402: Your Secret Business Partner? | What you should know.

I don't know if you know this, but the IRS has guns.

Billions of dollars have been allocated now to the IRS to bring on 87,000 more IRS agents.

He went to prison for not paying taxes.

The IRS is a partner, and you gotta take care of him. So they're.

The silent partner, wants a check. All right.

Yeah.

And it's okay. I want to say to you, like, my name is Matt, and I owe the irs. Welcome, everyone, to the Main Street Business Podcast with Mark Kohler and Matt Sorenson. We are excited to be with you today. And today's topic's pretty important because, you know, I don't know if you know this, but the IRS has guns.

The IRS is not going to go away anytime soon. In fact, billions of dollars have been allocated now to the IRS to bring on 87,000 more IRS agents over the next 10 years. And if you owe the IRS, you got to deal with it. So we're going to get into some topics today on practical approaches to just not go crazy. Not to be in fear.

Yeah. Like, what do you do? And how can you be strategic about it? There's some cool strategies here. There are some procedural things that you can use to your favor to work through these issues. But I'm serious about this, guys. There are people in the IRS that have badges and guns.

Okay?

All right.

No one's gonna shoot anybody. What are you talking about?

No, but they like to let you know. Okay, I've seen these IRS agents. I have. You know, they're from the. I think they call it the cid. Yeah, this is like, you know, Law and Order svu. This is like IRS CID unit.

Yeah, Criminal Investigation Division. Yeah, they're legit. They're legit. Okay, well, let's, you know, if you

don't believe me, you know, just ask some of our. Yeah, Wesley Snipes. I forget his character name in U.S. marshals, but that's my favorite Wesley Snipes movie. White Man Can't Jump's pretty up there, too. But if you didn't know that he went to prison for not paying taxes, okay, you can go to prison for this crap. We're not just talking about your credit getting wrecked, wage garnishment, your bank account going to zero and a flash. We're talking about behind bars.

Okay, now, Matt's not admitting this, but he actually did prosecute someone in his life before working at KQS Lawyers.

I was a prosecutor for a short stint, and I did a state tax fraud case. And this guy was, like, this promoter of these constitutional Trusts where you didn't have to pay taxes, of course.

Sounds great. Yeah.

And he sold them to hundreds of dentists. They were an easy sell. Anyway, so he go to prison. Lots of funny stories there for another day, but yeah.

Okay, so let's get into it. Our producer says we'll save some of these jokes for later and kind of keep it light. I want to say this from the heart. If you're listening right now, obviously you or a family member or friend owes the irs, or maybe you're just kind of a little interested and curious about this topic. But if you're listening, the first thing I want to say is, it's okay. We have thousands of clients over the years that have owed the irs. I've owed the irs. I've put it together an installment agreement before, and there's many times where I'm paying the IRS a big check on October 15th, and I get that nasty letter in November. Oh, there's some penalties in interest. All right. Damn. So you're not a bad person, you're not incompetent, you're not successful. It's okay. This is a big partner in your business, in your life. The IRS is a partner, and you gotta take care of them. So they're.

The silent partner, wants a check. All right.

Yeah.

And it's okay. I wanna say to, you know, like, my name's Matt, and I owe the irs. You know, it's okay, guys. Okay. You can say that. You know, lots of people do. So don't feel ashamed.

No, don't be. No shaming here today. And we're gonna. We want you to feel like there's hope and there's some options. And this is very, very important, you take this podcast seriously. So our first. That plane ticket to Costa Rica, is that our first strategy?

Now, when you do this, you're gonna first want to get a fake passport. The IRS, you know, if you owe more than 100 grand, they're checking. Yeah, Customs. All right.

Yeah. Customs is not. They don't fool around.

And if you can't get the fake passport, okay, you're going to want to get a bus ticket across the border to Mexico, and then you go from Mexico to Costa Rica.

Is that our first tip? Well, no, we're just joking.

Okay. If you owe more than a million, you're going to want to go to a country that has no reciprocity. Yeah.

Yeah. Serious stuff. All right. Okay. So here, in all seriousness, here's our. Let's talk about. Before we talk about methods of paying the IRS to keep the penalties and interest to a minimum. Let's talk about just some practical how to deal with the irs. Mo. Modus operandim.

