#191 - Will There Be A Tax Seasons? w/ TaxMax

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Dealer Podcast with hosts Luke Godwin and Jeff Watson, a podcast by Dealers for Dealers. Here we go.

Hey, welcome to the Independent Dealer Podcast brought to you by Buckeye Dealership Consultant. This week we have a special guest, a veteran to the show, Bill Nyland from texmax. Welcome, Bill.

How you guys doing?

Good, good. What we got today, Jeff.

Bill, talk to us about the first introduce yourself to the independent dealer community. What is Tax Max for anyone? Dealers that are hanging out under rocks or don't know or haven't heard the name before. What do you guys do? Who are you? How are you here to help dealers?

My name is Bill Neal and I'm the president and CEO of Tax Refund Services, Tax Max. We've been in business since 1995, so we're going into our 27th tax season. So we're pretty excited. We work with over 3,000 dealers all across the United States or in all 50 states, even Hawaii, Maine, Alaska. So we can help any dealer anywhere. And we basically work with franchise dealers, independents such as Buy Here, Pay Here, and retail dealers. And simply put, what we do is we basically file your customers tax returns, but we route the money to the dealerships. That way the dealership's guaranteed to be paid over the years. Obviously, when we first started, we just had our traditional program where January through March, people brought their W2s in and within two hours we can get an advance on the return and then the dealer could literally print out their down payment, move the car. Over the years, we've kind of got a little creative and started our fourth quarter program. And that's where a dealer can estimate a customer's future return. So for example, we're in October right now. We do have dealers estimating the future tax return and setting up a special payment for February to basically help get it, like a double down payment. That's been actually helping dealers reduce the term by anywhere from 10 to 21%. About six years ago, we launched our regular payments program. And if you have the right DMS that we've partnered with, and there's about seven or eight of them that you have the ability to do tax season all 365 days of the year to where you can do a tax deal in May or June, get your down payment, schedule a special tax season payment for the end of February and get another 1200 or $1500 principal payment. So once again, that's been very popular, been really coming to fruition to a lot of dealers because of the inventory crisis. With the prices rising up to 40%.

Yeah. Trying to get a little bit more money any time of the year. Now we're going to talk more about how the program works and how dealers can use it. But for first off, Bill, will you please put to rest the fact that there is not going to be a 2022 tax season. I feel like every couple of weeks, we see some dealers chime in on the community, like, oh, you know, with everyone getting their earned income credit monthly, that means we're not going to have a tax time. You guys all better thin out your inventory and don't plan on anything happening come, you know, February, April, like, that's just not accurate. Right? There is still going to be a very strong tax time.

This gets you guys fired up, so make sure you address this properly.

You guys brought this up.

It only fires me up, Lucas, because dealers, they. We just have such a great job of forecasting the future. You know, we're all like Nostradamus, and we see, like, the writing in the sand and the sticks on the beach, and we all sudden think that it's going to be like a harvest season or like a famine season. And so we go out and get on our little, you know, soapboxes and start spouting this to all the other dealers. And there's dealers that might actually believe you.

I mean, there's got to be somebody's cousin that works for the IRS that told him all these things.

So, I mean, yeah, the cousin's uncle's nephew that said it's going to go bankrupt and there's going to be no money for anyone. Bill, what's really happened in this tax time? Give us the facts of what's going to happen with people's tax refunds.

And I'm glad you guys really brought this up because you're right. We get calls every day from different dealers, large dealers, saying, what's going on this tax season? What's, you know, is there going to be a tax season? There's a lot of noise out there about refunds going down. It's absolutely incorrect. Refunds are going to be up substantially or at least minimally this year. To give you some little bit of background on what you're saying, that as far as the education piece here at Tax Mex, we wrote our own version of TurboTax, we write our own tax program, so it's not some off the shelf thing. So I literally write the tax code, and in the process of rewriting the tax code for next year, so therefore, I know what the tax laws really Are and the effects of these tax laws. So number one, the child tax credit, this is the big thing, right? Everyone say now everyone's getting their child tax credit in advance while the irs, basically what they did is the refundable portion. And if I talk too much tax lingo, call me out on it. The refundable portion of the child tax credit last year, in the last couple of years was $1400. So what they did was the IRS increased it to $3000 per kid. Per child. Correct.

