right into this however I heard a story from friends or was something in the internet or something I read but the scariest thing to some people out there is the IRS.
DARRIN T. MISH: Is that right?
PAT GEORGE: That is what they said.
KATRINA MADEWELL: Not right now it’s the clowns, Pat.
PAT GEORGE: The scariest thing to many people is the IRS and I thought of you immediately.
DARRIN T. MISH: Fantastic.
PAT GEORGE: Not if you know Darrin.
DARRIN T. MISH: Not if you know Darrin T. Mish so today we are going to talk about What do you do if you forgot to file a tax return. Or a lot of them.
KATRINA MADEWELL: You call Darrin Mish at 888-get-mish is it 888-get-mish it is 888-get-mish.
DARRIN T. MISH: It’s 888-get-mish or getirshelp.com. But first before we talk about that you know we haven’t been live in the studio for about 3 or 4 weeks and we don’t always announce that but we haven’t been here in the studio which is why we are all a little bit paunchy and having a good time.
KATRINA MADEWELL: It’s all my fault too.
DARRIN T. MISH: With that and the fact that we are all pretty much know that we are all going to wash away tomorrow. But anyway, I wanted to talk about Donald Trump.
KATRINA MADEWELL: Oh boy, here we go. Here we go ok we were having this…
PAT GEORGE: Could you help him out.
KATRINA MADEWELL: We were having this private conversation on the way here I didn’t think Darrin would want to take it to the airwaves but you know you never know.
DARRIN T. MISH: So, I want to talk about Donald Trump. It is alleged that somebody illegally obtained his 1995 tax return right and there’s like, almost pretty close to a billion-dollar loss on that. Now, I’m not really up on what the real estate development laws were in 1995 because quite frankly I guess I was out of law school but just barely and I wasn’t doing tax work but my understanding is that a developer back in those days could actually, if he had a failed project let’s say and he had borrowed, let’s use the number a billion dollars ok? Let’s assume that Donald Trump had a million dollars in that deal and the rest, the other 999 million dollars was borrowed from banks. If that project failed the developer got to claim the entire loss not just the money that he had at risk, that was the law at the time.
KATRINA MADEWELL: That doesn’t sound fair what about your thousand…your money?
DARRIN T. MISH: Well, now that we are talking about it, it almost created a disincentive for the guy that had the least, you know the developer to crater the deal because a billion-dollar loss is really valuable if you can carry it for 18 years which was the law at the time so I’m not saying that he…
KATRINA MADEWELL: Here’s the thing like I’m thinking about this like from your perspective Darrin and if you were representing someone that had a billion-dollar loss you know that’s going to be an automatic audit like there’s no way that that tax returns not getting audited so going back to the election, he basically said oh yeah, by the way, I’m signed up for an annual audit it pretty much happens every year.
DARRIN T. MISH: Yeah he says he gets audited all the time which I think is fairly common at that income level because if you think about it if you and I have a 3% discrepancy like big deal right I mean that’s not that much money but if a billionaire has a 3% discrepancy, which would be fairly common, right, then it’s big money. So, if I were running the IRS I don’t have a problem with rich people by the way but if I was running the IRS I would be auditing the bigger taxpayers because you have to, if you find minor discrepancy’s that equals more revenue, that’s just my personal philosophy. So, he says that he’s been under audit for you know every year for a lot of years and then he kind of intimated that it might have been for political purposes but since he’s been both a Democrat and a Republican, I can’t hardly see how. But, anyway, I don’t actually have a problem with the fact that he has this giant loss carry forward that he might have avoided paying taxes for up to 18 years, I don’t have a problem with that at all. Congress made the law, he’s following the law what’s the problem?
KATRINA MADEWELL: The phone lines may blow up on that one. But you know. But you have every single show, you do say you know and I’m trying to put it in your exact words I’m sure I will mess it up but you do say look the laws are there and you are supposed to take as many allowable deductions as you possibly can that are legal.
DARRIN T. MISH: Absolutely and that’s what, that’s what smart and intelligent people do, now we could have a philosophical discussion about is it fair that Warren Buffet’s secretary pays more tax than Warren Buffet, I’m not expressing an opinion about that but I think that’s an inherently unfair actually there’s my opinion about it, it’s unfair that the secretary pays a higher tax rate than Warren Buffet but that’s what the law is so if Donald Trump or Hillary Clinton had a giant loss and they were able to carry it forward that’s the law of the land, that’s, they would be, I would think less of them as a possible, as a possible Chief Executive if they failed to do that, now it’s my understanding too that Hillary Clinton at one point in time had about a 669 million dollar loss carry forward that she took advantage of. But would you want your President of the United States to not take advantage of that in their personal life?
KATRINA MADEWELL: No.
DARRIN T. MISH: Otherwise they are just kind of a sucker right I mean; I defy anybody to call the show right and tell me that they have voluntarily paid more tax then they had to pay.
