What To Do When The IRS Levies Your Bank Account

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DARRIN T. MISH: Good morning.

(bell rings)

DARRIN T. MISH: This is the IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL: School is in session. I’m your co-host, Katrina Madewell. We’ve got Pat George on the board. He’ll be happening with some traffic, and Darrin will be sharing more of his IRS Secrets.

(bell rings)

DARRIN T. MISH: I think he’s alluding to the fact that we’re going to have a boxing segue at some point in the show. We’re going to talk about Floyd Mayweather’s tax problems with the IRS and how they’re getting a little better. it’s probably not going to stop the fight that’s upcoming with the MMA guy. What’s his name?

KATRINA MADEWELL: I don’t know.

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DARRIN T. MISH: I’m sure the people that are listening can remember. I’m having a blank. it’s because I’m on the air, live.

KATRINA MADEWELL: If my husband is watching he’ll chime in and let me know. There’s one guy, I know who he is when I see him.

DARRIN T. MISH: Oh, it’s MacGregor of course.

KATRINA MADEWELL: Oh, MacGregor.

DARRIN T. MISH: We’ll talk about that during the show. We’ll talk about Floyd Mayweather’s tax problems and how significant they are. I think he owes about $29 million to the IRS.

KATRINA MADEWELL: Isn’t that unbelievable?

DARRIN T. MISH: If you’re listening and you owe less than $29 million to the IRS, you’re in great shape! It’s really not that big of a deal.

KATRINA MADEWELL: How do they get in that position? Are they contracted?

DARRIN T. MISH: I think the problem with Floyd Mayweather is boxers, especially big time boxers, get paid in chunks. Kind of like real estate agents.

KATRINA MADEWELL: We get paid in chunks.

DARRIN T. MISH: He’s getting paid in big chunks. They make a lot of money, let’s not kid ourselves.

KATRINA MADEWELL: But there are no taxes taken out?

DARRIN T. MISH: No taxes taken out. There’s a lot of hands out. There’s a lot of people that get paid when there’s a fight. At some point, he’s just not managed well and he’s gotten behind.

KATRINA MADEWELL: Isn’t that the problem with all businesses? There’s no real plan. Here’s your estimated income, let’s project this, here’s your expenses, you have to factor in taxes and other things.

DARRIN T. MISH: Who among us that are all entrepreneurial or self-employed hasn’t fallen a little behind the 8-ball with the IRS?

KATRINA MADEWELL: I definitely have.

DARRIN T. MISH: It’s almost impossible not to unless you have a very effective system and you’re disciplined at following the system. In which case you’ll probably still all behind with the IRS at some point. if you’re a wage earner and you get a paycheck, there’s no discipline to be had.

KATRINA MADEWELL: I don’t know.

DARRIN T. MISH: They take the money as you earn it.

KATRINA MADEWELL: I’ve been there and owed the IRS money. It was not a great time in my life. Many moons ago. I never want to go there again. I’d rather not take a paycheck than to ever have them knock on my door again.

DARRIN T. MISH: I feel the same.

KATRINA MADEWELL: Even though I know you and I see you every week and I feel pretty safe knowing I can ask you anything. I still wouldn’t want them knocking on my door.

DARRIN T. MISH: Even though this is what I do for a living, I’ve had three IRS problems in my life.

KATRINA MADEWELL: I thought it was two.

DARRIN T. MISH: I thought of another one. I had one when I was 18 because I used to put up the signs for the open houses on the side of the road on the weekends, so I had that one and my stepfather had to bail me out. I had the typical male reaction, like whatever. And he said, no, you can’t “whatever” the IRS, you have to take care of it. He called and got me into my very first IRS installment agreement at age 18.

KATRINA MADEWELL: What was that like? How much was that?

DARRIN T. MISH: It was a couple hundred dollars a month probably. You have to think about this, this is 30+ years ago, that was a lot of money.

KATRINA MADEWELL: Especially at 18.

PAT GEORGE: My son is 20 and he just got into an installment plan because he was a contract worker for everywhere and nothing was coming out. He owed around $800 and they sent him a notice that said on this date we’re going to take out like $300. He went online and they took an installment thing, around $60/month.

DARRIN T. MISH: That’s America today.

KATRINA MADEWELL: They don’t set it up automatically, though, do they?

DARRIN T. MISH: I had two separate tax problems when I was a sole provider when I was an attorney. I had got my first employee I generated a payroll tax problem because my accountant told me how to handle payroll and I was like “whatever”.

KATRINA MADEWELL: How old were you?

DARRIN T. MISH: I was 28. But not a very mature 28. I generated that payroll tax problem. There was a 1040 tax problem at the same time because I wasn’t withholding. I didn’t know what I was doing. I’m ok with telling people this because if I didn’t know what I was doing after having gone to law school, it’s ok if you don’t know about how to handle IRS issues. Nobody really knows until you’ve gone through that. Or if you’ve dedicated your life to learning it like I have.

KATRINA MADEWELL: Even with as much education as you have, Darrin, with your years of college and law school, they never teach you that kind of stuff.

DARRIN T. MISH: There’s no class on when you open up your law firm, these are the things you need to know. I think it’s because most law professors don’t know because they never did it.