Is that operandi?

Okay, okay, here's the first one you need to know. The IRS will never call you on the phone. Never ever. They never call you on the phone.

They don't answer either. It'll take them an hour, but, you

know, you'll be on hold for a long time. But here's the deal. There are a lot of scam artists out there that will call or text you and say, you owe the irs. And if you don't pay now, all hell's breaking loose. Your kid's in jail. We're gonna. Whatever. There's so many scammers right now. It's just so terrible. But the IRS will never call you on the phone. Now, if someone does call you and go, oh, we're from the IRS and you owe money, don't have it out with them. Don't be a jerk back. You never know what these scammers can do. They've already got your phone number, obviously, so don't antagonize them. We interviewed a really prominent prosecutor, federal prosecutor, attorney, that talked about how these scammers can get very vindictive if they feel like you're pissing them off. So just hang up nicely and go, oh, I'll call my accountant. Thank you very much.

Bye.

You know, oh, I'm sorry. I'm going into a tunnel. And then hang up. You know, just get off the phone. But don't antagonize them or interact with them. Just get off. But the IRS is not going to call you on the phone. Yeah.

What they will do, though, is send you letters. Okay. Now, those ones you need to read. Okay.

Yes.

There's something that. There's things that start clicking. These are called statute limitations. Your ability to contest the amount you owe. All these little letters. Letters and notices are on timelines in the IRS system. And if you start ducking the first few and you're putting your head in the sand, your options are getting more and more limited. All right? It's kind of like, you know, when you're a teenager and you're out late, you come back 30 minutes within the window. A little more forgiveness.

Yeah.

An hour or two, you know, maybe, you know, you got a weekend. Next weekend's not going to be so hot. Three or four hours past to.

Nah, you're not going to be driving

a car for a long time, so don't. So pay attention. To those letters, read them. If you don't understand them, get the professional that does.

Well, that's going to be third tip, I think, at the point. Let's stick with who to call next. But I want to reiterate what Matt said. We do meet so many clients that just bring in a stack of letters that haven't even been opened and. Yeah, because, you know, we.

Depressing, right?

Yeah. We feel your pressure and your str.

You know, there's not a refund check in there.

Yeah. You know there's. And you're like, if I don't open this, I don't have to deal with it or they'll forget about me or I already owe the IRS so much. I'm already depressed and on three anxiety and medications. Opening this letter isn't going to help me, believe it or not, which we're going to come to the third step, and that's reaching out and getting help. The sooner you can open those letters and get some help, the sooner that pain is going to go away. I know it seems counterintuitive. You've got a lot on your plate. Many of you listening today that owe the IRS are scared to death. You're frustrated. You don't know what to do. Well, that's what we're talking about here. And so open those letters. Don't throw them away. Heaven forbid. And number three, get help. I'd like that you alluded to that.

Yeah. Get help. And. And careful responding to the AM radio. If anyone listens to that anymore.

Yeah.

Or the late.

They're on FM now.

Okay. They're on fm.

Yeah, I heard one last night.

Probably a podcast, too. They got. Or the late night, you know, commercials that are like, you can settle for pennies on the dollar. Now we're going to talk about that strategy and how you can settle using an offer and compromise. We're going to hit that. It's an important strategy.

You should know.

But the also don't fall into the other trap. On the other hand, one, we don't want you to stick your head in the sand and do nothing. On the other hand, we don't want you to fall into the trap and think, oh, I would just throw some pennies at this and it'll go away. Yeah, I'm just going to pay this company $10,000 that I saw on late night cable TV and they're just gonna make this go away. Now be careful on that. That's frankly just a lot of hype.

Yeah, there's a lot of scam Artists out there that are preying on you. It's interesting. Today is October. What did I say? October 19th. So the filing deadline was two days ago on the 17th. Because October 15th was on a weekend. So anyway, we're two days out from the most important deadline of the year. This is when all extensions are over. You can't punt the ball anymore. It's over. The game's over, no overtimes. So October 15th, when is that and. Excuse me, Matt. Literally the last 48 hours, I probably heard five commercials on FM radio.

Yeah.