That's insane.

So they've increased it by $1,600. What they're doing is they're advancing 1500 of the sixteen hundred dollar bump. So basically everyone's getting $250 per child from July to December. That's basically the $1,500.

Luke, to our previous conversation, this is why Mormons and Catholics have so many kids.

I see. Because you get more money. That's awesome.

You do get more money.

So Bill, just real quick because that makes a lot of sense why there would be a tax season because honestly it doesn't affect what they're getting back.

Right.

$100 of it maybe at the most. Right.

So basically what will happen is, is that let's say the refund last year was 7,000 and they have two kids now, the refund this year will be 7,200. So it's not going down. They're getting an extra $100 per child bump. Now another part of the tax law which is minimal. Last year the child tax credit only applied to children 16 and under. They've included 17 year olds now. So now 17 year olds and under get the full 3,000 where before it was zero. So that's, that's another tax change.

And Bill, do you, I mean, I hate to stop you there, but I'm going to because it seems like, you know way more about tax law than any of us dealers. Can dealers expect this $250 a month per child to continue in the future? I mean, is this something we could rely on when we're looking at payments? Or can you speak to that, you think?

No, that's another great question. So the way the law is written, it ends December of 2021. So once we get into January, that money stops. Now there is some noise in Congress about this $3.5 trillion bill, but from what I literally saw this morning, and following closely, that this bill is going to reduce to 1.5 trillion and I think that will be cut out. So even some Democrats are against basically handouts for sitting home doing nothing forever. So in the current environment, you can sit home, have no income, and get a check for $250 per child. So that will cease December. So it's October right now. So basically you've got October 15, November 15, December 15, and then that, that ends. So now going back to some of the reasons why tax.

That's good to know because.

Yeah, stop signing that into your payments, Luke.

I don't, I don't. I don't.

So now going to why tax season is going to be better. So the child tax credit is minimal as far as making the child the tax season better. But there is no negative to this. Now, a lot of folks have opted out. So I think they said about 15% of people have opted out of those payments. So for those folks, their refunds will be sixteen hundred dollars higher per child. But I wouldn't count that as being the norm and probably not our customers. Yeah. Also the earned income credits rising 3 to 5%. Now, where there's an opportunity on the earned income credit, where there's a substantial law change, is that you can have no children and actually get a substantial refund. Now, last year the tax law was you had to be 26 or older with income of 15,000 or lower with no children, and you can get up to 1500. I'm sorry, a $500 earned income credit, the law is now rewritten to you could be 19 or older and make 27,000 or less, and you can get earned income credit up to $1,502. So this is a real opportunity. We analyze our database for the amount of single filers that we processed, and this will impact about 35% of the people that we filed. So using that, we specify in dealers. So I'd say a dealership portfolio probably has 35% of their customer base that they will sell cars to that will fall in this category. So instead of their refund being 3 or $400, now it may be $2,000. And that's an opportunity to extend this tax program and help them once again lower their term with that special tax season.

That's super interesting because we always, you know, I've used tax max, five, six years, whatever it is, and my salesman and my sales managers, everyone's kind of been trained that, like, if you're a single, you know, if you're a single person, a single adult, whatever, we don't even bring it up. We don't even mention it because we know their tax return is going to be minimal and it's not even worth it. But what you're saying is that that's going to open it up to all those 25 year old, you know, single males. Yeah. 19 year olds. Anyone that if you want to do those. Yeah. Gives them opportunity to actually have some sort of a, you know, refund that you can file for them.