KATRINA MADEWELL: They went straight from education to education. Not really in the trenches?

DARRIN T. MISH: This is about guaranteed to offend somebody. Most law professors never practice law. They just didn’t. If they did, they practiced law for a few years in a hoity toity big law firm.

KATRINA MADEWELL: That’s not on your own.

DARRIN T. MISH: It’s not the same. It’s a whole lot different. Then I generated a third, maybe this is the fourth at this point. Depending on if you count the time I had the 1040 and payroll tax problem at the same time. The fourth problem was just about five years ago when I had some other outside business interest and they were going well. They were cash flowing a lot of money. I made the mistake, I got a little cocky and I was thinking, there’s going to be a tax bill, but I’ll just pay it out of that month’s cash flow, it will be fine.

KATRINA MADEWELL: Cash flow never came.

DARRIN T. MISH: That business tanked unexpectedly. Overnight. Google made it go away.

KATRINA MADEWELL: You had an installment agreement?

DARRIN T. MISH: I did a blend of borrowing enough money to get the IRS off my back. I think I might have been on an installment agreement, but it was short.

KATRINA MADEWELL: At that moment, you could have went tax protestor.

DARRIN T. MISH: It’s pretty hard to make a living doing what I do as a tax protestor. Reps who represent clients before the IRS can not have an unresolved tax problem. It’s against the rules. Attorneys who practice in front of the IRS and enrolled agents and CPA’s can be disbarred from practice before the IRS. Separate and distinct from the states you’re admitted to, you can be disbarred by the IRS.

KATRINA MADEWELL: On what grounds?

DARRIN T. MISH: There’s a slew of rules. I have a story about that. I have a buddy who does this at a pretty high level. One day he got to the point where the pressure was too significant and he was on the phone with the IRS and he snapped. He went off.

KATRINA MADEWELL: How? He does what you do?

DARRIN T. MISH: There’s a lot of pressure in his life and he just snapped and he started swearing and told the IRS what he thought of him. It was all recorded.

KATRINA MADEWELL: That was the end of that?

DARRIN T. MISH: I think a week or two later he gets a letter from the office of professional responsibility. Asked him to Washington D.C. He retained counsel. He was suspended for a couple of years. Even we can’t really tell them. I was joking and said if you had just hung up the phone, even abruptly and then said what you wanted to say, everything would have been fine.

KATRINA MADEWELL: Hindsight.

DARRIN T. MISH: You left the connection on and that was the problem. The topic of today’s show.

KATRINA MADEWELL: That’s good stuff. You could make a living going to law schools and teaching, here’s Law School 101, here’s what you need to know. Offer a course and show how to set stuff up that law school will never teach you.

DARRIN T. MISH: I’ve never been passionate about teaching in an academic environment. What you just said kind of got my juices flowing. That would be neat. It would be worth the time spent because certainly, the money isn’t going to be alluring. I could see that. You could make differences in people’s lives.

KATRINA MADEWELL: You’d have some connections for the people that didn’t listen or take your advice.

DARRIN T. MISH: You’re right.

KATRINA MADEWELL: They’re going to be your clients in the future.

DARRIN T. MISH: All the D students will be my clients later. Over the years I’ve taught a number of attorneys how to practice in my area of resolving IRS problems. I’m passionate about that too. The reason is, they say why are you training your competition? Number one, there’s so much business out there, there’s no way I could do it all. Number two, I’m impacting the lives of those attorneys but also all the lives of those that the attorneys touched and helped. This is a bit corny, but if you put good in the world, a lot of good comes back.

KATRINA MADEWELL: The likelihood of you even bumping into the same person is non-existent. I’ve had agents that I’m friends with in my own marketplace. The likelihood of us competing for that exact same client is slim to none. It’s never really happened.

DARRIN T. MISH: There’s a bit of overlap. I’ve had some guys leave my firm and compete with me on a limited basis. Occasionally they get the client and that’s ok. That’s just life.

KATRINA MADEWELL: In the grand scheme of things, at the end of the day, it’s not going to break you. You’re listening to the IRS Solution Attorney Show. We’ve live today in the studio. We are going to talk about some more Mayweather stuff.

DARRIN T. MISH: We’ll eventually get to the topic of our show as well.

KATRINA MADEWELL: Our studio call in lines are 888-404-1010. Again, 888-404-1010. If you have an IRS problem that you don’t want to talk about on the air, you can get Darrin at 888-GET-MISH.

DARRIN T. MISH: That’s 888-438-4674.

KATRINA MADEWELL: We’ll be back in just a moment. Stick around.

(commercial break)

DARRIN T. MISH: Welcome back to the IRS Solution Attorney Show.

(bell rings)

DARRIN T. MISH: I am the champion of all IRS representatives. The IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL: I’m your co-host, Katrina Madewell. Always bringing the life of the party. Pat George back there throwing in some random nonsense.

DARRIN T. MISH: Today, what we’re going to talk about is what are you going to do when the IRS seizes your bank accounts. It’s pretty serious. It’s probably people’s worst nightmare. i have a client who is going through it right now. I’ll probably use that as an example because there are some problems with what the IRS did.