You owe the IRS. Call us. And those are. I'm not saying all those companies are bad, but you've got to be very, very careful. And be careful writing a big check up front. Pay as you go is my mantra there. Now, if you want to email me, I've got a signature of about two to three accountants that we trust. We do some offer work and deal with the irs. We'll litigate with the irs. We can help guide you. I'm just going to say now if you need an email of some referral sources of how to deal with the IRS or file prior your tax returns, email me mark markjkohler.com or markkkoslawyers.com Send me an email. It'll be down in the description and in the subject line, say owe the irs. Now, all I'm going to do is send you a return email with three or four referrals. You can interview them. Go. You could call our firm for help, depending on how serious it is. But do some research. Don't just hire the first FM radio commercial you hear. And, but on this thing of getting help, don't be embarrassed. I like how you said don't be ashamed. You gotta talk to family, talk to friends.

Yeah. If you gotta own it, if you got a spouse that's not involved in that stuff, they gotta know what the heck's going on.

Yes.

So, because. Let me, let me do. I don't. I feel bad. But people, some people need a reality check on this. Okay. Let me hit a couple of really important points. One, you cannot bankrupt tax debt. Okay? That's one thing. You go to bankruptcy court, it ain't happening. The other thing you're not going to be able to do is hide from the irs. Okay? They got tons of resources and they will find you, okay. The other thing you're not going to do, you're not going to set up some LLC or asset protection strategy to get around the irs. They amongst anyone can blow through that stuff. So you need to own this figure. A strategy, get a payment plan, get an offer and compromise. We're gonna go through your options here on what to do, but know that this is one creditor that is not going away. You've gotta confront it head on.

Yeah, it's brutal. And next, I don't know if there's a list here per se, but the next one I want to hit is making sure you file your tax return as soon as possible. There's several reasons for this. The first is the IRS isn't gonna cut any deal with you. Whether it's an installment agreement, 180 day grace period. They're not even going to talk to you until your return is filed because they don't know what's going on. You know, they got to hear what's going on. They got to see it and feel it and touch it. So if you haven't filed a prior year tax return, when you email me, another subject line you might want to put in there is need to file prior years or owe the IRS and need to file prior years. My executive assistant is just going to have a signature to send out some referral sources for that as well. We don't file prior year returns. It's a unique service that accounts that are built for that in their system, they can do it affordably. But if you haven't filed one, two or three prior years for your business or personal, put that at the top of the list. Don't throw away the letters, reach out for help. But just know you're not going to be getting anywhere with the IRS until you file. So make sure you file and it stops A lot of penalties. Some of the worst penalties are not filing. Yeah, IRS hates that.

Yeah. And we've had clients over the years, I mean we've had some clients owing literally tens of millions of dollars to the irs, getting notices that saying they're owing tens of millions of dollars and they haven't filed. And one of the things the IRS has is all this information for you business owners on all this money you made, all these 1099 and all this other stuff that got put to your business into your name and they have no expenses because you didn't file anything. Yeah. So a lot of people you, these notices you're getting are because you haven't filed. The IRS has way more income showing than they don't have any of your expenses and write offs. So a lot of times filing helps immediately reduce the amount owed because they haven't heard from you. So they're Gonna expect and try to collect the most they absolutely can.

Yeah. And if, you know, a good analogy here is if you've been dating a guy or a girl and you ghost them, it's not gonna go well. Usually results in your car getting keyed. Who knows a couple of good country songs about that? But, you know, they're going to see your social media and see all these good things. They're going to not hear from you. They're going to hear, you know, that you're out dating, but they don't know what you're going through. They don't know the costs you've been paying. And you got to let. You got to let these people know. And so never ghost your girlfriend, your boyfriend, or the irs, because bad shit happens.

I mean, that's just a good life. Common rule of thumb.

Yeah.

You know, a lot of wisdom in there. Yeah.

Now, let's say you're following some of those mantras. I'm going to review them. You're never going to take a phone call from the irs. You're not going to ignore the letters. You're going to at least keep them handy, open them up. Know if there's some important deadlines. Number three, you're going to reach out for help. You're not going to be ashamed. You're not going to feel bad. You're going to get professional help, but you're going to be cautious writing big checks to companies that are making big promises. Next, you're going to realize how serious it is. I like what Matt said there. This is something that you cannot hide from or get away from even moving to another country, unless you that right country without extradition law, they're gonna drag your butt back here to jail. And you need to have your tax returns filed. It'll stop the penalties in a big way and it'll let you start communicating with the irs. Let's say you've got that out of the way. I love Matt. Your first kind of this Fresh Start Initiative thing that the IRS has had for out there for over 10 years. Don't listen to the radio and they're like, oh, the IRS has just released the Fresh Start Initiative. You can save when you pay the irs. It's this new thing. It's not a new damn thing. It's been around for 12 years.