KATRINA MADEWELL: Alright the phone lines are wide open this is going to be a fun show. 888-404-1010,888-404-1010 you are listening to the IRS Solution Attorney Show with Mr. Darrin Mish I’m your co-host Katrina Madewell, Pat George back there always making it fun he’s been a little quiet today we will have to change that. We will be back in just a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney Show, I am your host Darrin T. Mish the IRS Solution Attorney.
KATRINA MADEWELL: And I am your co-host Katrina Madewell and we had a caller which was Lee, I’m not sure if he was wanting to answer the question or if he actually had a question.
PAT GEORGE: It was a she.
KATRINA MADEWELL: Oh a she, Lee. Alright Miss. Lee if you would like to call us back, Pat did she say if she had a question or was she responding to Darrin’s question?
PAT GEORGE: No she had a tax question.
KATRINA MADEWELL: Ok.
DARRIN T. MISH: Fabulous.
PAT GEORGE: In reference to political I wasn’t sure but she had a tax question.
KATRINA MADEWELL: Alright Lee, if you want to call us back we are at 888-404-1010.
DARRIN T. MISH: We are just trying to stir up the pot today we know that this election is acrimonious, to say the least and we are just trying to get some engagement here from the listeners.
KATRINA MADEWELL: We were talking before the break and you said, and that’s what you said before we took the break was, I don’t know anybody that willingly pays more taxes and I can give you an example.
DARRIN T. MISH: Ok great. Let’s hear it.
KATRINA MADEWELL: So if someone’s in the process of buying a property and they are self-employed they might want to make those tax returns look beautiful and not write off so much stuff for at least a couple of years how’s that?
DARRIN T. MISH: Interesting note.
KATRINA MADEWELL: You love that answer don’t you.
DARRIN T. MISH: Interesting note I don’t know anybody who would have done that.
KATRINA MADEWELL: Yeah, not you.
DARRIN T. MISH: But you know that it’s just as bad in the eyes of the IRS to pay, to file a return that’s inaccurate, that overstates your income as it is to understate your income or overstate your tax burden versus understate your tax burden.
KATRINA MADEWELL: See I don’t see it like that. I see it like I’m just not taking all of my possible deductions which I’m allowed to do and I’m choosing not to.
DARRIN T. MISH: Now interestingly enough, there is a place, there is an address at the IRS where if you decide that you just want to donate some money to the IRS you can send a check there.
KATRINA MADEWELL: You are kidding me?
DARRIN T. MISH: I’m not kidding. There is a place to do that so for all of these people who do say tax rates are too low and need to pay higher taxes…
KATRINA MADEWELL: Do they receive money there?
DARRIN T. MISH: Then there’s a place that you can Google to find out where to send it, you can send your money to the IRS…
KATRINA MADEWELL: Oh we are going to have to look this up definitely after the break alright we have, oh we had Lee back she is gone again. Alright we keep trying to grab you and keep hanging up.
DARRIN T. MISH: Did you touch something?
KATRINA MADEWELL: I didn’t touch anything, Pat, I didn’t do it.
DARRIN T. MISH: Alright.
KATRINA MADEWELL: I was, I was literally getting ready to mute my microphone so you didn’t hear me shuffling around so I could grab her so. Lee, I don’t know if you are like on the Howard Franklin or something and your call keeps dropping but call us back.
DARRIN T. MISH: Maybe she’s on the east coast and maybe the power to the cell towers is already cutting in and out.
KATRINA MADEWELL: I don’t know I have some friends in Miami and they were saying that people were already like going crazy there’s no gas. You know all that fun stuff that happens every storm.
DARRIN T. MISH: We only do that now in Florida we used to do it when there was a tropical storm coming remember, you know you would go to the store and there would be no bread or water and then after we got more and more false alarms then it was like, ehhh and now I think it’s kind of good news down there and the gas stations are out of gas because it’s a category 4 I mean this is a big deal this is not…
KATRINA MADEWELL: I think it was downgraded to a 3 did it go back up to a 4?
DARRIN T. MISH: Well, they are forecasting it to come ashore as a 4 and it’s just going to brush the entire east coast of Florida from Broward right all the way to Jacksonville.
PAT GEORGE: The next couple of days will not look the same the way it looks today and as far as Jacksonville, a lot of those folks are evacuating, they are saying they couldn’t find hotel rooms to the west they had to go as far as Dothan, Alabama to find hotel rooms.
DARRIN T. MISH: Well not that there is anything wrong with Dothan, Alabama I’ve been there, stayed there. It’s actually a pretty nice place.
KATRINA MADEWELL: So I guess the moral of the story is, go to the beach right if you are, if you want to go to the beach and enjoy the weather today.
PAT GEORGE: I did notice a lot more traffic this morning coming to work.
KATRINA MADEWELL: More?
PAT GEORGE: Yeah a lot coming south on the interstate, normally you see 20 cars behind you, it looked like 7 am at 5 am this morning and it looked like a lot of folks were headed west you know headed over the bridge….
KATRINA MADEWELL: Southwest.
