What You Need to Know About Filing Past Due Tax Returns

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DARRIN T. MISH:  Good morning and welcome to the IRS Solution Attorney show. I am the IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL:  I’m your co-host, Katrina Madewell. Welcome to the show. Today is a delightful Thursday morning. Isn’t it now Pat?  He’s going to be in one chipper mood today.

PAT GEORGE:  Yes, it is. Did I tell you that I had a hamburger yesterday?

KATRINA MADEWELL:  You told us all about the hamburger. I thought you were going to tell me that Roxanne Wilder went into labor, but that was not the story.

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PAT GEORGE:  I’ll tell you, there will be a baby in about a week and a half at the latest. So, yeah it could happen any minute, any day.

KATRINA MADEWELL:  Roxanne is never in here with us. She does so much stuff behind the scenes. She is the girl behind the magic. You don’t know this unless we don’t stream live, but every occasionally, there is a pre-recorded show in there, and she fixes it all and makes it work.

PAT GEORGE:  She’s our girl Monday, Tuesday, Wednesday, Thursday, and Friday.

DARRIN T. MISH:  Unlike Pat, Roxanne does not have a face for radio.

KATRINA MADEWELL:  Yes Roxanne is beautiful. She’s even more beautiful than her voice, which is not always the case in the radio world.

DARRIN T. MISH:  And a kind heart as well.

KATRINA MADEWELL:  Yes.

PAT GEORGE:  I hope she is listening to this.

KATRINA MADEWELL:  She is. She always listens to us.

DARRIN T. MISH:  She usually does.

KATRINA MADEWELL:  You know we were talking about Beasley a couple of weeks ago, and I was saying how much better I like this station than the other place that I was. She chimed in and said thanks for the kind words for Beasley. When I left here last week I went to the other studio where I used to be I was a guest on someone else’s show.

PAT GEORGE:  We saw that.

KATRINA MADEWELL:  I know you saw it. I told the person hosting the show that you are not going to be allowed to mention Beasley or the other station or anything like they will not let that happen. What does he do? He goes, no, it’s my show I can do whatever I want, I’m going to do it. Sure enough and it was a pre-recorded show it was not live.

We get half way through the show there is a cigar guy there, and some alcohol and all this stuff and one of the big producers comes in and says hey we are going to have to edit that show. I’m just laughing. I almost fell out of the chair going told you so.

DARRIN T. MISH:  We have to pretend that there are no other radio companies on Earth.

KATRINA MADEWELL:  Well there are some that are just…how do you say this Pat there’s some that are a little bit more full of themselves.

PAT GEORGE:  Everybody has their individual personality. That’s how you say it.

KATRINA MADEWELL:  It’s not even that, it’s just the company as a whole just I don’t know…

PAT GEORGE:  Some are just like distant relatives and others are like family.

KATRINA MADEWELL:  To give you an idea on my last show when I was there because I had done a lot of pre-recorded radio it was live and there is a small delay. Anything about radio was it 4 seconds, 5 seconds something like that?

PAT GEORGE:  4-7.

KATRINA MADEWELL:  So that’s in case somebody freaks out and curses on the air, Pat can dump it, we can dump it, we can keep those FCC violations away. He said, don’t even think about saying where you are going or what you are doing because I will have it dumped out so fast and I said don’t worry I won’t. But that’s the point, know what I mean?

PAT GEORGE:  Yeah and some people are just angry when you say goodbye to them.

DARRIN T. MISH:  So, moving right along today’s topic of the show is The IRS Solution Attorney show.

PAT GEORGE:  Yeah, there we go.

KATRINA MADEWELL:  Darrin we should have hung out. It would have been so much fun.

DARRIN T. MISH:  Why Now is The Best Time to File Your Past Due Tax Returns if you haven’t filed in years.

KATRINA MADEWELL:  Um, we are almost late well not quite late yet, it’s April 13th.

DARRIN T. MISH:  The filing deadline this year is April 18th it’s Tuesday.

KATRINA MADEWELL:  You’ve got five more days…

DARRIN T. MISH:  Monday is some holiday or something. I’m not exactly sure what is going on. It might be the Easter holiday since Sunday is Easter and Federal employees don’t work on Sunday, typically, so they get Monday off and so we’ve got one extra day, two extra days, three extra days.

KATRINA MADEWELL:  How did that happen?

DARRIN T. MISH:  It’s just one of those things this year is April 18th.

KATRINA MADEWELL:  Ok I get the Monday thing, but I don’t know how Tuesday and Wednesday roll into that it’s ok.

DARRIN T. MISH:  No it’s not Wednesday it’s Tuesday.

KATRINA MADEWELL:  Oh ok, ok.

DARRIN T. MISH:  It’s Tuesday.

KATRINA MADEWELL:  I’m not looking at the calendar, so thanks for keeping me straight. Well like Darrin said this is the IRS Solution Attorney show. He’s your host I’m your co-host, Katrina Madewell. We are glad you are here.

DARRIN T. MISH:  Yeah, we got a little sidetracked there talking about radio politics.

PAT GEORGE:  Little.

KATRINA MADEWELL:  We’ve got to have fun we can’t just talk about IRS and tax stuff all the time and not have any fun.

DARRIN T. MISH:  Well I agree with that. Think about what I talk about all the time.

KATRINA MADEWELL:  All IRS stuff makes Darrin a very dull boy.

PAT GEORGE:  Darrin’s very stressed. He was talking to me earlier that he is very stressed this week because everybody is coming in from every angle. They all want answers now at the last minute.

DARRIN T. MISH:  Here’s a funny thing about that ok and its true I am a little bit more stressed than usual, and it’s because of the filing deadline. Now here is the phenomenon that blows my mind every year.