KATRINA MADEWELL: They did it wrong?

DARRIN T. MISH: I think they did.

KATRINA MADEWELL: What happened? They went in and seized the bank account, took all the money?

DARRIN T. MISH: I represent this company and they’re out in California. By the way, I can represent clients in all 50 states. I just got retained by a client in China this week.

KATRINA MADEWELL: I saw that. Companies or people.

INTENT TO LEVY

DARRIN T. MISH: Companies are just people in the eyes of the law. I represent a company in California. They’re a roofing company. They have a revenue officer assigned. I’ve been working on this case off and on for a year or more. There was a little bit of continuity…basically, we stopped representing them for a month or two. Then we talked again and got back on the case. For whatever reason, there was a new revenue officer assigned to the case. The revenue officer, at least according to the IRS records, sent something called a final notice of intent to levy. It has to come via certified mail to the taxpayer and the tax payer’s rep. Then they have 30 days to appeal, the taxpayer does. If the appeal isn’t forthcoming, then about 45 days later, the IRS can go ahead and levy their bank accounts. In this case what happened…

KATRINA MADEWELL: It didn’t come to you?

DARRIN T. MISH: It didn’t come to me.

KATRINA MADEWELL: I knew it.

DARRIN T. MISH: The client says she never got it. Don’t know how accurate that is.

KATRINA MADEWELL: That’s in all the mail they never opened.

DARRIN T. MISH: It’s certified, if you get those orange slips from the post office, you need to go down and sign for your mail. I don’t care if it’s IRS mail or mail from Publisher’s Clearing House. You need to go down there and sign and figure out what it is. Unimportant mail does not come certified mail. I think we can go with that as a rule in life.

KATRINA MADEWELL: yes. The only thing is, people with a crazy schedule, I wish the post office had something where you can go in after hours, swipe your i.d. and get your mail. If you don’t make it there during those regular hours.

DARRIN T. MISH: I agree. I think they keep it for three days. Especially if you’re gone on a cruise.

KATRINA MADEWELL: Or if I have three days stacked, I’m not going to cancel an appointment to go pick up a piece of mail.

DARRIN T. MISH: I’ve got it made because I have a courier that goes to the post office five days so I don’t ever have to go.

KATRINA MADEWELL: They can’t pick up your certified mail.

DARRIN T. MISH: Oh, yeah, they do.

KATRINA MADEWELL: They can?

DARRIN T. MISH: Oh, yeah. I don’t know how we do it. They have a letter of authorization or something down there. He picks up all the certifieds and drops them off.

Kind of a funny short story. For years I personally went to the post office box every day for around ten years. When I was talking to a business coach of mine one time and she was like, how are you doing? I was kind of grumpy. Which is not uncommon.

KATRINA MADEWELL: He’s always really grumpy.

DARRIN T. MISH: She says, what’s going on. I said I just got back from the post office and took me forever. She said you’re standing in line at the post office? Why? I’ve always done it that way. That’s where the checks come. She asked how many hours a month I spend doing that. Quickly doing the math. 10 hours. She said I was crazy and said I need to price a courier to do that for me. Do you want to hear how much the courier costs?

KATRINA MADEWELL: How much?

DARRIN T. MISH: $7/day.

KATRINA MADEWELL: What?

DARRIN T. MISH: In your regular life, that would be kind of a lot, right? But, no, not to save ten hours a month.

KATRINA MADEWELL: That’s a lot. It might be more if you’re going every day.

DARRIN T. MISH: There are sometimes when you do have to stand in line for the certified and there are 17 people in line. The kicker is the post office eventually moved the post office that I was using from a good location with lots of parking to a highrise downtown where there is no parking. Not convenient. I feel bad for the courier that works for us because he has to deal with that every day. That was his choice, he likes his job. That’s great.

KATRINA MADEWELL: Somebody’s got to do it.

DARRIN T. MISH: I didn’t like that part of my job so we stopped doing it.

KATRINA MADEWELL: There’s always jobs someone likes, someone doesn’t.

WHAT IS A LEVY?

DARRIN T. MISH: Let’s talk about what is a levy? That’s really what we’re talking about when the IRS seizes your bank account. We’re talking about an IRS bank levy. The word levy is easy to get confused with the word lien because they kind of start out the same. They’re different. A levy is a seizure of some sort of property. A bank levy is a seizure of your bank account.

KATRINA MADEWELL: Swoop, we’re going to take it.

DARRIN T. MISH: That’s pretty much it. It’s not immediate. There are a couple misconceptions when it comes to bank levies. People think the IRS has frozen my account. Well, no, not really.

KATRINA MADEWELL: Probably feels like a freeze. I could understand why people think that because they go to use their debit card and it doesn’t work. So you would think it’s frozen.

DARRIN T. MISH: It’s really not frozen. What happens is on the day the bank processes the IRS bank levy notice, your funds are frozen, so to speak. In other words, the bank takes the money that’s in that account on that day and sets it aside. The next day, you can put money into your bank account, you can use your bank account. The IRS has no claim to those funds. It’s just the funds that were in there on the day the bank levy was processed.