Jeff, I want to talk to that for just one second because I noticed and Bill not wanting to cut you off, but it's very interesting here how this relates. I noticed a couple of years ago a demographic we were really missing was the single male in that 18 to 25 who had really good jobs. And there's a lot of those out there. It is an IRA anyway. So this actually gives dealers a lot of opportunity, this new tax law to, to sell those people early in the year, which we haven't seen before. So I think that's a really interesting piece that send us new tax off.

Yeah. Cause technically you can increase your productivity with the program by 33%, 35% with this new thing. And how many 20 year olds are making more than $27,000 a year? I'm sure there are, but there's a lot of opportunity there.

What else are you seeing? Anything else we need to be aware of?

Yeah, there's two more things. So another thing, and I'm glad Luke brought this up because you're right, usually if you're that, you know, you just don't talk tax max. Also now for this year, the people on fixed income, Social Security. In the past, if you had Social Security income only and had two or three children, your refund was zero. Now with the child tax credit does apply to the Social Security folks or someone who made. Now you're not going to sell a car to someone who made zero money, but let's say they made zero money or they get, you know, $1,800 a month SSI, they have three kids, they're going to get an extra $1600 per child.

There's a lot of, there's a lot of buy here stores out there that actually do sell to people like that.

So specifically fixed income SSI folks. Yep.

Yeah, it doesn't qualify for me, but there, I mean there's plenty of them. There's some in our 20 group that this really applies to. So that's an awesome thing coming into this tax season.

Yeah. We reached out to some of our larger dealers to get some data and we saw anywhere from 10 to 12% of their business was fixed income folks. So you know, they have two kids. Now the refunds $3200 and they would be willing to put that money to work for sure. And then the last substantial. Now this is the big one. This, this is, this will push tax season over the edge in a good way. In the past, the daycare credit, and no one's talking about this, the daycare credit's been changed. So in the past the daycare credit was not refundable, meaning it only went to pay any tax due. So if you have a buy here, payer customer, usually their income is around 30,000 or less. They have a couple kids, their tax liability was zero. So therefore daycare did not help pay any tax. So they had no tax due.

Right.

This year the tax daycare or the daycare credit is treated like the earned income credit where it's fully refundable. So as well as they are changing before you only get 10 to 20%. Now it's up to 50% of your daycare paid. For one child, it's $8,000. For two or more children, it's $16,000. So if you had someone made $30,000 a year, two or three kids, they paid $16,000 in daycare, their refund historically would have been about $8,000. This year will be $16,000. They will get 50% of that $16,000 added right to their tax return.

Holy cow.

Wait a minute. So but you said up to two, if they have two kids or more, $16,000. If they spent the full $16,000 in daycare, they could get half of that refunded.

Correct.

Okay, so so let's say they spent.

8,000, then they get 50% of that, which would be 4,000. Which would be 4,000. They get 50% of their, of their expenses back basically up to, up to, basically it's 8,000 for one child, meaning the max credit would be 4,000. And for two or more children, the max credit would be you take their expenses up to 16,000, 50% of that would be $8,000.

So man, it seems like you got to educate your customers on this. Yes.

In our training right now with our dealers, on our webinars, we do webinars every multiple times throughout the week. We're training our dealers on the new aspects of these tax laws as well as our system has already been reprogrammed and reflecting. So if you do a regular payment deal or a fourth quarter estimator, you know, if you've done any deals yet, our estimator now reflects those new law changes and actually has daycare on the estimator where before it never did because it never really mattered.

And it's funny that a lot of people are not going to daycare because they don't feel like they can afford it, and yet they don't know that they're getting half of that back at the end of the year.

And it's not just formal daycare. It could be their parent. You know, they pay their mom $200 a week. That comes out to $10,000 a year. That means they get a credit of $5,000 added back to their tax return.

Is there going to be any documentation requirements by tax max to say, hey, we need to, we need, we need printed bank statements or check stubs or anything? It's, it's basically kind of the same with any deduction. You'll be audited and you'll have to.