KATRINA MADEWELL:  Wait why does the filing deadline stress you out? You are a Tampa tax attorney, not a CPA.

PAT GEORGE:  He is going to tell you.

DARRIN T. MISH:  We do some current year returns but here is the phenomenon that does flip me out a little bit. I represent primarily people who haven’t filed a tax return in years ok, six years, ten years; my record is like 45 years the guy hadn’t filed. But, right around this time of year, even the non-filers flip out.

KATRINA MADEWELL:  People go oops I should file my returns.

DARRIN T. MISH:  Yeah, the pressure, imagine they are a pressure cooker, and the pressure just builds and builds and builds, and eventually the lid just pops off and explodes.

KATRINA MADEWELL:  That pressure cooker has been brewing for a couple of years.

DARRIN T. MISH:  So I try to convince people just to relax this is going to be ok. I’ve done this a few times before; it’s going to be ok…

KATRINA MADEWELL:  It’s just such a hot mess. When you think about some people that are your typical client, and they haven’t filed for years, and it’s still just so, we talk about it all the time it’s no big deal because you fix this all the time, but it’s pretty anxiety ridden for most people.

DARRIN T. MISH:  Yeah, that is totally true. If you haven’t filed for years and you are one of these people who have a soul and a conscience you know, and you are worried about it, and you feel guilty about it then it is a pressure packed anxiety filled situation and this is the time of year when it’s the highest. Here is another part that’s interesting about the phenomenon is April 19th.

KATRINA MADEWELL:  Does it get worse or slow down?

DARRIN T. MISH:  No, it will, all the steam will escape and they will go back to being less stressed about it.

KATRINA MADEWELL:  It goes away. Like the one day is not going to make a difference if the IRS sends a letter.

DARRIN T. MISH:  Well, ok, let’s say the late filing fee is $500 give or take and these are people who haven’t filed a return in 6 years, ten years, 15 years whatever so they are going to owe six figures, so what difference does the $500 make….

KATRINA MADEWELL:  In the grand scheme of things I don’t think that matters.

DARRIN T. MISH:  Exactly, especially if the goal and the strategy are we are going to file an offer in compromise make a deal with the IRS and wipe it out anyway.

KATRINA MADEWELL: Let me tell you how you can get us so you can listen to us obviously here on 1010 AM. We are also on 103.1 FM, and if you have HD radio in your car it’s 99.5 HD number 2, and Facebook Live so we love to stream…

DARRIN T. MISH:  Facebook Live,  The IRS Solution Attorney podcast, and the IRS Solution Attorney app.

KATRINA MADEWELL:  And if you have an IRS problem or you know someone that does you really should call Darrin at 888-get-mish what’s that number?

DARRIN T. MISH:  That’s 888-get-mish, 888-438-6474.

KATRINA MADEWELL:  And so Kristy, one of our Facebook live viewers, is talking about how much she loves your voice and she filed yesterday. Good job, Kristy.

DARRIN T. MISH:  Congratulations, Kristy. Kristy is cool she’s, one of her side gigs is she’s a Marilyn Monroe impersonator, and she is beautiful, so it works out great for her.

KATRINA MADEWELL:  Cool.

DARRIN T. MISH:  Let’s get back to the topic of the show…

KATRINA MADEWELL:  Let’s talk about it.

DARRIN T. MISH:  Now is the best time to file past due tax returns.

KATRINA MADEWELL:  Can I make one more point?

DARRIN T. MISH:  Yeah sure…

KATRINA MADEWELL:  Now is the right time to file the past due tax returns but I just want to say that if you are going to hire Darrin, do what you are supposed to do, he can’t fix it if you don’t do anything. It’s kind of like somebody coming to me going, yep I want to buy a house, yep, I need a loan, but I don’t want to provide any return. I don’t know I don’t think I’m going to look any properties.

PAT GEORGE:  How much coffee have you had today?

KATRINA MADEWELL:  One cup. We could probably do it but you are going to have to still sign some paperwork at some point and do your part. You have to show up you can’t just say here’s some money could you make it go away.

DARRIN T. MISH:  Ok, so the reason that Katrina made that comment is that I was maybe venting just a tiny bit.

KATRINA MADEWELL:  Well, I’m just presuming that most of the crazies come in around this time, I’m just saying they might.

DARRIN T. MISH:  I was venting just a tiny bit because there was a gentleman who hired me in April of 2015, not 17 not 16 but…

KATRINA MADEWELL: Only 2 years ago. It was still April.

DARRIN T. MISH:  2015.

KATRINA MADEWELL:  My guess it was pre-15.

DARRIN T. MISH:  Yeah it was. He was a chronic non-filer and he hasn’t filed a return in 10-12 years or something like that. He paid me a fee, kind of a low fee and we’ve been communicating with him regularly for 2 years now to try to get him to assist us in assisting him. He just refuses to do so. He just needs more time. I would just say call in if you have an opinion on this, what’s the phone number?  It’s 888-404-1010, 888-404-1010. Is two years long enough to file a tax return?

KATRINA MADEWELL:  Yeah, I think that’s a great idea I think we should open it up to the person listening and ask them if you retained an attorney two years ago and they ask you for some stuff but you didn’t do it and now they are asking for a refund, what do you think?  You think that’s fair even though there are multiple correspondences asking them to do their part? I know you-you would be willing to jump in and help still but they have to do their part.

DARRIN T. MISH:  Yeah, my thing is that I’m not doing this client any service. This happens quite a bit, I mean more than I like. I’m not doing that client or that prospect any service if I don’t apply some pressure for them to do their part so that we can ultimately resolve the problem. All he’s done is kick this can down the road another two years. He’s not paying his taxes now and it’s not going, it’s not helping him to say, oh, yes you can have another 6 months, or you can have another year or another 5 years even.