KATRINA MADEWELL: Which is pretty astounding. I would venture to say 90% of people don’t know that it’s only that one day and not the day after.

DARRIN T. MISH: It’s probably like 99% because I know practitioners that don’t know this information. Then the bank has to hold that money for 21 days to give the taxpayer the opportunity to discuss this with the IRS and try and get it back.

KATRINA MADEWELL: How often can you get that money back?

DARRIN T. MISH: It’s pretty hard. You’re kind of in a begging situation where there’s not a lot of leverage. Oftentimes taxpayers aren’t current with their ongoing obligations. We talk about this on the show all the time. In order to take advantage of any of the collection alternatives or opportunities we talk about on the show, a taxpayer has to be current. What does that mean? You can’t have any missing filings. If you have missing tax returns, they have to be prepared and filed. If you’re a person who is supposed to be making estimated tax payments, those have to be on time. Here we are in the 8th month of the year so you would have had to make at least two-quarters worth of estimated tax payments to be considered current. Most of the self-employed taxpayers, if they’ve come to me within the last few months, not current. It makes it challenging.

This particular client that’s in California. I’m not sure if they’re current or not. If they are current and the revenue officer sort of did bypass the power of attorney, once I get him on the phone he’ll probably release the levy. There’s not a whole lot of money in there, but the taxpayer is upset, obviously.

KATRINA MADEWELL: Do you think they pick or watch a day when there’s more money in there?

DARRIN T. MISH: No.

KATRINA MADEWELL: It’s Murphy’s law, though.

DARRIN T. MISH: It’s like the terrorist on the ground with an AK-47 and an F-16 flies over them at full speed and they’re shooting up in the air. Occasionally a bullet is going to hit, but they don’t know.

KATRINA MADEWELL: I bet they pick a lot of Fridays.

DARRIN T. MISH: It’s just a golden BB. If I were a revenue officer, I would be strategic. It’s why I’m glad I’m not. I would time them to hit the first of the month or the last day of the month. Or when payroll is about to happen. The point of the bank levy, typically with the IRS, is not so much to get the money in the bank. It’s to get the attention of the taxpayer.

KATRINA MADEWELL: That would do it.

DARRIN T. MISH: That’s usually more the goal. Especially if you have taxpayers who have been…

KATRINA MADEWELL: What if you have more than one account?

DARRIN T. MISH: Good question, let me finish this thought. It’s to get their attention, especially if the taxpayer has been ignoring the problem for a significant amount of time.

KATRINA MADEWELL: All the notices that go on and on.

DARRIN T. MISH: Or if there’s a revenue officer involved and the revenue officer gave them deadlines and they completely blow them off. Usually, a revenue officer will go hey! This is his way of saying, hello, I’m going to shake you a little bit.

KATRINA MADEWELL: Deadlines to what? Make payments or send returns?

DARRIN T. MISH: Usually what will happen is the revenue officer will make initial contact, give them a laundry list of stuff they want them to do. Bank statements, etc. A lot of taxpayers just blow them off completely. They ignore it and that’s the revenue officer’s way of saying, hello! McFly! This is a problem, I’ve got a lot of power here and I’m going to use it if you don’t get with the program.

Your question was, what happens if they have multiple bank accounts?

KATRINA MADEWELL: Is it common for them to swoop more than one?

DARRIN T. MISH: If the IRS knows about those bank accounts, they’re going to issue bank levies to all the banks. If you bank at Bank of America, Wells Fargo, whatever…

KATRINA MADEWELL: How do they know?

DARRIN T. MISH: That’s a good question. The IRS has a computer system that tells them about some of this stuff, but a lot of times, when a taxpayer is required to submit a collection information statement, it has that information on it. Or, if they’ve been making estimated tax payments via check.

KATRINA MADEWELL: There you go.

DARRIN T. MISH: They know about that bank account.

KATRINA MADEWELL: If they open another account, they probably wouldn’t know that.

DARRIN T. MISH: That’s exactly right. Sometimes we tell them what they need to do is run down to a smaller, local institution, open up a bank account it’s going to take the IRS a long time to find out about it.

KATRINA MADEWELL: Just to make sure they got somebody to dig themselves out of that hole.

DARRIN T. MISH: Absolutely.

KATRINA MADEWELL: You’re listening to the IRS Solution Attorney Show, we’ll be back in a minute. Studio call-in lines, 888-404-1010. Do not dial if you’re driving. We’ll be back in a minute.

(commercial break)

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

KATRINA MADEWELL: I’m your co-host, Katrina Madewell. Thank you for our listeners out there. Sorry, Pat George was trying to get my attention to grab the phone. He was trying to do traffic and commercial things. I didn’t see it ringing, I’m sorry.

DARRIN T. MISH: We were doing the show within the show, which is on Facebook Live. We were kind of jabbering at the people who had joined us on Facebook Live.

KATRINA MADEWELL: There’s a lot of stuff to look at here.

DARRIN T. MISH: We have computer monitors, outlines, people on Facebook Live. We have people talking to us on Facebook Live. Things like that.