DARRIN T. MISH: Maybe it’s Orlando folks coming over to the beach, the best beaches in Florida…
PAT GEORGE: Will make it a long weekend.
KATRINA MADEWELL: Unless they are surfing in which case they are probably hanging out on the east coast.
DARRIN T. MISH: Oh yeah. I don’t know.
PAT GEORGE: It’s got to be bad when they start closing down Universal and Disney probably today.
KATRINA MADEWELL: That’s what they said they might close Disney that doesn’t happen very often.
PAT GEORGE: Not often.
DARRIN T. MISH: It happened back in 2004 for Charlie, remember when Charlie went right over Orlando, we evacuated from here in Tampa and we ended up over in Titusville, actually just in the right spot for the storm to run right over.
KATRINA MADEWELL: That was the year that we had the back to back storms…
DARRIN T. MISH: 4 in a row.
KATRINA MADEWELL: And all I know is one of the trees fell in my neighborhood and snapped the power line and the transformer blew, we didn’t have power for a week. One week, a long week.
DARRIN T. MISH: And it’s always hot right after a hurricane.
KATRINA MADEWELL: And there’s no hotels, there’s no hotels anywhere…
DARRIN T. MISH: Nope the only choice is gut it out or go on vacation somewhere else.
KATRINA MADEWELL: Well eventually bought a generator, where we could later get when which was a very long time and you know we would probably just stay in the camper.
PAT GEORGE: There’s the Disney magic right now that was supposed to return today to Cape Canaveral and they said nope it’s going to stay out a sea so whoever has that cruise right now stays out there 2 extra days.
KATRINA MADEWELL: That’s fabulous. I would love that, you are not paying, all on Disney do you know how much money that’s worth?
PAT GEORGE: You know it’s probably down in the Yucatan somewhere down around Mexico and just enjoying it you know, pull into a dock and you stay on the island longer.
KATRINA MADEWELL: I mean that is fabulous, we’ve taken Disney before they are expensive.
DARRIN T. MISH: I bet you there is about 25 – 30% of the people that are not happy with that decision though because they have to go, you know they have child care or they have you know they have work to go to or they have other obligations.
KATRINA MADEWELL: Darrin, Darrin you are not a cruiser.
DARRIN T. MISH: I am a cruiser I’ve been on a lot of cruises.
KATRINA MADEWELL: When is the last time you went on a cruise?
DARRIN T. MISH: Well it’s been several years but.
KATRINA MADEWELL: Yeah. Pat, you are a cruiser.
PAT GEORGE: I am a big cruiser.
KATRINA MADEWELL: And you tell me would you be upset about spending an extra 2 days in some port on a Disney cruise?
PAT GEORGE: Absolutely not.
KATRINA MADEWELL: You would be like ah, Charlie, you would be sending him an email from the little port room, sorry no phone access but I am stuck you know.
PAT GEORGE: It’s not my fault I wanted to come home.
KATRINA MADEWELL: Hurricane Matthew.
DARRIN T. MISH: I don’t know if Pat’s liver ever handle an extra 2 days on a cruise.
PAT GEORGE: Hey speaking of that you know I ran into some friends that loss some weight on this you know there is all these diets that they have now that the doctors are helping you with and….I will get back to that let me get Lee.
KATRINA MADEWELL: Ok that is probably Lee we’ve missed her, so we’ve been waiting for you Lee.
DARRIN T. MISH: As you can tell we are talking about the weather again.
KATRINA MADEWELL: And the question was you don’t know anybody that has willingly just paid more taxes?
DARRIN T. MISH: Yeah, and I’m not talking about they are trying to make their income look good so they could get a loan, that doesn’t count.
PAT GEORGE: And good morning Lee, how are you? Before we lose her again. Push that button.
DARRIN T. MISH: Hey Lee.
L: Hey, how are you?
DARRIN T. MISH: We are doing well, how are you?
L: Oh my gosh I don’t know what’s going on with these powers. I have a quick question let me ask this fast it’s not about Trump I’m all for him so but I heard so many things about short sales with houses I know that they were giving everybody a 1040 and you have to pay it back. A bank told me that they think that they have changed the laws now and it’s different.
DARRIN T. MISH: Well I’m going to punt this over to Katrina let her try and goof it up and then I will fix it.
KATRINA MADEWELL: That’s a Katrina thing. No that is not entirely true they have been, and they have to renew the bill every year. Was it your homestead property your primary residence?
KATRINA MADEWELL: Ok so you should not, I mean you may get a 1099 and Darrin will chime in on the tax side of this, but they have renewed that bill every year that you, you know because of the short sale market and the way it was this has been in effect for a while. I don’t know, you know I don’t know if we will be here next year but it’s been in place for the last several years that you don’t have that and before that you know there’s the 982C if you had a hardship but…
DARRIN T. MISH: Yeah there’s 2 exceptions there’s the primary residence exception and there is the insolvency exception. And most people who go through a short sale do it because they’re insolvent. I mean you don’t typically let your house go because you are flushed with cash, some people do…
KATRINA MADEWELL: You weren’t a strategic default were you Lee?