KATRINA MADEWELL:  Here’s the thing Darrin and it’s kind of like a good coach, you might not always like what they tell you to do but a good coach will kick you in the you-know-what and make you do it.

DARRIN T. MISH:  If you have a personal trainer and he’s your favorite person in the world and you want to cuddle up with him…

KATRINA MADEWELL:  Not a good trainer.

DARRIN T. MISH:  Probably not the best trainer for you. You kind of want to hate the guy. I always hated my athletic coaches. I mean they were horrible.

KATRINA MADEWELL:  I get to the gym and they are telling me that we are doing ropes, oh I don’t want to do ropes, I don’t care you are doing ropes, alright fine I will do ropes. Alright, you are listening to the IRS Solution Attorney show we will 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 hanging around through the break, we appreciate that.

PAT GEORGE:  You are going to like this I just opened up my Facebook and one of my friends said, short day at work today then I am going to what I have been putting off…my taxes.

KATRINA MADEWELL:  Oh there you go, Pat George, talking about one of his Facebookers saying…

DARRIN T. MISH:  That is dedication you are going to have a short day at work and then you are going to go and do your taxes, especially when the weather has been as nice as it is.

KATRINA MADEWELL:  I wonder how many people have the day off on Good Friday and that is their Tax Day?

PAT GEORGE:  Oh that would be bad.

KATRINA MADEWELL:  The tax guy must hate you?

DARRIN T. MISH:  Well once you are in mourning you might as well stay in mourning.

KATRINA MADEWELL:  I guess. I don’t know.

DARRIN T. MISH:  Anyway today’s show is all about why now it the best time to file your past due tax returns.

KATRINA MADEWELL:  What you missed during the break is we were playing with all the lights in the studio so you can’t see it obviously. I will describe it for you but watching on Facebook there was this big glare off Darrin’s head. I said let me turn these lights down to see if it is any better and it does look better but it is super dark in the studio.

PAT GEORGE:  Let me call the makeup department, hold on.

KATRINA MADEWELL:  Yes, please who is that send them down.

DARRIN T. MISH:  Ok so we are going to talk about why now is the best time.

KATRINA MADEWELL:  We are let’s do it.

DARRIN T. MISH:  So let’s just go with some simple points first. If you are behind on one year or maybe even 2 years then ultimately the solution is going to be full pay, you think you are going to owe a couple of grand or something.

KATRINA MADEWELL:  So do you think the biggest reason why people don’t file is because they do not have the money to pay or they are not organized enough to get everything to the accountant to file?  What do you think the number one…?

DARRIN T. MISH:  There are two camps, number one camp is I just, I’m self-employed and I do not have any records and this is just too overwhelming and when I think about it, my heart starts to race and I really cannot deal with it. So, I get a fair number of people who have, I’m not judging but they have emotional problems wrapped around doing the taxes and for those people what we have to do is to get them caught up and then we have to devise some simple system for them so they do not have to think about it too much and it is surprisingly easy to do that to set that up…

KATRINA MADEWELL:  Yes, get a bookkeeper.

DARRIN T. MISH:  Or you can use QuickBooks online and you can attach that to your bank account and then somebody will have to look at it at the end of the year and make sure everything is categorized.

KATRINA MADEWELL:  Now everything is so automatic, everything can be pulled from your bank statements, it is simple because it ends up memorizing transactions and all that sort of stuff.

DARRIN T. MISH:  If you use a lot of cash in your business and you have no records then good luck with that I don’t think…

KATRINA MADEWELL:  You are going to need a bookkeeper.

DARRIN T. MISH:  You are going to need a bookkeeper and you are going to also need to keep those receipts. The second camp of people or the people who just go, ok, I know that I am going to owe and so I can’t deal with it now and I will just wait until I have enough money to pay and then I will deal with it then and…

KATRINA MADEWELL:  Probably the self-employed crowd.

DARRIN T. MISH:  Not always, sometimes it’s early withdrawal from retirement accounts and things like that.  One of my favorites/non-favorite kind of cases where that person who is the wage earner and decided along the line to go ahead and claim exempt on their W-4 or 99 or something. I had a case recently that I consulted on where the person somehow wrote exempt on their W-4 and claimed to be exempt from all Social Security withholding as well. Not just the income tax but the Social Security withholding as well…

KATRINA MADEWELL:  I guess that is possible.

DARRIN T. MISH:  The employer/payroll company, can’t remember which, went along that and so this guy was working at this job for 2 or 3 years with no Social Security withholding. Not to mention no tax withholding but no Social Security withholding as well. We went ahead and we fixed that and we muddled through somehow. So those are the two types of people, the people that just get overwhelmed when they think about it and then you have the people who know that they are going to owe money and they just can’t deal with the fact. I think they both have good intentions…

KATRINA MADEWELL:  Which one do you think you see more of?

DARRIN T. MISH:  I probably see more people that are just overwhelmed.

KATRINA MADEWELL:  Owe the money.

DARRIN T. MISH:  They just can’t process, or they just can’t deal with it.

KATRINA MADEWELL:  I would have guessed the total opposite.

DARRIN T. MISH:  So I was thinking about this on the way to work today that humans would be better off if we all focus on improvement. That one word kept coming up in my head, it was an improvement. If we all focused on improving any aspect of our lives, not all of them just one aspect if we all focus on improving society in the world, in general, would be better off. I know that is kind of deep for the show today…

KATRINA MADEWELL:  No, but it’s pretty spot on.

DARRIN T. MISH:  If you do have missing tax returns and it is kind of overwhelming, what’s the first step?  The first step is to commit to resolving the problem. Just decide I’m going to deal with this one way or the other. Either you are going to do it yourself, which is probably not ever going to happen, or I’m going to seek out some help and get some help getting it done. I was talking to a high C level kind of guy yesterday, good earner kind of well-known and…

KATRINA MADEWELL:  Explain what you mean when you say high C level earner.