What's the Fresh Start initiative?

It was in 2011, the IRS passed the Fresh Start Initiative. Said we know taxpayers are struggling, okay? And so we're going to allow for these different methods to help taxpayers pay or get out from under it. Which includes the installment agreement offering carbon. So it was just kind of the

IRS going, that was like the Jared Subway thing years ago. Like, you know, was that fresh start? Yeah, yeah. That's a different question.

I like. Yeah, I like Jared too.

Yeah, he ended up not.

No, he didn't go.

Okay, okay, okay. Well, let me hit the first one because I love this first fresh start thing.

It's all part of the fresh start. Okay. When you hear it on the news, this is another little thing. When you hear someone go, oh, the IRS has released something that no one else knows about us but us in this commercial called the Fresh Start Initiative. They're full of crap, right? Yeah, Just, just know that. So, okay, so the first one, I love this. You've used this one? I've used this one.

Yeah, I use, I'm using it this year, like right now. Okay, let's, you know, so is 180 day to pay so you can get a short term payment agreement with the IRS, which gives you 180 days to pay. The reason that's important is if you filed like me on the deadline of the extension and you owe like me. I ended up owing this year and that happens.

I owe too.

Okay. You know, okay, you're a business owner, you're self employed. You know how the numbers are going to work out at the end of the day and so you end up owing. Okay, no big deal. Well, the first and easiest is just say, hey, IRS, give me 180 days. That's six months that you have to figure out how to get the money in there. And why it's so important is if you do not do that, the letters are starting to come from the IRS After a couple months. There could be bank garnishments coming out. There could be a wage garnishment going, There could be a tax lien going, that's going to wreck your credit. All right. All these little things start crescendoing and so you want to get ahead of it. So by getting that 180 day to pay, you've bought yourself your first six months. Now hopefully you can resolve that in six months. But if you can't even do it in six months, that's cool. Buy yourself the six months first, then you can do the next thing here. I love it.

It's like hitting the pause button. Because what they will do is not put you in collection status. That's the keyword. You want to avoid that first six. I don't wanna be in that other Division across the road from the main IRS building. I don't wanna be in the other building, the bad building.

I want my file over here.

Yeah, I want my file over here.

He's paying in six months. We're okay.

Yeah. Don't kick me across the street yet. So stay out of the collection process by now. Getting this 180 day grace period. Hit the pause button now. How do you do this? You pick up the damn phone. Yeah, you have to call the irs.

You can do it online. I think if you owe less than 100 grand, you can do it online or you can call. You can call if it's more than that.

Either way though, quick pause. Child molestation. Yeah.

Yeah. That's why I said didn't end well for him.

That's where the.

Thank you.

We can cut out any Jared reference to. I don't care.

I just didn't know what the hell the Fresh Start initiative was. I'm sorry.

Yeah. You'll hear it on commercials too.

Okay.

Yeah. And if you. I just. That's what I was googling to just see if there was something new. There's nothing. It's called the IRS Fresh Start Initiative. Okay. Okay. So we're going to come back in on after the 180 degrees period. Now, once you have that 180 day grace period option, maybe you've used it, maybe you've looked at it and said 180 days isn't going to cut it for me. Have a reality check. You may say I can't go get the money. I can't borrow from family or friends. There's no equity in my home. You know, I don't. You don't. You'd rather pay someone else than the IRS. So during that 180 days, you want to be scrambling to replace the debt with a different debtor. You want to.

Yeah.