L: No, no, no my situation is a little, a little bit, I’m not in default, I’m kind of above my payments, I’m getting ready to retire and once I retire I’m upside down in the house and I make a decent salary to where I don’t know if I can claim hardship I make over $120,000 a year so how in the heck do I get out of this house that’s worth 30 or 40 thousand less than what I owe?
KATRINA MADEWELL: Will your income change after you retire?
L: After I retire, yes.
KATRINA MADEWELL: Ok, so, I mean that right there is enough to create a hardship to likely have the bank look at a short sale. The other thing to that people don’t talk a lot about Darrin is, you know if you are upside down on your home and you want to sell there’s nothing that says that you can’t sell but what happens is, you usually have to work out some terms with the bank to repay that difference after you sell. Some people might elect to do that as opposed to you know when you go through the short sale process some banks won’t even talk about it or consider you for a short sale until you are behind on your payment which I think is so goofy I’ve never understood why they encouraged that.
DARRIN T. MISH: I’ve heard that they want you to be behind 3 months.
L: I don’t either and…
KATRINA MADEWELL: Some of them.
L: You missed 3 payments you’re are in foreclosure so then you are in big trouble.
DARRIN T. MISH: Right.
KATRINA MADEWELL: Well it’s the beginning stage like you are technically in a hard default where they can file the list pendants which is the first stage in the foreclosure process. I would try to work out some type of repayment plan with them, who is your lender?
L: I’m going to lose you. I’m going to hang up maybe you can answer it?
KATRINA MADEWELL: Alright who’s your lender? Do you know? We lost her ok. So, depending on who that lender is, if it’s a credit union they will absolutely work out a repayment plan with you, if it’s a big bank like, I don’t even like saying their name but we just refer to them as Bank of god because they think they are. It’s way more difficult to get anything done on that process just because the right hand doesn’t talk to the left and it’s almost, it’s hard enough to get thru a regular short sale process using their equator system.
DARRIN T. MISH: Sounds like a certain governmental agency that we talk about quite a bit once a week.
KATRINA MADEWELL: Exactly, exactly.
DARRIN T. MISH: Well I think the big banks and the government are kind of melted together almost now a days you know they are too big to fail and all that. Bank of god could be any one of like 4 or 5 banks, right?
KATRINA MADEWELL: Yes it could be but I think we know who I’m inferencing.
DARRIN T. MISH: I think I know who you are talking about. I will ask you at the break.
KATRINA MADEWELL: So Lee if you want to call my office Echo is standing by the number is 813-936-2302 we will be happy to answer some questions for you and dive into a little bit deeper when the cell phone signals not wonky. Again, that’s 813-936-2302 and this is the IRS Solution Attorney show and you can reach Darrin at 888-get-mish…
DARRIN T. MISH: It is?
KATRINA MADEWELL: It is. Hey, every once in a while, someone has a real estate question and we answer it so…
PAT GEORGE: It’s good to talk out of the box.
KATRINA MADEWELL: Don’t act like I wouldn’t call you up if it was Friday come on now. Alright we will be back in a minute. Got a question or comment call in 888-404-1010 we will be back in a minute.
DARRIN T. MISH: Welcome back to the IRS Solution Attorney show or the Katrina answers real estate questions show.
KATRINA MADEWELL: That too, yep, we can do that.
DARRIN T. MISH: I’m your host still I think, the IRS Solution Attorney Darrin T. Mish.
KATRINA MADEWELL: He’s the host and we are going to talk about IRS stuff I promise I’m your co-host Katrina Madewell which you probably heard no Tampa home talk on Friday so we will have to squeeze a little IRS stuff in there on a Friday.
DARRIN T. MISH: So, let’s talk a little bit about what we are supposed to be talking about today and I’m the biggest offender and the biggest problem here today but what do you do if you forgot to file a tax return? There’s probably people out there, there’s probably about I don’t know 70% of the people driving around listening to us and they are thinking well who in the world would forget to file a tax return right?
KATRINA MADEWELL: It’s April 15th what?
DARRIN T. MISH: Right, I mean don’t you think that that’s kind of your typical consumer response would be who in the world would forget to file their tax return aren’t they going to get a refund right?
KATRINA MADEWELL: I mean it’s not something that most people forget considering it’s what everybody talks about on April 15th.
DARRIN T. MISH: But my people, the people I love so much who come to me and let me fix their tax problems they tend to be you know self-employed type folks typically or people who made early withdrawals on 401k’s or IRS’s or things like that who are going to owe money and sometimes it just slips their mind when April 15th comes to either file an extension or if they do file an extension to October 15th it just sometimes slips their mind to file a tax return and then when nothing happens over a period of months…..
KATRINA MADEWELL: They think oh it’s all good.
DARRIN T. MISH: And sometimes it slips their mind to file the next year and then the next year.
KATRINA MADEWELL: That’s how the trend starts.