DARRIN T. MISH:  Ok, so like a CEO of a company, big company and he comes to me because he has this problem well the problem is he hasn’t filed tax returns in years. Again, it’s April, so this kind of thing is common. He went through all the, hey, this is all my responsibility and I take full responsibility that kind of thing.

I like to hear that because then you are ultimately responsible if you are a non-filer, it is on you. You can’t delegate that responsibility it’s on you if you haven’t filed. But then the more he talked, the more I was thinking we have to get these old returns done and then we have to set up some kind of simple system so that you don’t have to worry about this.

When you are earning a half million bucks a year or something really is that the best use of your time to be worried about keeping every receipt and making sure every receipt goes into QuickBooks and that kind of thing?

KATRINA MADEWELL:  The reality of it is he probably has a secretary that can help with that stuff?

DARRIN T. MISH:  Yeah except for neither one, she was there in the room with us and she is a great gal and all that and certainly willing to help, but the problem is neither one of them really had a clue how to set up the rudimentary system. That is why I’m hoping I can engage in that case because believe it or not I am more interested in the improvement of his life then I am in the feat.

KATRINA MADEWELL:  Fixing the problem versus just taking the money for the solution.

DARRIN T. MISH:  Because ultimately there is enough money in the world, in my opinion, I believe in abundance I think that there is plenty if you just apply yourself. For me, at this stage in my life and my career, it’s not about the fee as much as it is in the self-satisfaction that I know that I helped another person with a big problem in their life.

KATRINA MADEWELL:  You are one of the only businesses I know that does not like repeat business.

DARRIN T. MISH:  Yeah, I will take it but it’s not…

KATRINA MADEWELL:  Which is a little cliché because everybody wants repeat business.

DARRIN T. MISH:  I will take it, but I don’t feel great if I’ve helped somebody through a big life problem and they owed you know 200 grand to the IRS and I get it settled and then they come back 3 years later and they say I did it again. I have one right now and it’s, I like the guy a lot but it’s a little disappointing, we didn’t talk about this enough? Really what it was is he just hadn’t committed.

KATRINA MADEWELL:  Ok, got a plan, create a system and then sell that system especially if they are a repeat customer to get them on track.

DARRIN T. MISH:  Well that is a great plan.

KATRINA MADEWELL:  Because you just said they don’t have the rudimentary system. That’s what they need, isn’t that what entrepreneurship is there is a gap in the market somewhere and somebody fills that gap?

DARRIN T. MISH:  Yes actually I call it need but yes.

KATRINA MADEWELL:  I’m sorry yes, I ramble and I know what I’m saying and it didn’t come out right, but that’s exactly what I am saying.

AVOID ADDITIONAL INTEREST AND PENALTIES

DARRIN T. MISH:  Ok, so let’s get back to what we are talking about here. Now is the best time because if you have a couple of years that are unfiled you need to get them done so that you can avoid additional interest and penalties. You need to calculate the number. What’s the number? Then you need to try and deal with the situation.

If it’s going to be full pay just write a check and pay it off that is one thing that will minimize the cost and if the other is well I’m going to enter into an installment agreement, a payment plan well then you are going to want to do that because again you are going to minimize interest and penalties by entering into the installment agreement on the early side of the process. The next thing would be…

KATRINA MADEWELL:  What’s crazy to me, Darrin, and I think we should bring this up because I don’t think we talk about it enough and I think the last time we discussed this you said they were self-employed or at one point they owed tax money and they just never filed tax returns. It might be 10,15,20 years later and they may have been a W-2 wage earner for years and they are missing all those refunds.

DARRIN T. MISH:  I was going to save this story for a little bit later in the show but there was a gentleman that came in yesterday….

KATRINA MADEWELL:  I didn’t hijack your story.

DARRIN T. MISH:  Beautiful guy, wonderful guy. Been a wage earner for the last, his whole life. I forget why he didn’t file a tax return…

KATRINA MADEWELL:  Something silly.

DARRIN T. MISH:  I forget why he didn’t but it was like he was going to owe a little bit of money. It was like your scenario he is going to owe just a little bit of money and he didn’t file and he is deathly, deathly afraid of the IRS bad. So, he came in…

KATRINA MADEWELL:  Yet, they owe him money.

DARRIN T. MISH:  He came in and we devised a plan and we are going to work together to get this thing resolved. Quickly too, I believe. The saddest thing is that for this particular gentleman this has been going on for 9 years is that he has been worried about it and anxious, severely anxious for 9 years.

KATRINA MADEWELL:  For a decade.

DARRIN T. MISH:  Nine years out of your life I mean listen, folks, we only get what 60,70,80 years that’s it so to waste almost 10 of those years on worrying about the IRS…

KATRINA MADEWELL:  If you are Pat George then you drank a lot of Tequila.

PAT GEORGE:  60 or 70?  Why don’t you try 90?

DARRIN T. MISH:  Ok, ok well I don’t know. I have my qualms about living to 90. It seems like kind of old.

PAT GEORGE:  Yeah, you could be right about that because I’m 62 and I know how I feel right now.

KATRINA MADEWELL:  You say that now until you get there and you are like ugg.

PAT GEORGE:  Oh, you are right.

DARRIN T. MISH:  Another thing that people don’t realize why now is the best time to file a tax return especially now April 13th.

KATRINA MADEWELL:  Oh you are going to find out why…

DARRIN T. MISH:  I did not do that on purpose.

PAT GEORGE:  I did.

KATRINA MADEWELL:  It was just timing. You are going to have to find out after the break so when we come back…

DARRIN T. MISH:  This is a big one too.