Prove that the law requires, basically you just have to provide the employer ID number or Social Security number of the individual taking care of those children, along with their address and the amount paid. That's it.

And they're going to want to make sure that that person reported it as income, I'm sure.

I would imagine so. Historically, when the IRS makes, you know, tax law changes, they're very slow to adapt the audit process. So, you know, not saying any, you know, do anything wrong, but what I'm saying is, you know, follow the law. But if you paid somebody and you paid them for daycare, then you should basically get their Social Security number or ID number and report on your tax return to get that.

Two things that really jump out to me, Bill A. I'm going to jump on right now. I'm going to make a big banner for the side of my building that says something about daycare drive today. Like, is your kid in daycare? Or do you use, do you pay for daycare? We'll get you a car. Now, something along the lines that I can tie this daycare refund because if I have a customer who has two to three to four kids and has been paying for daycare, that's going to be a monstrous return?

Yes.

You're talking about eight grand, plus the child tax care credits that, I mean.

You'Re talking like, plus the Earned income credit.

13.

Earned income credit.

Yeah, they earned income credit, right?

Yeah. So the earned income credit, I think that most this year is going to be $6500, plus the, you know, additional or the usual 14 to $1500 child tax credit, because you already received 1500 of it, plus the daycare credit. So I mean, it's going to be a monster tax season.

Yeah. And heaven forbid if they'd opted out of the child tax carrier.

Now you're talking $20,000 credit.

Like, and even if they were getting their child checks, child tax credit, the last couple of months, they've hopefully had those bills paid. And you know, they don't have to. They don't have their, their refund earmarked to get caught up on previous bills. They can actually contribute more of that to their down payment because they're hopefully not as behind as they would be in a typical tax season, using that tax refund to get caught up. So let's talk about that bill. Let's transition into how are dealers using the program to get their hands on that money? There was another post in one of the dealer groups that says something about. He's like, well, I don't want to get between my customer and their tax money. That sounds like a death warrant or something like that. And I was like, dude, bro, like, what are you talking about? I was like, that's the number one thing you want to do, is get between your customer and the tax money and try to intercept it sooner. And that's partially where this fourth quarter program comes in, right?

Yeah. The biggest problem right now that dealers are having, you guys are dealers, right? I mean, you guys are paying 30 to 40% more for your inventory. You know, the costs are expensive. Our channel checks are showing that sales are starting to soften throughout this industry. Down payments are starting to soften and collections are starting to slowly turn to the delinquent side. Nothing, seriously, but it's slowly starting to turn. So with that said, the amount you're getting for a down payment when you sell a car today is probably less than you were getting a year ago. The amount you're paying for your cars right now are 30 to 40% more than what you paid a year ago. So to solve that equation, as you extend the term, there's no other option to do that. So your term may go from 40 months to 50 months. And we're seeing that using the tax program, you can rein that term back in from 50 months, maybe back down to 40 months where you had it. But like you said, though, you have to basically get your hands on some of this tax money. Now what we're saying is if they're getting a $10,000 refund, you still only want to collect maybe or set up a special payment of 1500 or $1800. You don't want to go any more than 30%. And you don't want to go past that $2000 threshold, because what happens is if you can get into, as a customer into another vehicle for $2,500, then you're better off scheduling those payments for less than $2,000, because it forces them to do the right thing, because it's the cheapest thing for them. And we're living off. That's how this program really works. So the best dealers are asking every customer when they sell the car, even if they have the full down payment that you asked for, saying, would you like to better your deal by utilizing a small portion of your future tax return? That is the secret sauce. The entire program. Weirdly enough, I haven't been like everybody, haven't been traveling much for the last year and a half. But now with conferences, I'm getting out of the house, I'm traveling. Something new I've done because I've just wanted to do it for my whole career is actually I've been visiting a couple of different car dealerships and actually helping dealers that use us do the program in the field. So I've been to three different dealers probably in the last month, and one dealer sold five cars. While I was there, I talked with the salesperson and the customer and asked them that question, would you like to better your deal by utilizing a small portion of your future tax return? And I said, well, tell me what that's about. And I said, well, we'll estimate your tax return right now. It took 90 seconds, and three of the five people said yes, and we were able to reduce the term. One deal was 9%. One deal was 12%. One deal was 18%. And the dealer's like, wow, that's really simple. They've always used us, but they didn't realize that that's the secret sauce. It literally takes five minutes.