DARRIN T. MISH: That’s exactly what happens is because the IRS is really slow on the trigger then and not much happens….
KATRINA MADEWELL: What makes them finally pull the trigger anyway?
DARRIN T. MISH: The IRS?
KATRINA MADEWELL: Yeah, cause sometimes it could be a couple of years, 2 or 3 years and sometimes it’s many, many, many years, right?
DARRIN T. MISH: Yeah, so let’s talk about what happens if they IRS, if the taxpayer doesn’t file a return and what, you know the 2 possibilities, there’s really 3 kind of possibilities but the first is the IRS can prepare what’s called a substitute for return so a substitute for return is exactly what is sounds like it’s something that the IRS prepares allegedly for the taxpayer, what they do is they add…
KATRINA MADEWELL: Oh they prepare for them alright.
DARRIN T. MISH: They add up all of the income from whatever source from the W-2’s and 1099’s and what not and then they just multiply it by the tax rate and then they assess interest and penalties and they are off to the races. Now, there are some procedural things that they have to do they have to send you a notice certified mail to your last known address and things like that. But in Florida in particular we are such a transient population that if you haven’t filed a tax return for you know 9 years right what are the odds that you live at the apartment that you lived at in you know 1994 or whatever and so lots of times people don’t get those notices and then a substitute for return you know balance is assessed which the IRS….
KATRINA MADEWELL: Which they don’t send a notice for right, if they do a substitute for return they don’t mail that to you right?
DARRIN T. MISH: Yeah actually they do…
KATRINA MADEWELL: They do?
DARRIN T. MISH: They are supposed to send you what’s called a notice of deficiency to your last known address via certified mail and then the taxpayer has a right within 90 days to file a tax court petition. Now that’s the hard way to fight a substitute for return is to file a tax court petition and kind of hash it out in court, the other way to deal with a substitute for return is to just file an original return after you know if the IRS prepares a substitute for return let’s say for tax year 2010 and if you finally can get around to it and file an original return for 2010 that reflects less tax, 99 times out of 100 the IRS is going to accept your original return and move on and move forward like that.
KATRINA MADEWELL: So it just supersedes whatever they filed?
DARRIN T. MISH: Yeah you can file an original return subsequent to that substitute for return. That’s a mouth full.
KATRINA MADEWELL: And you use 2010 isn’t this 2016 didn’t you say you only have to go 5 years back?
DARRIN T. MISH: Well you go 6 years back.
Katrina Madewell: Oh so that’s why you used 2010.
DARRIN T. MISH: Yeah so it would be 2010. So, what happens in my practice quite a bit in just about every day is someone comes into the office and they haven’t filed a tax return in 10+ years and they are scared and they are nervous and they don’t know what to do and they come and ask for help.
KATRINA MADEWELL: Better question would be where the heck do they start because they are probably thinking, like what usually triggers that is it a 401k withdrawal a lot of the times, what usually triggers that whole I’m not going to file this year whoops that’s another year, whoops another year, oops another year like what triggers that first year, usually?
DARRIN T. MISH: So, what triggers the failure to file? You know every once in a while, we do entire shows or we just talk about the mental and emotional you know aspects. What honestly triggers it is fear.
KATRINA MADEWELL: No, no, no that wasn’t the question.
DARRIN T. MISH: No I know let me just…
KATRINA MADEWELL: Ok.
DARRIN T. MISH: Let me elaborate, it’s fear of the balance due that they, they in quotes they know is coming and so because they think they are going to owe a bunch of money and they don’t have the money to pay they just put it on the back burner and they think to themselves well I will deal with this later because later will be a better time and maybe that’s true, maybe that is true but later is a better time but you know we have this obligation to file and pay our taxes so if the IRS decides to, I mean it’s not common at all but if the IRS really has 2 options they could do the substitute for return or they can just criminally prosecute you for the crime of failure to file.
KATRINA MADEWELL: Yeah, but we talk about that all the time that is like almost never happens.
DARRIN T. MISH: It’s very, very rare because the number of people who are non-filers is roughly, the estimates are 10% of the population….
KATRINA MADEWELL: Wow 10% of people don’t file their returns?
DARRIN T. MISH: Which is a huge number. So, when I hear about all, the part of why I brought up the Donald Trump thing was when I hear, knowing what I know and doing what I do every day, when I hear this sort of false outrage that this billionaire isn’t paying taxes, I think man if you people knew of the sheer number of people who walk among you who don’t bother to file their taxes and pay their taxes I think you would be appalled. But see does it really matter you know to that kind of person that you know Joe the Carpenter who’s driving around not paying taxes? I mean no it’s just because Trump’s a billionaire and he allegedly should be paying lots of taxes. I don’t think billionaire’s pay taxes personally.
KATRINA MADEWELL: Well it’s not like you have a label that says oh, by the way, I didn’t pay my taxes like that’s a personal thing that most people just wouldn’t know.