KATRINA MADEWELL:  Darrin’s going to tell you so stick around why right now is the opportune time to get those tax returns filed. You can get Darrin at his off-air number at 888-get-mish again that number is 888-GET-MISH.

DARRIN T. MISH:  888-438-6474.

KATRINA MADEWELL:  You are listening to the IRS Solution Attorney show. That’s Mr. Darrin Mish over there and I’m your co-host, Katrina Madewell. Pat George back there producing the show and we are streaming on Facebook. You can catch Darrin on Twitter @darrin_mish and on Facebook and across the web. Catch the podcast if you missed any part of the show at getirshelp.com. We will be back in just 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 thanks for hanging with us through the break we are glad you are back.

DARRIN T. MISH:  Today’s show is all about…

KATRINA MADEWELL:  If you are waiting you had a special little tip. Go ahead.

DARRIN T. MISH:  Ok, today’s show just to recap for a little bit.

KATRINA MADEWELL:  During the Facebook live we were talking about this chicken that Darrin has which is not, I will say it quick, quick, quick but he has a chicken that acts like a dog and when is wife Heather calls the chicken the chicken comes.

DARRIN T. MISH:  And the back story behind that is that we are a suburban couple who moved out to the country and we now live on a 31-acre farm and we have chickens, pigs, and ducks and getting ready to get some cattle. I will say that we are going to have cattle within 6 months so I will be a cowboy finally.

KATRINA MADEWELL:  He is not your average attorney.

DARRIN T. MISH:  Every boy’s dream.

PAT GEORGE:  2017 version of Green Acres.

KATRINA MADEWELL:  Yeah, he is not your city slicker.

YOU COULD FORFEIT YOUR REFUNDS

DARRIN T. MISH:  Today’s show is all about why now is the best time to file your past due tax returns and before the break I kind of accidentally did a little teaser on why I think the best reason is and that is if you have a refund coming to you and you don’t file that return within three years then you don’t get the refund and you don’t even get credit or an offset for that refund if you owe back taxes.

KATRINA MADEWELL:  Which is exactly what we were talking about with the person that didn’t file a tax return 15 years ago because they owed a small balance. Now they’ve been missing out on these refunds and now they can’t get them.

DARRIN T. MISH:  Over the years I’ve seen some high earners that kind of fell into that trap or was too much to deal with, or they were too busy, or whatever and some of them had $15,000 refunds that they just forfeited.

KATRINA MADEWELL:  Don’t you wish you could go get them, I would love to go get those people because you don’t know what you don’t know.

DARRIN T. MISH:  We need to gather them up and hug them and fix them. Yeah, it’s one of those things that’s one of the reasons why we do this show and we do this kind of outreach is so that you know if you are more than 3 years late on a refund return that you don’t get the refund and you don’t even get credit for the refund.

KATRINA MADEWELL:  Share this show because you likely know someone at your job that you don’t even know they haven’t filed tax returns. If you casually mention that you could be doing them a favor because they could be missing out on all their refunds.

DARRIN T. MISH:  So with the tax filing deadline coming up then you are going to need to file that before the deadline because if you don’t then you are going to forfeit that refund or the credit for that refund if you have a balance due. It’s kind of sad to me. Now that means that I’ve seen lots of mistakes over the years with the IRS where they have accidentally cut a check on a refund that is more than three years old. I’ve seen them offset it against an existing debt but it’s not something that you can count on. I believe if they inadvertently issue you that refund check they could come back for that check with interest.

KATRINA MADEWELL:  What about with this day and age where they do the automatic deposit?  Can they swoop back in and take it?

DARRIN T. MISH:  That’s a good question I don’t think they can because it’s not the same to deposit money as to debit money, thank goodness.

KATRINA MADEWELL:  I mean most people think that they can just swoop in and take it I imagine but I don’t think they can.

YOU COULD BE MISSING OUT ON EARNED INCOME CREDIT

DARRIN T. MISH:  Now there is another reason why you should file past due tax return now and it’s related to the refund issue and that is if you are entitled to an Earned Income Credit, so you are very low income and maybe you have some kids and there are people who get the Earned Income Tax Credit that get more money back in the form of a refund then they ever paid in.

It’s basically Federal Assistance if you are missing tax returns in your past and the recent past say the last SIX years and you file an Earned Income Credit refund kind of return you are not going to get that refund if you have some missing returns. You are going to want to make sure you get caught up.

The IRS and I have said this time and again on the show, the IRS is more concerned about getting you the taxpayer back into the system than they are in collecting the money that you didn’t pay for the past unfiled tax returns. Now they are concerned about getting the past due money they are but they are more concerned…

KATRINA MADEWELL:  Only so far back.

DARRIN T. MISH:  Yeah, they are more concerned with you getting back into the system so that you do not perpetuate that behavior…

KATRINA MADEWELL:  What’s that statute of limitations again Darrin if they haven’t collected the money and they owe it how long is that?

DARRIN T. MISH:  The statute of limitations for collection of past due income taxes is 10 years from the date of the assessment of the tax so it’s not as much as…

KATRINA MADEWELL:  Isn’t that interesting that they can go back 10 years for owed money, but if they owe you money it’s only three? Isn’t that interesting?

DARRIN T. MISH:  Yeah well that is how Congress works.

KATRINA MADEWELL:  I know, I’m just saying.

DARRIN T. MISH:  In the 80’s the statute of limitations for the collection was only six years and I’m not sure how that really came about but they got it extended to 10 years.

KATRINA MADEWELL:  Of course it did.

DARRIN T. MISH:  Well but then on the other flip side of that coin is I think it’s kind of cool that there is a statute of limitation for collection at all.

KATRINA MADEWELL:  There should be yes.

DARRIN T. MISH:  Most people don’t know that.