You want to get a different. Sorry, you're the debtor. You want to get a different creditor involved that you owe rather than the IRS. And that's what you're trying to do in that 180 days. Either pay them or replace them with someone else. That's going to give you better interest rates. Penalties aren't continuing to grow. You want to. You want to get over there. Now your next option that I like, and I've been on this before, is the installment agreement. Now this is an official application where if it's under a certain threshold, the IRS has to accept it. It's typically over a five year period. It's like a car payment. You're going to set up a new car payment with the IRS and get on this installment agreement. Now. We could spend a whole hour. In fact, there's half day seminars on installment agreement strategies. So I'm just hitting the highlights here. But generally this installment agreement, you have to keep it going. You have to have your tax returns filed and continue to file all your tax returns on time. If you don't, you get behind the eight ball again, they kick the installment agreement and they don't let you get back on it. They're like, you got one shot at this, don't blow it. But the interest rate isn't terrible. But penalties and interest can continue to grow. You want to make sure you get good advice on your strategy on getting the installment agreement in place. I'd rather set up a loan with someone else than the irs. But again, some of you, we don't have any other choice. So.

Yeah, yeah. And so the installment agreement, you're going to have to disclose some stuff. So this is one of the downsides of the installment agreement and it gets even worse when we get to offer and compromise because you got to disclose even more. But you know, the IRS is going to want to look at what is your income. Okay. And by the way, they probably have a record of some of this. If you got a W2, you know, any of you self employed, it's, you know, a little more mystery. Again, there might be some 1099s floating, but so be truthful and honest in that, but also try to be realistic. Now the one thing that's nice about that is you do get a list your expenses. So if you have a lot of other creditors and you can show guys, I'm really trying here, then it helps you get this approved. You have a plan to get it paid back. The one thing to be that's hard on this, and this is just, you know, one of the hard things about being self employed is you can get in a rut. If I'm paying off last year's taxes, are you paying in for this year? Because now you're getting behind again. You're like, you're in this vicious cycle. And so, so also try to figure a way to make sure you're current on your existing taxes.

Yes.

And take that into account in your installment agreement because otherwise you're just always going to be behind. You're always going to be on the naughty list with the irs. You're always going to be doing these structures. So I like budgeting in, in your installment agreement too. Your Current ongoing tax liability.

Yeah. And, or budgeting into your personal budget, your installment agreements for the prior debt and then you got to look at your overall personal budget.

But installment agreement, they want like, they want a breakdown of income expense. I'm just saying on the expense, when you're saying what you owe every month to show what you are able to pay, take into account current year tax so you're not behind again.

Yeah, yeah. And also on this, I'm going to share on a personal note too. I've been in that situation where you owe the IRS for last year and you've got to start making deposits for this year and then you got to live and you're like, holy crap. And the one thing I would say is don't try to get ahead of the curve all in one year. It's not going to happen. You're going to beat yourself up, you're going to feel terrible and it's going to crumble under you. What I would recommend is make sure you've got a payment plan, a procedure to get your prior year debt taken care of. And if you're just throwing everything at your prior Debt, first take 10% of your income or 20% of your income if you can and start depositing for the upcoming year or get rid of that debt as soon as possible and then double down on this year and then you'll probably owe a little bit more again at the end of the year, but not as much as you did this last year and then next year you're hurrying get rid of that and then put as much as you can to this year and then you're not. It took me once, five years to finally get caught up where, ooh, my deposits match up to what the hell I owe. So when I file my tax return, I don't owe anything and I'm already caught up for what I owe this year. And it's, it's a system, so don't think it's going to change overnight. Just have that reality check.

Yeah.

Now, before we get to the offer, let me throw out one other thing. To the 180 day grace period in the installment agreement. You're going to go down that path because you know the IRS isn't going to cut you a deal because if you've got to be able to show a hardship that's significant and the inability to pay before they're going to cut you an actual deal, meaning give you a haircut on what you owe. Unless you're, if you're still making money and You've got some assets. Don't even think about an offering compromise. Just get on the 180 day or the installment agreement and just deal with it. Don't get visions of grandeur.

Yeah, we're just buying time on those strategies. Avoiding your credit from being wrecked, your bank account getting garnished. Like, we're just buying you time to catch back up.

So.

All right, are we ready for the offer and compromise?

Okay.

Yeah.

This is the big one. This is what the commercials are all about.