I just wanted to say, the intro to this third segment was so nice. It was normal music, there was no crazy boxing ring noises or anything like that. Now we’re getting the stink eye from our producer.

KATRINA MADEWELL: If Pat lets my regular music play in Tampa Home Talk, I give him a hard time. I’m like, what are you back there sleeping? I buy you food!

DARRIN T. MISH: No one can see this, Pat George just waved and walked out of the studio.

KATRINA MADEWELL: He’s gone.

DARRIN T. MISH: He might be on strike forever now.

KATRINA MADEWELL: If you call, I have to answer the phone. I’ll try not to hang up on you.

DARRIN T. MISH: We love Pat, he’s awesome. Today’s topic of the show is what do you do if the IRS levies your bank account, seizes your bank account.

KATRINA MADEWELL: Back to my question. More than one bank account, what’s the likelihood that they’ll seizure more than one?

DARRIN T. MISH: If you’ve already submitted the information to them…

KATRINA MADEWELL: They’re going to seize everything?

DARRIN T. MISH: They’re going to take everything. It’s not so much about getting the money. If you owe $2,000 and they levy you, they kind of hope to get all the money and close the case. But that’s not normal.

KATRINA MADEWELL: You owe a lot.

DARRIN T. MISH: Normally the client owes $100,000.

KATRINA MADEWELL: They’re not really paying much attention to someone that owes $2,000 on their taxes, right?

DARRIN T. MISH: Not typically.

KATRINA MADEWELL: They have bigger fish to fry.

DARRIN T. MISH: Although, I’ve had some.

KATRINA MADEWELL: Where does that come from?

DARRIN T. MISH: I had a big knock down, drag out with a revenue officer recently over a lawyer client of mine who owed $9,000.

KATRINA MADEWELL: Which is tiny in your sea of fish.

DARRIN T. MISH: It’s ridiculous.

KATRINA MADEWELL: Was that a principle thing? Like they want to make an example out of him?

DARRIN T. MISH: It was a male revenue officer, and I never got to the bottom of what the big deal was. Other than it’s a lawyer and a lawyer is supposed to know better. Lawyers are more high-profile individuals, we’re going to make an example. That kind of thing. Sometimes they do get small cases. You’re probably not going to get a revenue officer in the Tampa area unless you owe in excess of $50,000-$75,000. If you’re in Texas, you’re not going get a revenue officer if you owe under half a million. There are a lot more people there. There are more people there, but there’s also more money there. The economy is better in Texas. The IRS only has limited resources.

KATRINA MADEWELL: They’re looking for the folks with the big oil rigs.

DARRIN T. MISH: They’re looking for J.R. Ewing, right?

KATRINA MADEWELL: Yeah. So, if you have more than one account, they might get it.

DARRIN T. MISH: Yeah, if you have more than one account, they might get it.

KATRINA MADEWELL: So, what to do? The next day, if you have a deposit going then it’s ok?

DARRIN T. MISH: You can do that.

KATRINA MADEWELL: At that point, I imagine most people are probably freaking.

DARRIN T. MISH: If you don’t have a rep, what you need to do is call…first of all, this is crucial, you need to get a copy of the bank levy from the bank. Some of the banks, even the big banks, are not real cooperative.

KATRINA MADEWELL: What do you do if they don’t give it to you?

DARRIN T. MISH: You have to keep asking and talk to the manager. You have to keep going up.

KATRINA MADEWELL: Is there anything in the IRS Publication you can show them that says you have the right to get copies?

DARRIN T. MISH: You’re definitely entitled to a copy.

KATRINA MADEWELL: Is there anywhere in there?

DARRIN T. MISH: It’s probably in the banking regulations. We will routinely have clients who call and they’re upset and say the IRS seized my bank account. We have them get a copy of the levy. When they get a copy of it, it’s for child support, or student loans, or something else. Or it’s the state. I was talking to a guy this week that had told us he had previous bank levy then when we got down to brass tacks, it was California that levied his bank account. It wasn’t the IRS at all.

You have to get a copy of the bank levy because you have to see what’s going on. You have to see is it the IRS, student loans, child support, what is it?

KATRINA MADEWELL: So, they have this IRS problem, but it was really child support enforcement.

DARRIN T. MISH: Not unusual.

KATRINA MADEWELL: That’s a good place to start with the IRS problem.

DARRIN T. MISH: Get a copy of it. Then call the person who issued the levy. If it’s a revenue officer, it’s easier. One thing revenue officers do, I hope some are listening. if you are a revenue officer and you’re listening, call in. We’ll keep it anonymous. I want to know the answer to this question. What they will often do, is levy the bank account and then they go dark for like a week, two weeks, they won’t return the phone call.

KATRINA MADEWELL: They levy it right before they go on vacation?

DARRIN T. MISH: I don’t know that it’s necessarily right before vacation, they just ignore you for awhile.

KATRINA MADEWELL: To see if you’re wondering what’s next?

DARRIN T. MISH: You want my honest opinion? I think they’re burning the 21 days, I really do. I had a case recently where we had a fairly significant amount of money. It was a south Florida case and a fairly significant amount was levied. We’re working on the 21 days and he didn’t get back with me until around day 17. Then we’re working on it, got to day 21 and he’s like, oh, I’m sorry.