KATRINA MADEWELL:  But I think the same should apply for a refund is all I’m saying, if it’s good that way it should be good the other way that’s all.

DARRIN T. MISH:  Ok, so here’s the deal, call your Congressman and your Senators and pitch the idea. If there is tax reform coming up that would be a great place to put it.

KATRINA MADEWELL:  Who’s the go-to person?

DARRIN T. MISH:  Probably Rand Paul would probably be my choice for, he’s a Kentucky Senator, not a Florida Senator, Bill Nelson ok, whatever. Marco Rubio would be decent. The only reason I said whatever about Bill Nelson is he is Democrat he’s not going to be down with any tax reform except to raise taxes.

KATRINA MADEWELL:  I think everybody generally likes Rubio regardless of what your political party is most people like Rubio.

DARRIN T. MISH:  Or as Donald Trump calls him little Marco.

KATRINA MADEWELL:  Yeah well, I like him. I don’t follow politics very closely but I have been following him for a long time and his career and I like him. His ideas are just good.

DARRIN T. MISH:  He does seem to be a likable fellow.

KATRINA MADEWELL:  He is. He’s not your average politician.

DARRIN T. MISH:  Do remember the year he did the response to the State of the Union address and he had a bottle of water and he got thirsty.

KATRINA MADEWELL:  No.

DARRIN T. MISH:  He got thirsty a few minutes into his response, he was super stressed and he started drinking water during the speech and it was really kind of funny. But he wasn’t just drinking the water he was guzzling the water.

KATRINA MADEWELL:  Well it’s probably better then him choking up and coughing everywhere.

PROTECT YOUR SOCIAL SECURITY BENEFITS

DARRIN T. MISH:  Yeah that’s probably true. So, the next reason why now is the best time to file your past due tax returns would be, you know to protect your Social Security benefits.

KATRINA MADEWELL:  The ones that might not even be there?  Those benefits?

DARRIN T. MISH:  Well they are there now.

KATRINA MADEWELL:  They are there now if you are Pat’s age you might get them but if you are my age you might not.

DARRIN T. MISH:  There are two reasons why I make this comment about the Social Security benefits:  Number 1 if you are self-employed and you are not filing tax returns then they are not giving you credit for the money that you are paying into the Social Security system and so ultimately your Social Security check will be smaller than if you have been paying your taxes and filing your returns and what not.

KATRINA MADEWELL:  It’s supposed to be a forced retirement saving isn’t it, it’s not a very good one but that’s the idea.

DARRIN T. MISH:  That was the idea back in the 30’s. Short segue about that it was when Social Security was passed the average life span was 62 and so to offer the benefits at age 62 really what the politicians were thinking is well, most people will be on Social Security for a year or two and we will basically profit from this whole deal.

KATRINA MADEWELL:  I’m sure that is how it started.

DARRIN T. MISH:  And now with improving medicine and health care and all of that, I think the average lifespan in America is around 76 or so and so your average person’s Social Security is around 11-15 years.

KATRINA MADEWELL:  Plus don’t forget disability people are going earlier than expected. None of that was around back then.

DARRIN T. MISH:  So now that is why Social Security is having problems is the math just…

KATRINA MADEWELL:  It was never revamped.

DARRIN T. MISH:  The math just doesn’t work and they need to fix that and hopefully, it will get fixed so that people in the younger generation will have it. If it continues down the road that we are on it’s not going to be there.

KATRINA MADEWELL:  You know and if you listen to Dave Ramsey it’s, it’s just not going to be enough to live on.

DARRIN T. MISH:  Oh absolutely not. I mean that’s…

KATRINA MADEWELL:  It’s not.

DARRIN T. MISH:  And there are people who are unfortunately living on it and it’s sad.

KATRINA MADEWELL:  And I think it’s going to get smaller and that’s why I say that.

DARRIN T. MISH:  What will eventually happen is one of two things regarding Social Security either they will move the minimum retirement age up which would pretty much fix the problem or….

KATRINA MADEWELL:  But think about how crappy that is. You pay in all these years and you never get so much as a dollar from it, that’s just not right.

DARRIN T. MISH:  The second option is probably worse and what they will do is they will test it which basically means you will get less if you make more and that’s even more unfair to me than pushing back the retirement age.

KATRINA MADEWELL:  Yeah, it’s unfair but in the same token it really pushes people to be self-accountable and to save more and plan better. At least it should.

AVOID TROUBLE GETTING A LOAN

DARRIN T. MISH:  Another reason why you want to file your past due tax returns is because you are going to have a lot of trouble obtaining loans specifically real estate loans and…

KATRINA MADEWELL:  Oh without a doubt.

DARRIN T. MISH:  The gentleman that came in yesterday his motivation was he was supposed to close on a house tomorrow…

KATRINA MADEWELL:  Not doing it.

DARRIN T. MISH:  And when they got to the point in underwriting where they were they said ok we need to see your tax returns or we need you to fill out the 4506t to get your transcripts he was like frozen, deer in headlights…

KATRINA MADEWELL:  Freaked out.

DARRIN T. MISH:  I haven’t filed a tax return in a while. I don’t think he told them that.

KATRINA MADEWELL:  Well here is the deal, back in the day, pre-housing collapse, people could just give tax returns and they would not verify them unless you were in Miami-Dade or Broward County where the fraud rate is so high in the state they would verify those and still in many other parts of the country. They are not considered a high fraud area so they will have them sign a 45060 in the event of a random audit, but they are definitely not pulling tax transcripts in advance. But in Florida they are.

DARRIN T. MISH:  So, for the whole state?

KATRINA MADEWELL:  For the whole state they are. The whole state.

DARRIN T. MISH:  That’s great…

KATRINA MADEWELL:  And my background is in mortgage, so I remember and it never used to be at all then it was Miami-Dade Broward county and then it slowly moved its way up the state and they said nope there is just too much fraud.