And, Bill, so what? Let me get this straight. And I put it into dumb, dumb terms for me.

Hey, real quick, everybody. What better way to fund that reinsurance company that you have with Buckeye, then through getting a little more tax money, right? Luke? Get that sucker filed. Take the money from the irs, ship it over to your reinsurance company, and.

Think about all the extra product you can sell when you get that extra tax money, right? You can make sure you get VSC, so 3636, right? And get. Get you Gap. So get all that sold because you're getting extra money because you're getting them filed with tax max. So buck out of a ship consultant is the way to go. They have the products you need, and it's the way to build wealth.

Right? Yep. Yeah. Give them a call, look for the link in our show notes. And back to the episode.

I've already got a deal that's working. I'm getting 1500 down or whatever right this second. And then I go, okay, Mr. Customer, Mrs. Customer, I got a. I got a way to bring your payments from 48 months to 40 months. Right now, it just takes a little portion of your. Of your tax return. Then I estimate it from there. From their last. From their last pay stub. Is that what it is?

Yeah, because you already have anyway.

Okay. And then I go ahead and estimate it and enroll them right there.

Yeah.

How do I. How do I get them? How do I make sure I get the money? Am I still the one printing the, the. The check or how does that work?

Yeah, that's a great question. So that is correct how you played it out? Yes. You just. And to be clear, these are deals you're doing anyway. Okay. We're not saying a deal you would turn down. Let's see if we get them qualified using the Tax Mex program. These are deals you're doing anyway. If you're doing the deal, you're ready to hand them the keys. You ask them the question. 85% of those customers will say, yes, I want to do this. Of course, I want to better my deal. One thing we found out at that, and I'm sure has to do with the interest rate. But let's say they pledged $1,500. That guy gave them savings of $3,000 by lowering interest and shortening their payment. So that was a big wow factor for them too. So when you estimate the return, you key in all their information. It spreads out a little promissory note. Something new that we've done probably in the last four years is that we have some underwriting criteria in the system. So it will tell you to. The dealership tax Max suggests not to schedule more than X dollars as a tax season payment. So we've done is. We've helped you kind of rein in those craziness. For those dealers who want to do $4,000 and $5,000 tax season payments, we're not saying you can't do it, but we're giving you some underwriting guidance to help you kind of put you in the successful zone. Well, 90 to 95% of these deals will pay out. Then you explain to the customer, you just need to bring your W2 back in January, February, tax Max will process the Tax return, but the refund will go to the dealership. So you get paid for that payment.

Pretty. What.

What benefit is it for the consumer to come to us as a dealer instead of going to H and R Block or Liberty or whoever? Is it cheaper? Is it better?

Is it.

I mean, is it faster? What does it do?

I'd say all the above. So, number one, when you use tax max, combined with a dealer, you know, H and R Block can't sell the customer a car. You. The dealer can. So you're going to sell them a car with better terms, basically lowering their interest and shortening their terms. You're saving them money in the car, dealer, car deal. When they file with tax max, you know, H and R Block, Jackson Hewitt usually charges anywhere from six to $750. We charge less than $300 all in. And that includes getting a refund advance within two hours the same day. So our fees are literally, you know, we charge $139 to do a federal tax return. That's it. Flat fees. We don't charge any extra. You know, we do volume. We file 10 to 30,000 tax returns a year. So like I said, we're not trying to. To get these customers. A typical H and R Block May only file 400 tax returns a year. So that's why they're charging them 6, $700.