DARRIN T. MISH: True. And I hang around with lots of folks, small business owners and entrepreneurs you know in my professional circle because those are the type of people that I like because I consider myself one of those people. It never fails to shock me how many of my very successful friends will later come and contact me privately and say hey Darrin I got this tax problem I need to get fixed. As a matter of fact, I’m on the computer here in the studio on Facebook and I got a Facebook message during the show from an entrepreneurial friend who just said hey what’s your phone number I need to come in and talk to you.
KATRINA MADEWELL: It says help.
DARRIN T. MISH: Yeah, exactly and there’s and even he expressed some shame about, hey you know I really screwed this up and I really need help. Hey, I respect that tons that he comes, there comes a time when you have certain types of problems in your life, mine would be plumbing ok if I had a plumbing problem in my house I’m not going to try to fix it I don’t know how to do that and I do not want to. So it’s the same thing when you have a tax problem is you should probably go and seek out some help from someone who’s been there and done that maybe like a thousand times.
KATRINA MADEWELL: So did you tell your friend that your number is 888-get-mish? Or he can find you on Twitter @darrin_mish.
DARRIN T. MISH: Well actually I tried to save the toll-free cost I told him my phone number is 813-229-7100 so if you want to call me on that number that works too.
KATRINA MADEWELL: Oh for local people.
DARRIN T. MISH: It’s 813-229-7100 or 888-438-6474.
KATRINA MADEWELL: So you should have got a number that ended in like 1040 or something that would have been really cool.
DARRIN T. MISH: I, you know…
KATRINA MADEWELL: Did you try to do that or you didn’t think about that.
DARRIN T. MISH: When I opened my practice I actually did not represent people with tax problems so.
KATRINA MADEWELL: Oh.
DARRIN T. MISH: I did not have the presence of mind to do that because I couldn’t read. Couldn’t read the tea leaves.
KATRINA MADEWELL: Criminal defense attorney.
DARRIN T. MISH: Yeah my background is as a criminal defense attorney going way back but I feel like that skill set of defending people against the government when they have real serious problems really came in handy when I started representing people with tax problems because I understand procedural maneuvers and planning and strategy and that kind of thing.
KATRINA MADEWELL: And the cool part is like I know just from hanging around with you for the last several years and doing the show and just knowing you on a personal level that your friend that is asking for help but probably took them a lot of courage to muster up like the ummph to actually send you that message because they are afraid that you are going to judge him or her and I know you enough to know that that would never be the case.
DARRIN T. MISH: No not only am I not going to judge him, I would like to collaborate with him so that we can figure out so that he can pay the least amount of tax possible under the law right, we are not going to break the law and we are not going to do anything illegal, immoral or unethical but we can use the law to try to attempt to make sure that he pays the least amount that he can get away with. Which is what it sounds like these couple of politicians who are running for President are doing.
KATRINA MADEWELL: So what do you think Pat? I would think that maybe somebody like me or Pat knows you, of course we would want your help but it would be bittersweet the fact that we knew you but that we are like oh we got to tell him that we got a tax problem.
PAT GEORGE: Well, he’s heard and seen it all so that’s not a big deal I would be willing to tell him everything because you know he is going to save you, he’s going to help you and stuff.
KATRINA MADEWELL: If I had a tax problem he would throw me under the bus, he would be like oh yeah we’re so talking about that on the air you are going to share every detail like you would just throw me right under there.
PAT GEORGE: I don’t believe that with….
KATRINA MADEWELL: I think he would. He knows I would do it.
DARRIN T. MISH: Only if you gave me permission I would throw you under the bus. If you didn’t give me permission that no one would ever hear a word about it.
KATRINA MADEWELL: I know but you know you would want to talk about that. You would not let me live that down.
DARRIN T. MISH: I would just start talking about the hypothetical real estate agent that I know who has this giant problem although I have actually…
KATRINA MADEWELL: There’s a bunch of them.
DARRIN T. MISH: I’ve easily represented dozens of agents over the years, which is why I can speak so freely about how they can get in trouble.
KATRINA MADEWELL: I know some agents that do a lot of business and have not filed returns in I don’t even know how long and I’m just like hey, Darrin’s number is 888-get-mish you might want to call him sometime.
DARRIN T. MISH: So let’s talk about…
KATRINA MADEWELL: It’s probably easier to deal with it before then when you actually get contacted by the IRS right?
DARRIN T. MISH: Yeah, if I had my choice of a taxpayer who was a non-filer who has had no contact from the IRS versus the taxpayer who is a non-filer who now has a revenue officer assigned to the case who’s breathing down their neck I would pick the first option every day and twice on Sunday because we have more time, we have less, we have less of a stressed out client and we have time to do it right so that you know we are not under the gun versus when you have a revenue officer who is handling the case I mean it is their job to get the money….
KATRINA MADEWELL: And they are ready to close that sucker out and move on.
DARRIN T. MISH: So they are going to start to apply pressure they are going to give you some you know some semi-reasonable deadlines and you know to get your stuff done, but I think the hardest part about the practice isn’t honestly not what needs to be done, it’s not developing the strategy or the game plan or how we are going to resolve the matter, it’s, it’s clients and I don’t mean that in a bad way it’s just clients. Because, first of all, they are not used to you know having records and providing records and things like that but they are also scared and scared people act weird.