DARRIN T. MISH:  What we are going to do for that particular gentleman is we are going to go ahead and get his transcripts from the IRS so that we can get the wage and income information for the missing years, he actually had his W-2’s with him in a folder then he said don’t you want this and I said nope…

KATRINA MADEWELL:  He was a wage earner?

DARRIN T. MISH:  Yeah he is a wage earner and I said nope I don’t want the W-2’s from you, no offense.

KATRINA MADEWELL:  He should be fine just got to file his taxes.

DARRIN T. MISH:  I’m going to get your information from the Government so that it all matches and then we are going to prepare your returns and we are going to file them and we still have a target closing on April 30th. I don’t know about I mean we can get our part done I don’t know if that will still happen but he’s, what I really liked about this gentleman was his motivation level was very high.

KATRINA MADEWELL:  Well yeah, his eye is on the prize. He is getting his house.

DARRIN T. MISH:  And this was the last piece in a whole bunch of various parts of his life that were kind of a mess and the credit was not good and all that.

KATRINA MADEWELL:  Speaking of the 4506T, I should just mention this because, for example, I told you I did my taxes, I was done early then I realized my accountant did not include my miles which are crazy, 3000 miles a month that got missed.

We added that back in and of course made the return better, but there are people that get that first copy of the return and then don’t save a second copy for some reason then they apply for a loan and let me tell you something if those numbers do not match even by $2.00 they will freak out like you are committing fraud just saying just so you know.

DARRIN T. MISH:  $2.00 worth of fraud. In breaking news, today there was $2.00 worth of fraud.

KATRINA MADEWELL:  It’s insane. But so, to my point, if the tax returns do not match they do not like that. Can the lay person get their tax transcripts?

DARRIN T. MISH:  Sure. There is an online way to get it I think it works as of yesterday it was working. You can just Google get transcripts IRS and the link will come up to the page and you can enter in your personal information into this website, including your adjusted gross income from last year or the year before and it will verify who you are and you can obtain your transcripts there. Now here is kind of the trick is, especially the kind of transcripts that I use, can you read them? Can you understand what is going on so…?

KATRINA MADEWELL: Likely not but you could make sure that they at least match what you are giving your lender so you don’t have any…

DARRIN T. MISH:  Oh for sure on the wage and income you can check those. If you need duplicate returns or you could match the tax return transcripts to a specific kind of transcript. That way you can make sure the lender has the same version that you have. I agree with that by the way, that if you’ve had modifications or versions of your tax return keep the last one. That’s it.

KATRINA MADEWELL:  And here’s the thing I think it’s something that you just don’t even think about. Like me, if I am knee deep in this like I am I wouldn’t think about that I would just keep rolling it would not be something that I would think about. Just like you said hey, Katrina, it was everyone the person that is listening you should be reviewing your tax return and what did I tell you I am telling you hey Darrin I still don’t really review the tax returns, I just give the tax guy everything and they file it. Anyway.

DARRIN T. MISH:  You can’t delegate that responsibility.

KATRINA MADEWELL:  I know. You are listening to the IRS Solution Attorney show we will be back in just a minute. Stick around.

(commercial break)

(She Thinks My Tractor’s Sexy playing)

PAT GEORGE:  By the way a nice special dedication here from Darrin to his wife.

DARRIN T. MISH:  That is a big shout out to Heather Mish out there in radio land.

KATRINA MADEWELL:  The Heather Mish.

DARRIN T. MISH:  From her husband, the IRS Solution Attorney, Darrin T. Mish.

KATRINA MADEWELL:  She’s very sweet she invited me to come and do CrossFit on your farm.

DARRIN T. MISH:  Well actually that is…

PAT GEORGE:  CrossFit on the farm is just cleaning the pasture.

DARRIN T. MISH:  CrossFit on the farm is a regular Saturday. Just the chores that need to get done.

KATRINA MADEWELL:  Well I’m working all day Saturday.

PAT GEORGE:  So you have your big tractor yet?

DARRIN T. MISH:  I don’t have a big tractor yet so if you sell tractors call into the show 888-404-1010, 888-404-1010. I expect a significant discount.

KATRINA MADEWELL:  You have a customer. Darrin wants to buy a tractor.

DARRIN T. MISH:  I didn’t tell you this last week because when the topic of chain saws came up months ago you kind of scoffed and you just did it again.

KATRINA MADEWELL:  I can’t help it, Darrin, I’m sorry.

DARRIN T. MISH:  So I want you to know that I have an enormous downed tree on my property and I think it was Saturday before last, I cleaned that sucker up. I worked on that thing for 8 hours and I had a nice big burn pile right by and for 8 hours I cut and burned, cut and burned.

KATRINA MADEWELL:  Alright. Heather where was the live video feed on that one? I want to see it.

DARRIN T. MISH:  Well ok well I will show you the…

KATRINA MADEWELL:  I just tease because he is always dressed to the nines. He has no cuff links on today but usually, he does. So, you can’t see him getting dirty but I’m sure he does.

DARRIN T. MISH:  So the topic of the show today is why now is the best time ever to file your past due tax return. We are running out of time here in the last segment and I have a great train wreck of the week this week.

KATRINA MADEWELL:  Ok, moving right along.

THE IRS WILL FILE YOUR TAX RETURNS FOR YOU

DARRIN T. MISH:  This is high on the list. If you don’t file your tax returns the IRS will eventually do that for you and that is not a pretty sight at all.

KATRINA MADEWELL:  We talked about that before so it’s going to be whatever income they have with no deductions.