Well, that's neat. I didn't realize it was that big a difference in price.

Yeah. So technically, you can save a customer $500 by filing with tax max. If you have a customer that's delinquent with you, say, look, you're behind $500 in your payments. Instead of going to H and R Block, let me file the tax return. I'll save you the $500. And there's your delinquent balance. So that's another way that dealers utilize the program as well as for collections. And then lastly, you have our repairs program. We literally tell every buy here, pay here dealer. Look, you do repairs, right? You have repair notes. Make sure every repair Note balloons on February 28th. Say, Look, Mr. Customer, I'll fix your car. I'll put two new tires on there, but only under one condition, that you agree to bring me your W2. We file the tax return and pay off your repair note on tax season. And that's the way you can actually collect repair notes.

That's a great idea, because right now, a lot of those deals you sold in February and March, you know, they're coming up with some real maintenance issues. Tires and trannies Engines.

Engines.

And that's an awesome way to hopefully get them to stay in the car come this coming tax season. By doing that.

Yeah. We send out an email that says, we'll give you X amount discount off your side note if you come in with your tax return or if you let us file your tax return. Then we use that to pay off your side note. We'll give you a discount off.

Yeah, I'm not that nice.

Most dealers from our Channel Check show collect less than 20% of their side notes.

Wow.

So our dealers using it this way with the balloon on February 28, promising to pay the tax return, they're collecting 70 plus percent versus less than 20.

The thing with the collectors, that's a. I love that program. Is there good training module that y' all have built to help our collectors do that better?

Actually, I'm glad you brought that up. Because of COVID we probably did 10 years with the technology with our Tax Max program. So now for collectors, they can literally do a tax return or at least initiate the tax return from their computer. It could be a centralized or decentralized collections. The customer doesn't even have to be there. So let's say I'm in Florida, and for whatever reason you have a customer. You sold me a car and I'm in Florida and I'm delinquent and you wanted me to apply my tax return towards the delinquency. A new thing we have. It's called our VIP program. And that's where literally you can create a link. You just type in the customer's name, social, date of birth, their cell phone number and email address, and then you hit submit to their cell phone. They will get a link. Well, now instead of you, the dealer keying all the information in, the customer keys all the information in. They take photos of their W2s using their phone. They submit it to our BDC department. We go ahead and read and finish entering the actual information in. They get a second link which basically tells them the refund amount. They select how fast they want it. They e sign on their phone and hit submit. And then the money goes to the collections department.

Wow, that's awesome.

So it's a paperless way of actually doing the program. And it's not just for collections. We have dealers now doing it too. Because of COVID We've been asked by some of our bigger players in the space. And look, you know, our dealerships are closed, but how can we still utilize Tax Max? And that's how we developed this program. We beta Tested it the last two years. We're in the third phase this year and launching it nationwide.

Very good. And that's something we can do even if the customer is here with us or has left or we've talked to them. If. If you want to initiate that tax return before the customer sitting in front of you, you could do that and kind of get the ball rolling, so to speak.

Yeah. One thing we've learned from COVID and I think everyone has to write that this cell phone now is how these folks live, right? They don't care if they have to fill out the information. So maybe five years ago, like, oh, I don't know how to do it. I don't, you know, I can't do my cell phone. I went to the doctor a month ago. Before I came to go in the building. I had to. Basically, they texted me a link. I had to fill all my information, enter my insurance card, had to scan my license. I had to make my copay right there. So, I mean, paperless is the way life is going. Dealerships, right, For Covid, now you have online applications. I mean, you've always had it, but there's always been some resistance. But now you've got the subprime. I don't even say, you know, the uneducated customer. They are now educated on how to live. To get their child tax credit payment with the irs, Right. They have to go online and enter some information, update their bank accounts. And so things have changed because of COVID and customers and taxpayers are not afraid of doing things on their phone, taking pictures, or maybe five years ago, they had some hesitation.