KATRINA MADEWELL: Can you make them respond any faster? Anything in the tax code where they have to res pond within a certain amount of time?

DARRIN T. MISH: You have the right to talk to their manager if they’re not getting back with you.

KATRINA MADEWELL: I think all government employees, including the IRS or anything else, should have to respond to any inquiries within 24 hours.

DARRIN T. MISH: That’d be kind of a neat rule. You can talk to their manager. But when you go over someone’s head, what does that do for your future relationship? It’s not usually the key to success.

KATRINA MADEWELL: If they have rules in place, they wouldn’t have to do that.

DARRIN T. MISH: It’s kind of a dicey situation where I want the best for my client and I have to think about future clients too. You do what you can. Fortunately, in our practice, we don’t have a lot of levies because if we get involved in the case early enough, we can prevent those things from happening. Occasionally it does happen.

KATRINA MADEWELL: Usually by the time they hire you, it’s too late for that?

COLLECTION DUE PROCESS HEARING

DARRIN T. MISH: When they hire me, there are different things I can do. I can file appeals. We’ve talked about when the IRS sends you a final notice of intent to levy via certified mail, you have 30 days to appeal. We’ll typically file within 30 days because I like to work out cases in appeals more than I like to work them out with the revenue officers.

You can also file a late appeal. We barely ever talk about this. If you get a final notice of intent to levy and more than 30 days have gone by, but less than a year, you can still file an appeal.

KATRINA MADEWELL: That’s a long grace period.

DARRIN T. MISH: Using the same form, it’s called an equivalent hearing because it’s the equivalent of that appeal, there are just some minor rule differences that we’re not going to talk about today.

KATRINA MADEWELL: An 11 month grace period? That’s what I just heard.

DARRIN T. MISH: That rule has only been in place around ten years. The reason they put that in place, I think, is because of guys like me…previous to that, there was no limit. You could always have an equivalent hearing. If a final notice had ever been issued, you could request an equivalent hearing. I would look at the transcripts and see,  yep, a final notice was issued eight years ago, and I would file an appeal. Why not?

KATRINA MADEWELL: So people like you found all the holes in the law.

DARRIN T. MISH: Now, when you file an offer in compromise, which is the program where you make a deal to settle for less, you have to pay a filing fee, and you have to put 20% down of what you’re offering. In the old days, everybody got an offer because there was no barrier to doing it. You didn’t even have to do it close to right and it would stop everything bad from happening. You were like a magician. It was guys like me, they decided to go ahead and change the rules. We were taking advantage of the situation. Not in an illegal or immoral way. We saw the chinks in the armor.

KATRINA MADEWELL: Half the battle is knowing the rules. This reminds me of playing Scrabble with my family. Nobody wants to play with me because I know all of the two-letter crazy words that nobody ever uses.

DARRIN T. MISH: It’s like when I was a public defender years ago, if you had a particular judge that was being unreasonable, we would band together and we would set every case for jury trial. That would clog up the judge’s docket, he wouldn’t be happy because he couldn’t take an hour and a half for lunch. Eventually, they would come around and we would work out a compromise and get the cases worked out. Same thing. With the IRS you just have to take advantage of the situation and the rules and opportunities that are afforded to you.

KATRINA MADEWELL: It’s still a pretty long time. Eleven months is a long time.

DARRIN T. MISH: It’s twelve months.

KATRINA MADEWELL: Plenty of time.

DARRIN T. MISH: We do that a lot. They don’t have to give you collection protection if you file that late of an appeal, but as a practical matter, they do.

KATRINA MADEWELL: I guess they figure, if you’re working with them, you may as well.

DARRIN T. MISH: When you get to appeals, the mentality of the appeals officer is different from the mentality of a field level officer.

KATRINA MADEWELL: What’s the first thing somebody should do? I guess there are times where it makes sense to hire an attorney and times when it doesn’t.

RELEASE OF A BANK ACCOUNT LEVY

DARRIN T. MISH: It’s hard. If you’re not current, you’re not getting the levy released. That’s the bottom line. If you are current, and you’re willing to enter into an installment agreement or an offer in compromise, or some kind of collection alternative that we talk about on the show…

KATRINA MADEWELL: You have to have some money to put down on that? To pay your attorney.

DARRIN T. MISH: Usually. Let’s talk about if you don’t have an attorney, I’m ok with that. You have to call the person that issued the bank levy and you have to have a conversation with them. You got my full and complete, undivided attention.

KATRINA MADEWELL: They’ll want to hear that.

DARRIN T. MISH: I promise to cooperate with you in the future, will you please release the bank levy because I need that money for payroll. As an example.

Most of the time, unless there has been a lot of bad blood, they’re going to do that. That’s if you’re dealing with a revenue officer. If you’re dealing with ACS, which is the automated collection system, basically a computer has decided to do this to you…good luck. It’s probably not going to happen. It might.

KATRINA MADEWELL: Can you get assigned to a rep?

DARRIN T. MISH: Not really. You used to be able to but they don’t have the inventory to do it.