Yeah. So, you know, you've heard the commercials, right? You can settle for pennies on the dollars with the IRS by paying us $10,000, and then we'll help you settle with the IRS for pennies. Okay, Sounds great, right? I just pay you 10,000 and the IRS pennies and it goes away. All right, reality check. Okay? Now, the offer compromise is a legit thing. I've helped clients with it. Even when I was in law school, I represented clients as a great little strategy. Now, what that basically allows you to do, you can ask for a haircut, you can say, hey, I owe 100, but I really can only pay 20. Will you take it? Here's my situation, and we're going to go into the factors that the IRS is going to look at. You can also offer a payment over time type strategy.

With the haircut.

With the haircut.

So it's kind of installment agreement, offer combo.

Yeah. So the offer in compromise is a bigger strategy. All right, I'm trying to reduce the amount owed. I need, whether it's lump sum or a longer payment plan. Now that's awesome, right? I mean, I get. I can reduce the amount that the IRS is trying to go after me for. On the downside, if you choose this route, you're doing disclosure of assets to the irs. Okay. Not just income and expense. You're disclosing assets to the irs. They want to know what you have. And by the way, this is under penalty of perjury. So you gotta be honest about this stuff and where your assets are. Because the IRS needs a total picture to say, what can we collect? They have something called rcp, reasonable collection potential that they're gonna analyze in your offer and compromise. Say, what could we reasonably collect from this person if we just went and took their money?

Yeah, their house, whatever. Now, this is where you may say, oh, I can get an offer in compromise. I'm not making enough money to pay my bills, but grandma left you a rental property, or you've got a raw piece of land, or you've got a farm with a little piece of land over here or this, that or another, or a collectible car or whatever they want to know down to your literally clothing, jewelry, house, IRA 401k. They need to know everything. And if you, if there's money sitting somewhere, they're not cutting you a deal. And see these companies on the radio that say, we'll take 10 grand and help you settle, then they go through and do all these things and go, oh, yeah, you don't qualify, but that's after you paid them ten grand. So that's where the scam is. So you've got to be very, very careful about thinking you're going to qualify when you maybe won't. And this is where paying an accountant, maybe one of our tax lawyers, just hourly to say, hey, walk me through for two or three hours here and let's dive into it. Let's start filling out some of this paperwork and go, oh, I'm not even going to qualify. Okay, well, at least you got a fair answer for a reasonable cost. You're not going to get it for free, but you're not going to pay some upfront scam artist.

Yeah. Now there's two different. Well, there's really three. There's three criteria that the IRS will look at to do an offer on. Compromise, all right? And the first is doubt as to liability. The second is doubt as to collectability. And the third is efficient tax administration. We're going to explain each one of those. But doubt as to liability, I like going here.

This is good.

Doubt as liability is a good one. Some of you might be a business owner, self employed, and you got into an issue with the IRS and like, we disallowed this or whatever on your return. We adjusted this on your return. And you're like, nah, I was right, you were wrong. Like, that happens a lot. Guys, the IRS does a lot of stuff that just sometimes their system kicks up one way. Sometimes someone that's not super competent, the irs, believe me, there are people there I know you're not surprised, but does something wrong and it affects your tax return. And so one of the ways you can combat that that is there's appeals process, but is in the offer and compromise and say, hey, I don't really feel like that was legit. I feel like I've got a good claim that I actually had that expense that was valid that you disallowed perhaps. And so you can submit on that basis as to doubt as to liability. So I have a reasonable claim here that you guys, you know, took a different opinion on.

Yeah. Now here's the sad part. Some of you listening or watching on YouTube are going to go, oh, that's me. I mean, they disallowed my auto deduction. That's why I owe. Frickin irs. They screwed me over. They didn't allow me the write off. That's why I owe. And so you go, that's what I'll do. I'll go doubt as to liability. I'm gonna go in and fight this and just bring it down legitimately by fighting with them. Well, spoiler alert. You know, all those letters you ignored, all those letters that are in a pile on the, in, you know, in the drawer, Those letters said, if it's doubt to liability, here's your deadline. And you have a deadline to make that claim. That's that statute of limitation Matt was talking about. So if you miss that window to bitch and moan and fight what you owe, then option one, out the window because you missed your chance to complain and appeal. So that's why we need you opening the letters and talking with someone right away. And if you think that you really don't owe the irs, deal with that first.

Yep, great point.

Then down to collectability. That's when they review your assets. I think we vetted that. You know, they're going to look at your income, your assets, and if you could, if they think they're going to get money out of you and there's some blood in that turnip, they're not giving you a deal.