It's so true. So a couple of things, Bill. Just. Just a few tips from my experience, and you can tell me if I'm doing this wrong. So last tax season, we did about 39 deals through Tax Max. I think we did about 39 filings. I tried to go back and look and see, and for me, that's pretty decent. You know, I sell about 40 cars a month, so I had picked up about a whole extra month's worth of sales that were tax deals. About half of those were fourth quarter. And for my fourth quarter program, a couple tips I would have for dealers or the way I operate is, like you said earlier, it's a deal. I would already roll. Like, I'm already planning on rolling them. I'm just trying to get a little more down payment either, you know, I want to cover my warranty, you know, so, hey, Mr. Customer, like, a little bit more down, and I can upgrade Your warranty. I can also extend your term a little bit because now you have a warranty. So in actuality, your payment's going to go down a little bit. Right. So I try to structure it in the fourth quarter like that. The other thing that I've done is most of the time my fourth quarter, because it's a little more of a risky type, you know, deferral. Like Luke was saying, you have to actually get that customer back in, in January to actually file. Right. So you're kind of having some faith in them that not only are they going to bring your W2 back and file in January, but there's actually going to be money there when they do file. So you've kind of got two little hurdles to jump over. But I found that most of the time it was some of my past customers. You know, I've already got a track record with this person. I've sold them cars before. Maybe they're upgrading or trading in or, or getting a family car. We already have a relationship. So I know that they're not going to go. You know, they're not here just to take advantage of the system and skip town. The other thing I was thinking is I had about a total of $70,000 that I did on deferred downs over tax time. And I think last season I didn't collect about three grand. So I only had three grand not come through. Right. One of them was from a lady whose husband went and filed before she could file because they got in some sort of a spat. And the other one was someone that just completely, you know, dropped the ball. And in those situations, those people have already made two to three to four payments with me. I just take that deferred down and just tuck it back in their loan. I'm not going to repo over it. I'm not going to yank the car. I'm not getting in a big issue. I'm just refinance them, tuck it back in the loan and keep moving forward because I would have done the deal anyways.

Right. And back to your comments before about. And this is one of the biggest dealers hesitations. Well, it sounds risky just like you said, right? I don't know if I'm going to collect the money. I don't know this. The alternative is you're just extending the term. You're doing the deal anyway because you're in buy here, pay here. So you're already in the risk business. So being afraid to not collect a $1,200 special tax season payment and Saying, well, I'll just roll the term 10 more months. You're better off just putting it in the contract. And if you do that, you know, for example, the biggest thing they say, right, Bill, well, if I do the tax max program and I set up a $1,200 payment for February 28 in the contract, they don't pay it. What happens if they don't pay it? And I said, well, what happens if they don't pay the payment for January 1st?

Yeah.

What happens if they don't pay the payment for February 1st? So it's the same thing whether they, you know, if they don't pay, you have your regular recourse, whether you want to work with the customer, repo the customer. So I always say that if you're going to do the deal anyway, don't be afraid to schedule a payment. Now what you can do is possibly say, well, for my people that I have repeat customers, have better relations with, I might do a $1600 special tax season payment, but for somebody, I just have a bad gut feeling or a bad whatever, maybe I limit that to $800. So I would not, not do one. Because you're, you're just not familiar with the customer because you're familiar enough to give them the car.

Yeah.

So. And you're thinking you're going to get paid.

We also do, we always try to have an incentive like, hey, when you bring me back your W2 in January, we're going to have a free oil change for you or we're going to have some sort of a little perk that they can look forward to to say, oh, you know, I get my spare key in January when I bring back my W2. Or, oh, I get a, you know, whatever it is, a free oil change.

Or a tuna or gas or gas card or whatever.