KATRINA MADEWELL: Freeze, they freeze sometimes.
DARRIN T. MISH: Yeah, yeah either they do one of 2 things they or 3 things, they either fight us or they run or they hide right so I mean those are the 3 options I don’t like either one of those, you know any of those options.
KATRINA MADEWELL: You have left them 15 messages and nobody is calling you back, hiding their paperwork, they don’t want to provide it.
DARRIN T. MISH: So that’s the hardest part about dealing with people with tax problems is just that there’s this anxiety and fear and stuff wrapped up like Pat said it’s the most feared agency in the world and so people get scared.
KATRINA MADEWELL: And you do get some psycho people it’s interesting cause you know I just came back from Accelerate at Dave Ramsey’s office earlier this week and same thing he is like yeah we get some lunatics unfortunately like I don’t know what it is but….
DARRIN T. MISH: Well, and there are some people who are you know mentally ill or emotionally crippled or whatever and that’s the cause of the tax problem, not the other way around so that happens and you try to weed those folks out, not that you know I have a problem with those folks is just they are harder to represent.
KATRINA MADEWELL: Cause should we talk about one of your crazies that calls when we come back? I think we should talk about these crazies.
DARRIN T. MISH: When we come back we can talk about somebody who called me he was really offended about an article that I had written about Donald Trump and why Donald Trump might not be wanting to release his tax returns.
KATRINA MADEWELL: And we actually got a question from Pat, a different Pat not Pat George but another Pat, we are going to answer that question when we come back. If you have one to we will take yours as well 888-404-1010 if you got a tax IRS issue anything like that question 888-404-1010 we will be back in just a minute.
KATRINA MADEWELL: Welcome back, you are listening to the IRS Solution show for real, for really real.
DARRIN T. MISH: IRS Solution Attorney. See she is trying, keep trying to discount my involvement in my own radio show.
KATRINA MADEWELL: I know it’s not intentional at all, at all.
DARRIN T. MISH: Just comes naturally.
KATRINA MADEWELL: I’m your co-host Katrina Madewell I’m happy to be here for real.
DARRIN T. MISH: So let’s get to that question.
KATRINA MADEWELL: Alright so the question is, oh the question disappeared hold on I got it right here, alright so Pat wants to know and this is not Pat George by the way, but it’s a different Pat that is listening to the show which you can catch up with Darrin @darrin_mish if you are a Tweeter and he is also on Facebook is it The IRS Solution Attorney?
DARRIN T. MISH: It is.
KATRINA MADEWELL: Ok and he will answer your questions there too and we will likely bring them to the air as well. So, Pat wants to know my wife works full time and collects W-2’s and I own my own business, we filed our taxes jointly do I still need to pay my taxes quarterly? That’s a great question.
DARRIN T. MISH: Yeah that is a good question so a little bit of a loaded question the answer is if you have a tax liability attributable to the self-employment income, your business income at the end of the year then you are actually supposed to be paying your estimated tax payments quarterly. If you had no you know tax liability, you know tax liability from the business like so for example maybe there was enough withholding from the W-2 earnings then you would not have to pay your quarterly, estimated tax payments quarterly. The one thing that he said was do I, yeah he says do I still need to pay my taxes quarterly. There’s a little hint would be pay your estimated tax payments more frequently than quarterly if they are substantial payments so make them monthly, you can make them daily if you really want to and the IRS has a pretty cool direct pay system…
KATRINA MADEWELL: Unless you duplicate they don’t like that, unless it’s the same amount they think it’s weird, they think it’s an accident.
DARRIN T. MISH: Yeah I don’t know if I would pay a hundred dollars twice in one day but the IRS has a pretty good direct pay system that’s online nowadays that does work, it works really well I’ve used it myself for myself and for clients that’s called IRS direct pay just google it.
KATRINA MADEWELL: I thought it was EFTPS?
DARRIN T. MISH: No EFTPS is for typically for payroll deposits and that kind of thing. Direct pay is to pay your estimated tax payments or pay your 1040 balances and that kind of thing. So, I recommend people do it because it’s a lot faster than a check.
KATRINA MADEWELL: Gotcha. So, we were going to answer the question also for the topic of the show If you forget to file like what should you actually do and if we have time Darrin I would like to get to this bank rate story that we have on our outline it says that they are talking about the IRS says you should change your withholdings now but if we have time we will get to that.
DARRIN T. MISH: Ok, so, what you should do if you are a non-filer is you should call somebody like me and we can you now interface with the IRS very discreetly and we can get your transcripts so that we can help you prepare those returns and then develop a game plan before we file the returns so that the IRS collection machine doesn’t start you know start rolling and steam roll you. If for whatever reason you don’t want to hire a professional, I respect that. There are ways that you can get your transcripts from the IRS, there are phone numbers that you can call to get your transcripts from the IRS that will send them to you, usually through the mail and then you can go to, you know you can either prepare the returns yourself or you can go to a tax preparer and they will prepare them for you.