DARRIN T. MISH:  What it’s called is a Substitute for Return or an SFR for short. So, when the IRS does a Substitute for Return what they do is they take that wage and income information that we were talking about on the transcripts and they just take that and they add up all the income and they multiply it by your tax rate and that equals your tax bill plus penalties and interest, significant penalties and interest. You get no exemptions, no deductions, you don’t get to claim your kids, you don’t get to claim your home interest, you can’t claim anything and so what happens is that SFR assessment is huge, it’s huge.

KATRINA MADEWELL:  I’m sure it is.

DARRIN T. MISH:  So the reason that it is a sad thing is then what happens is…

KATRINA MADEWELL:  Penalties and interest…

DARRIN T. MISH:  Since the tax is assessed then they have a tendency, strong tendency to come looking for their money and so that leads to liens…

KATRINA MADEWELL:  Like specifically when they file a Substitute for Return?

DARRIN T. MISH:  Yeah, and then they are coming looking for their money. That means they are going to file liens, they are going to do levies. They are going to seize your bank account they are going to seize your wages. Not in every case but this is very common. So, you are going to want to file those returns…

KATRINA MADEWELL:  Is it usually a lot of money is that why they file? Is there a threshold?

DARRIN T. MISH:  Yes, usually a lot of money. The computer can somehow tell if it’s going to be a refund you are not going to see a Substitute for Return period and that sort of makes sense. If the computer does the math and it’s not going to be real significant and there is not another long track record of non-compliance they are probably not going to do the SFR but usually we see significant balance. Now here is some good news. If the IRS prepares and SFR, a Substitute for Return the taxpayer can go back and file an original return reflecting less tax and can mitigate. Or, abate all that extra tax penalties and interest…

KATRINA MADEWELL:  Well, yeah, I hope so.

DARRIN T. MISH:  But still sub-optimal to let the IRS do the Substitute for Return. There are lots of reasons for that. One of the primary reasons is the case load right now pretty much says that if there was a Substitute for Return prepared then that is never going to be dischargeable in a bankruptcy if you have to go down the bankruptcy route. So, there is this long record, this long history of bad decisions in my opinion relating to that.

Lots of courts have said well once an SFR always an SFR and so what we used to do in the past before these cases came out is we would have SFR assessments and then we would file original returns and then we would wait two years and then we would bankrupt the whole thing and so that is probably why the courts ultimately changed…

KATRINA MADEWELL:  There’s always a workaround, isn’t there?

IRS TRAIN WRECK OF THE WEEK

DARRIN T. MISH:  Not always but …So that is the indication that we are ready for the IRS train wreck of the week. This is the segment of the show where I get to tell a story about how somebody came into the office and their situation was something of a train wreck and ultimately, we only talk about the happy endings here.

KATRINA MADEWELL:  That’s right, well we’ve talked about other stuff too.

DARRIN T. MISH:  We’ve had a couple of sad endings.

KATRINA MADEWELL:  They are not always perfect, but they are better.

DARRIN T. MISH:  So this story is so good it’s almost unbelievable but I can assure you that it’s true. I was working with this gentleman who is in the insurance business. I was working with him for a long time I would say 3-5 years. He was a great guy, love this guy. He agreed to be a guest on the show at some point in the future.

KATRINA MADEWELL:  Oh that’s fantastic. I would love to have one of your people on as a guest.

DARRIN T. MISH:  Great guy but he was one of these guys that had to be dragged through the process, it just went on and on and on and some of it was probably our fault and a lot of it was probably his fault but it just went on for a lot of years. He’s been resolved for a couple of years now. I saw him in the lobby last week and when I think of him and his name I think oh we got a great result but honestly couldn’t remember what had happened.

I went out to shake his hand and say hello because I only see him once a year now. We have a lot in common and stuff, I said hey you know I know you got a great result but can you remind me what happened because every time I see this guy once a year he’s like thank you, thank you thank you.

KATRINA MADEWELL:  He’s over the moon.

DARRIN T. MISH:  So I said I know you got a great result I just can’t remember what it is. He says well ultimately, I owed $374,000 and you convinced me to file an Offer in Compromise. We offered $250 and it came back accepted. I got a big smile last week and I kind of laughed and I said…

KATRINA MADEWELL:  No wonder I am your BFF.

DARRIN T. MISH:  Yeah, I would say that’s a pretty darn good result. So, he also reminded me that at one point in the process he was asking lots of questions and I did remember that there was question, question, question. Some clients want to be educated on how to do the job that I am doing. They don’t want the solution they want the education as well.

I told him I don’t sell insurance so let me do what I do every day and it will work out better. He said he had an epiphany. He looked at me and he goes you are right I will just let you do your thing. Then he got that killer result. That’s the story for today. He got just an incredible result. Because of getting that monkey off his back life’s good he is doing great. He got his life back and that is what it’s really all about.

KATRINA MADEWELL:  How long was it before he how long was he in the hole didn’t file?

DARRIN T. MISH:  Oh, I don’t remember but this probably went on for 10-15 years.

KATRINA MADEWELL:  Typical I suppose.

DARRIN T. MISH:  His credit was ruined, he had liens and all kinds of stuff and we filed the offer in compromise, the IRS accepted it and we moved right along.

KATRINA MADEWELL:  Alright. If you or someone you know needs some help with that you can get Darrin at 888-GET-MISH.

DARRIN T. MISH:  That’s 888-438-6474.

KATRINA MADEWELL:  You can also find him on Facebook and Twitter, across the web @darrin_mish on Twitter, he’s on Facebook.

DARRIN T. MISH:  You can go to the Facebook page at The IRS Solution Attorney, you can download our podcasts or our app also called The IRS Solution Attorney.

KATRINA MADEWELL:  We will be back the same time same place next week. We are so glad that you are here. Thanks for listening to Money Talk 1010 and for this week…

DARRIN T. MISH:  We’re out.

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