KATRINA MADEWELL: How is that automated? Is it a certain dollar amount?

DARRIN T. MISH: The rule here is, if you owe the IRS a tax liability and it has not been to a revenue officer, but it has been assigned to collections, it goes to ACS. It’s essentially a bunch of computers kind of working your file. Really dumb computers, actually. If you call in, you talk to somebody at a call center who has a lot of discretion to say no.

KATRINA MADEWELL: You get a call center in India.

DARRIN T. MISH: We haven’t gotten that bad yet.

KATRINA MADEWELL: Just kidding.

DARRIN T. MISH: Lots of discretion to say no, but very little discretion to say yes.

KATRINA MADEWELL: What’s the likelihood that they’ll get the money back or any portion of that money? Is it all or nothing?

DARRIN T. MISH: I hate to say this, it just depends.

KATRINA MADEWELL: Hit or miss?

DARRIN T. MISH: Sometimes all, sometimes a portion. Sometimes they’re going to require you to justify why you need it back. Sometimes they’re not going to justify why you need it back, they’ll just give it back because they got your attention.

KATRINA MADEWELL: What if you said, can you keep 30%, I’ll enter into an installment agreement. Do you think they’ll say yes to that?

DARRIN T. MISH: Everything is negotiable. It depends on the circumstances. If they’re not current, no, you’re not getting it back.

KATRINA MADEWELL: My baby needs diapers.

DARRIN T. MISH: If you’ve already blown off the revenue officer five times, you’re not getting any money back. It’s just not going to happen. The person just throws up their hands and decide to move on getting the money without your cooperation.

KATRINA MADEWELL: What do you think is going to happen with this whole Mayweather thing? He has a pretty hefty tax bill.

DARRIN T. MISH: Here’s what is going on with Floyd Mayweather. He owes $29 million to the IRS. I think most people have heard this, he’s trying to get the IRS to hold off until after the fight. I think that’s a reasonable request. He’s getting paid, coming up. I think he’s going to make $77 million dollars. I guess we’ll have to talk about the details when we come back.

KATRINA MADEWELL: Think about it, it’s going to require a lot of…they want him to win because they want the money.

DARRIN T. MISH: He’s getting paid whether he wins or gets knocked out.

KATRINA MADEWELL: But he gets more, right?

DARRIN T. MISH: I think he does. He has to pay taxes on the winnings and then he has to pay the back tax bill.

KATRINA MADEWELL: If I was the IRS I would wait, then you want to seize the bank account. It makes more sense. We’ll talk about Floyd Mayweather’s little problem when we come back. You’re listening to the IRS Solution Attorney Show. You can get Darrin directly off the air, at 888-GET-MISH.

DARRIN T. MISH: 888-438-6474.

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

(commercial break)

DARRIN T. MISH: Welcome back to the IRS Solution Attorney Show. I am the, one and only, IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL: Like the fish, but Mish. This is your co-host, Katrina Madewell.

DARRIN T. MISH: As a short aside, my last name is spelled MISH, and every time when someone has to read it for the first time, they want to make it complicated.

KATRINA MADEWELL: What do they say? Mesh?

DARRIN T. MISH: Meash is the most common mispronunciation. No, there’s no “e” in there. I can understand how an “i” can make that sound, but it’s plain ol’ Mish.

KATRINA MADEWELL: People mess up Madewell. It’s about as simple as you can get.

DARRIN T. MISH: Like a Maddi-well?

KATRINA MADEWELL: Mad-well, Maiden-wheel, you name it.

DARRIN T. MISH: I might have called you Madwell. Sometimes you’re mad.

KATRINA MADEWELL: I don’t think you did. Usually when I introduce myself and I want someone to remember my name. It’s Katrina, like the hurricane, Madewell like something made well.

FLOYD MAYWEATHER’S TAX PROBLEM

DARRIN T. MISH: Gotcha. We need to get back to the Floyd Mayweather situation. Floyd Mayweather, boxer, is going to fight MacGregor pretty soon. Mr. Floyd Mayweather has some problems with the IRS. He owes about $29 million to the IRS. He recently got a tax lien released. A lot of people want to know what that’s about. Why do they come down on me when I owe $9,000 and Floyd Mayweather owes them $29 million and they release his tax lien?

It’s not exactly as it seems. The tax lien that’s been filed against Mr. Mayweather is for $3.3 million, it was recently released because he paid it off. So, yeah, it got released. That makes sense, right? If you have a lien or judgment and it gets paid off, it gets removed or at least it gets released and that’s what happened.

KATRINA MADEWELL: I bet he wished his statute of limitations was up.

DARRIN T. MISH: Yeah, that’s for sure. I’m sure he does. He’s still going to owe the IRS whatever, $29 million minus $3.3 million is. A lot of people are like, Darrin, even I can do that math. Except penalties and interest are accruing at a rapid pace.

KATRINA MADEWELL: You can’t get that percentage at the bank right now.

DARRIN T. MISH: The IRS is really tagging the guy.

KATRINA MADEWELL: I think their penalties and interest should have to move with prime.

DARRIN T. MISH: It does. The penalties don’t, but the interest rate does. Right now the interest rate the IRS is charging you is 3%, which sounds great, except for it’s compounded daily with penalties.