KATRINA MADEWELL: Isn’t that like a red flag though self-prepared returns and all that.
DARRIN T. MISH: No not necessarily, no there is still an awful lot of self-prepared returns out there but you can prepare the returns and then you can file them and try to figure what you are going to do from there. It’s important to note, that sometimes non-filers have refunds coming and it, it really breaks my heart because there is a refund statute of limitations. So, in other words if you file a refund return more than 3 years old then you don’t get the refund and you don’t even get the credit for the refund. So, I just saw that in my office yesterday. There was about a $900.00 refund that he’s not going to get because he…
KATRINA MADEWELL: Didn’t do it in time.
DARRIN T. MISH: He didn’t get around to getting the returns prepared.
KATRINA MADEWELL: If you are a W-2 person don’t wait call Darrin 888-get-mish that is painful like do not give the government any extra money. At all. Alright can you touch on this real quick about why bankrate says this year you should change your withholding?
DARRIN T. MISH: Ok so the IRS is actually saying that you should change your withholding at this point of the year if you can and the reason is there saying that they are going to be delaying some refunds this year until at least mid-February so if you are the type of person that gets an earned income tax credit, typically a lower income person and you expect a big refund they are basically saying that those are going to be delayed this year, I think they have been delayed a few years in a row…
KATRINA MADEWELL: Because of withholdings?
DARRIN T. MISH: It’s because they are doing more and more investigation to make sure that they are good returns because there is more and more fraud occurring. So, the IRS is basically just saying that they want you to adjust your payroll withholding now so that if you have, you can diminish the size of that refund so you can get more of your check now, basically.
KATRINA MADEWELL: Gotcha. Right on time for the train wreck of the week.
DARRIN T. MISH: So it’s about that time this is the segment of the show where we talk about where somebody came into the office and they were essentially a train wreck because they had a problem with the IRS and then we talk about what the problem was and then how we solved it and, almost always they leave living happily ever after.
KATRINA MADEWELL: Can’t please everybody Darrin.
DARRIN T. MISH: So this is one of my favorite stories actually there was a gentleman that came into my office several years ago he was an older guy he must have been around 60 years old, not that that is old I’m not saying that, but he was older than me at the time I was probably 30 and he sat down and he was way more nervous than typical so lot’s of people come into the office and they are nervous because they are in a lawyer’s office and lawyers are scary and they have this problem…
KATRINA MADEWELL: You are all crooks.
DARRIN T. MISH: Yeah they think we are all crooks and stuff and…
KATRINA MADEWELL: You know just the stereotypical.
DARRIN T. MISH: One of the reasons why I haven’t gone into politics is that would just solidify the whole deal right so, so he’s way more nervous than average I mean I know what acceptable nervous is, it’s like me going to the doctor right I’m not usually like hey dude but I’m usually a little nervous cause I don’t want to hear the bad news…
KATRINA MADEWELL: You are going to get a shot.
DARRIN T. MISH: So, but this guy is trembling I mean he can barely speak and so I’m a pretty nice guy especially in that context so I’m like tell me what’s wrong because there is obviously something wrong so tell me what the story is and he says I haven’t filed tax returns in a while. I’m like ok and what’s going through my head is you know look this is the story of my life that’s really not that big a deal.
KATRINA MADEWELL: There’s never a real number it’s always awhile.
DARRIN T. MISH: So I said, ok, well you know lots of people probably most people that come in are non-filers so I, you know I know what to expect it’s fine and he says no awhile and I said ok well alright just tell me how long is awhile, he’s says a long time.
KATRINA MADEWELL: In that context, I would think 20 years.
DARRIN T. MISH: He says a long time, I said alright so just cut to the chase and he says well I was in the Army, the Army screwed up my social security number, after they screwed up the social security number I didn’t know which social security number was right, so I just never filed. I said ok so what year was that he said 1960. So, I get a big smile on my face I’m like excited right cause that’s cool, not cool because he is not paying taxes just cool because it’s a big problem and I know how to solve it.
KATRINA MADEWELL: You can give him some good news.
DARRIN T. MISH: Exactly so I shared with him that I was born in 1967 and I thought it was pretty darn cool that I was going to fix a problem that has been in existence since before my existence. So, what we did is we ended up filing the last 6 years of returns, he owed very little he ended up paying that off and he got his life back, he basically let that fear ruin the most productive years of his earning life because he could not face that fear, that anxiety about not knowing what to do.
KATRINA MADEWELL: What are you adding rain it’s not raining yet, Pat, save that for tomorrow. Alright you can get Darrin at 888-get-mish you can also reach him at Twitter @darrin_mish.
DARRIN T. MISH: Don’t forget the website getirshelp.com and for now I think we are blown out.
KATRINA MADEWELL: Yep don’t miss Mason Dixon and Charlie Ochs in an hour I will see you tomorrow bye.