Right? Yeah, yeah. If there's some juice they can squeeze, they're going to squeeze. All right, okay. Ooh, I like that. All right, so. So doubt is to collectability is going to be the most common though. And that is basically where you're saying, hey, I don't have the resources to just pay you IRS, 50 grand, 100 grand, whatever it is you owe. I maybe got 5,000 that I could throw you now. And maybe here's my financials and what I make. Maybe I could throw an extra 500amonth for a few years and you'd be better off. Do you want this irs? You know, and so that, that is a common approach of let me throw you some money now because I got it. I had to disclose it to you, for heaven's sake. And then here's my plan on paying you a partial amount and still ask for the haircut right now you do have a fee you have to pay though. Keep in mind, offer and compromise. You do actually pay an application fee for this. If you have real economic hardship, there is a waiver on it. But that, that, that's not. Don't expect that even if you're saying doubt is to collectability.

So, okay, on this point too, when you're in the doubt of collectability, you may be at that point conversing with a real IRS agent. This is the time when IRS agents may knock on your door if you're ignoring them. This is when they're not going to call you, but you can call them. And this is maybe when your tax lawyer.

They're going to send you letters.

They're going to send you letters. And this is when your accountant can call them up and cut deals. The one that I thought was interesting back in the day was Willie Nelson. About 30 years ago, Willie Nelson owed over $17 million to the IRS. And he really owed it. He like frickin did. So he was like, hey, I don't have any money, I'm broke, but I'll do another album. And all the revenue from this new album, you can have the money from it. And the IRS was like, all right, we'll cut that deal. And so he did a bunch of songs that were kind of like anti government and all this. And it freaking sold well, paid the irs. IRS got off his back. And it's a long saga, the Willie Nelson IRS battle. But you can get creative, you know.

Yeah, that's a great one.

I'm gonna try that with the IRS too. I'll write you a song.

Yeah, we're gonna pass on that one.

Yeah, now we'd rather have your second home. We're gonna sell that. Okay. Then they've got this efficiency thing where the IRS is like, you're just a pain in the ass. We're gonna cut a deal because it's gonna be too much work to, to fight through this.

But yeah, and that one is more kind of like the IRS is going to look at their resources and what they would take to collect. And is this really just justice in this scenario? And that one's a hard one to get. I think it's really in there for weird hardship situations. Do you have a disability or things like this where they're like, yeah, this just isn't effective tax administration. This is tax administration gone awry.

And this is where some of you may hear rumors of, gosh, my friend, they cut a deal. Or I heard once this or whatever, there's a lot of horse horse training tales or old wives tales or whatever, because you don't always Know the facts of what this other person or family member or cousin did with the irs. And you can also get a different response with different IRS agents. This is why working with a professional, they can up. Go up the chain. They can go to a supervisor, they can go to appeals board, we can go to the tax court. The higher up you go, the actual more reasonable they get. The lower level agents are a lot of times just dealing with a manual they were given, and they can just be mad at the world. They're like, you know what? I hate life. I'm gonna be an IRS agent. I'm just gonna make life miserable for everybody else. And that, you know, that could be out there. But

there's no person that really thinks of, like, civil service and is like, I really want to serve my country and work at the irs.

I don't think that exists. So. But you. So you're. What, you're. What I'm getting at here, though, is you can start showing the IRS these hardships and kind of playing that violin when you get your tax advisor involved. And the IRS is actually going to give you a little more respect, too. If you're the one calling up and saying weird things and crying, I think they just put you on mute and just do their work and then come back when you're done. But when you have a professional negotiating on your behalf, they can say, hey, this person had a heart attack, or their wife died of cancer, or this, that or another, Their dog got run over, their truck broke down. I don't know if that cuts it.

Let me tell you a negotiation strategy, okay? When dealing with the irs. This is something back way in law school, man. It's like 2003. 2002, okay? I was in this federal tax clinic. I was doing this for people. So I remember I had this truck driver, okay, and he owed the IRS 50 grand or so. He owed the state money, too.

We got to come back to states in a minute.