KATRINA MADEWELL: It’s not simple interest, it’s compound interest. Huge difference.

DARRIN T. MISH: During my 18-year career of representing clients with tax problems, I’ve seen that rate as high as 12%, compounded daily. That’s crazy right there.

KATRINA MADEWELL: When I started in the industry, the rates were 12%, conventional money as in the 12’s.

DARRIN T. MISH: Which is great compared to the 70’s when it was 19%.

KATRINA MADEWELL: For sure. They probably never thought they’d see the day where it’s 4’s. Should we jump in and answer a couple of questions? One of them we got from Bill, I’m not sure I understand the question, but you may. It says how can I recognize an abusive tax avoidance transaction?

DARRIN T. MISH: That’s a good question. Abusive tax avoidance transaction, also known as ATAT is an IRS abbreviation for tax protestors. The IRS is not allowed to call people tax protestors because I don’t know, they decided it’s not polite or politically correct. So they renamed them abusive tax and avoidance transactions. How do you avoid them? I’m going to give you the short answer. If it looks too good to be true, it is. If you hear an argument, and I’m going to offend somebody, I’m sure, if you see an argument that the IRS is a private corporation, has no right to collect taxes, does that make sense? Does that sound too good to be true? It does. If you see an argument that the amendment to the Constitution that allowed the income tax if you see arguments that it was never ratified and it sounds too good to be true, it is.

KATRINA MADEWELL: When everybody is paying taxes.

DARRIN T. MISH: I don’t want anyone to misunderstand me. Let’s just assume for a second that those are legal arguments that have merit. I’m just going to grant you that. As a practical matter, a federal judge is never going to overturn the income tax system in America. it’s just not going to happen.

KATRINA MADEWELL: It makes America.

DARRIN T. MISH: If that issue went to the supreme court of the United States, they are not going to overturn the income tax. The mayhem and chaos that would follow would basically cause anarchy in our country, there are some people that want it I guess, but most people don’t want anymore anarchy than we’re currently going through.

KATRINA MADEWELL: We’ve had enough.

DARRIN T. MISH: I don’t see it as a practical thing. I’ve been offered many times throughout the years, the opportunity to go overturn the IRS tax system and I’ve chosen not to….

KATRINA MADEWELL: That’s not my gig.

(Train Wreck Noise)

TRAIN WRECK OF THE WEEK

DARRIN T. MISH: I almost let the time run down for the IRS Train Wreck of the week, so I’m going to have to go fast. This was a cool case, I represented a gentleman who is a senior citizen, he owed the IRS about $89,000 in 1040 income tax. We had a problem, though. When I was talking to him, he says, well, I have very low income but I have free and clear condo worth more than $89,000. It’s like, oh, that’s not good. In theory, he has the money to pay the taxes if he just sold the condo.

We took advantage of a special program within the offer in compromise program called effective tax administration. We don’t talk about this much on the show, but the ETA offers where the taxpayer could theoretically afford to pa y, but it would be unfair to cause them to do so. I’ve filed a number of these lately and I keep winning them. We were able to get this offer to go through for $2,000. He owed $89,000, he is going to pay the IRS $2,000 to take care of this tax problem.

I really like it because when you’re in your retirement years, you shouldn’t have to worry about the IRS breathing down your neck.

KATRINA MADEWELL: What’s the likelihood that they’ll make you sell your primary residence?

DARRIN T. MISH: It’s not super likely. Unless you’re one of these ATAT people, they might make you sell your primary residence, this is a common misconception, people in Florida think we have an unlimited homestead, they can’t do that. Yes, they can because of the supremacy clause of the U.S. Constitution says federal law supersedes state law. They can take your primary residence, there are some extra hoops they have to jump through. If they want to do it, they can do it. There isn’t a lot you can do to stop them. but, they don’t do it that often.

KATRINA MADEWELL: That’s bad PR for them.

DARRIN T. MISH: In the few cases where they have threatened to do it to a taxpayer who was not an ATAT kind of person, went to some of my friends in the media and they went and did news stories and it disappeared. That’s one of the things we do. We don’t have to do it a lot because the IRS is pretty reasonable when it comes to primary residences. They don’t want your house, they want some money.

KATRINA MADEWELL: They want your money, they want your attention.

DARRIN T. MISH: That’s for sure. It’s been a good show today, I enjoyed it.

KATRINA MADEWELL: Thank you to the ones that called in and commented and said you enjoyed the show, we appreciate that. I know the podcasters, not so much, they don’t love it, they want us to get straight to the point. Live radio, you have to have fun.

DARRIN T. MISH: It makes it worth the drive here once a week to know I’m going to hang out with my friends on the air and off the air and talk about tax problem stuff and what you can do if you have those problems.

KATRINA MADEWELL: Make sure you tune in tomorrow for Tampa Home Talk. We have a special guest, Mr. Chris Hogan is going to be joining us talking about their upcoming seminar. This is the IRS Solution Attorney show. You can get Darrin at 888-GET-MISH.

DARRIN T. MISH: 888-438-6474. For today, we’re out.

 

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