Yeah, but I remember him telling me, he's like, man, it's just really tight. And I saw his income and expense and, you know, he had family and everything. And we were able to show that, like, there's really no money for him to just pay. You know, he owes so much, he's so far behind. But we did an offer in compromise, and he's like, I could get money from my mom to pay this now to him. He's like, that's my money. So he's like coming to me saying, I have 20 grand to pay. I'm like, you do. He's like, yeah, well, my mom will give me that money if I can, you know, get this resolved. The irs, and I'll pay her back later. I'm like, that ain't your money. Then you don't have money. If you say to the irs, I have money. That's not good.

They're gonna write that down in their notes.

They're like, okay, send that to us. And if we don't cut a deal, thank you for telling us where it's at. All right.

You dumbass.

I was like, dude, your mom has money. Okay, yeah. She will loan you. Like, that's what I put in the offer to the irs. The taxpayer's mother will loan him money that they will give you that you can't go collect from Mom. Mom doesn't have this tax bill. All right? So there are some, like, strategies in here on trying to get a lump sum in. And family loans are a good one where you can use that as a wedge to say, hey, irs, this is tempting. They're going to pay back mom over here or family member that's willing to throw in to help them. But if you show it as your own asset, like, this guy was just like, well, but my mom will give it to me, so I can't pay them, so I need to show them I've got the money.

No, we don't. Yeah, there's techniques. There's so many techniques. But, well, here's. I want to summarize. Well, oh, before we give our summary statement, let me point out states. Yes, I've had, like, this year, I'm okay with the feds, got them paid. That's cool. But I owe two states, and I'm like, so now I've got to deal with this whole same process at the state level. Well, that's a grab bag. Some states are totally flexible. They're like, oh, yeah, pay us whenever, blah, blah, blah. And there's hardly any penalties on interest. Other states, California, they are not cutting deals. You know, they're like, you go have fun with the irs. They're, you know, they're wimps over there. We're going to freaking take you to, you know, to.

The states are a little more aggressive, and I have to say, more organized.

Yeah, so more organized in the irs. I mean, the IRS is not the epitome of organization.

It's not like a major compliment. That's just kind of like. Like, here, they're like, here, you know, so. But that is true. You'll see a little more aggressive action from the states. I think most tax professionals know that just in the collection, they just, they just got a man, they got a shorter leash, they are just like, nah, we're coming after you.

So other states can be easier though. So you got to go, you got to deal with each 50.

50 answers.

Yeah, don't. Yeah, there's 50 answers. Don't ignore it. But whenever you owe the IRS, there's a good chance you owe the state. So don't ignore the stepchild there because they can make a lot of noise. So my final closing statement is I just want to, from the heart, just seriously tell you that this too will pass. There's ways out of this. It's going to take some time and reach out for help amongst family members, friends, professionals, get engaged in the process. When you feel like there's a plan, a lot of times that's going to help you sleep at night. More so than just the unknown. The unknown can be a lot more scary than just getting a plan in place. So really grit your teeth, get into it, get a plan figured out. And I know it's miserable, I know it's hard. I've been there. The IRS is not going to take away your house, they're not going to put you in jail, they're not going to lean everything unless you ignore them, unless you aren't willing to negotiate, unless you aren't willing to deal with a plan. Then the IRS will knock on your freaking door. They will. Yeah, so.

And they'll put a lien on your house too, by the way.

They will.

Before they knock on it.

And they're not going away. So.

So anyway, yeah, no, I thought that's a great sentiment. I think once you have a strategy and a plan of action and you're making progress, the stress of it really starts to whittle away. Even though you know you've got a long way to go, you're on the path, you got a deal, you've stopped the nasty collection efforts. You don't have to stress about all these worst case scenarios of what could happen and your credit getting wrecked and all these things. So. So getting a plan, getting on your pathway, I know every time making those payments sucks and seeing that money go to the irs. But as we talked about you, Frank, you don't have a choice and just get on it, don't ignore it.

Yeah. Once you get caught up on your taxes, you can renounce your citizenship and move to another country. But until then, you got to go to inhabit. Until then you got 4th of July yeah. You know, just. And embrace Lee Greenwood and just enjoy it. So thanks, everybody, and we'll see you next week for another episode of the Main Street Business podcast. Don't give up on your dream. Know the IRS is there. You can deal with them. Have a plan, and don't give up.