Yeah. The other thing we do is if you, we tell the customer, hey, if you use 3,000 or more, which Bill is telling me not the smartest thing all the time, but for some of those people that have really. And I only let, with a, with a, with a fourth quarter program, I only go up to like 30% of their estimated tax.

And that's Right, that's what we recommend.

Yeah. So if you're going to use up to three grand, then I'm going to pay all your filing fees. So that's what I tell them. I say, hey, I'll pay all your tax filing fees if you use X amount or more towards your down payment. And that works really good on the first quarter. Program when you're filing, because you're filing, you know that, that money's coming in, you know, it's a little more of a sure deal and a little harder for them to not, you know, well, they really have no option to stiff.

You, and we don't mind you taking more money when you file it. It's the October, November, December deals. You really have to be smart how you underwrite those deals.

Yeah, that makes sense.

And I think the key to this whole thing is we have dealers that are like, oh, I tried tax max for a year or two. Oh, I. This, this, this, this, this. You've got to train your salesman. If the salesmen are scared of it and they either don't know how to enter the information in the website or they don't know how to ask the customer, then you're not going to be successful. But I collected $70,000 that I probably would not have collected all of that. I may have got some folks rolling in here with their H and R block cards, you know, the day of that, 48 hours between the time they get their refund and the time they spend it. But I don't want to be the one out there scrambling, you know, one or two weekends out of the whole season to try to get as many deals done as possible. Like, just. It doesn't make any sense. So, I mean, that's an extra 70 grand that I collected because I trained my guys to ask for it. I mean, that's a huge deal.

The other thing we recommend, too, is that you tie part of their sales commission to the tax max program. So, for example, if you do have a separate tax season payment that they. Either they get an additional bonus based on that collection or they'll withhold half. So, for example, if you give a dealer $300 for selling a car, well, if it's a tax max deal, you get $400 bonus. But you get 200 at the time of sale and 200 at the time you collect the note or collect the W2 with the payment. Because then a lot of times the salespeople are involved and say they'll call Mr. Customer, hey, I just don't. You know, this is Bill with ABC Auto Sales. I just sold you that car three months ago. Don't forget we had that deal. You bring us to W2, we'll take care of that special seasonal payment which is saving you all this money. The salesperson has some incentive because they've got $200 on the line to make that phone call and help get that W2 in house. So that's some other best practices that some of our other dealers do along with things that you said, free oil changes or car wash or something like that for making their payment.

No, one thing when we used to do this, and the reason we haven't, because we hadn't had time to train our sales staff and not had enough.

Sales staff to do it.

But that's another episode there. When we had, when we were doing it every year, people kept coming back and saying, hey, are you doing taxes again this year? You're doing tax again this year. How often do you see that, that yearly thing where the same customers keep coming back to your store? Because that really helps business.

That's a great question because actually we've actually tracked a lot of this with some of our larger dealers. We're seeing a lot of repeat business. So for example, you sold a new customer a car with the tax max program. That a great experience. Their term went from 50 months to 40 months. They saved money, their payments were reasonable, they had equity or paid off their car early. That when they're ready to buy another car, they walk in, say, hey, I want the same deal. And then as Jeff said, you know, some dealers will pick up the freight for the tax prep prep fee. So they say, look, I want to come back, get my taxes done for free. I want to buy a new car or trade my car in, utilize Tax Max. So it does generate repeat business after year three and year four. So that actually is a really good question.

Yeah, I really enjoy.

They're familiar.

Yep.

And comfortable. Right?

Yeah. One more thing, Bill. So if I'm not a buy here, pay here dealer and I'm a traditional retail or I'm using, you know, third party lenders or something, does this still work? Because I know there are some companies like CAC will only let you defer, you know, a small amount as a down, a deferred down payment, or a banker credit union might not let you defer any kind of a down payment. How do those guys still use the program when their lenders maybe don't kind of frown on deferred downs?

Yeah, Number one, we always tell dealers to make the first thing you do is check with your lender. A lot of the lenders are aware of who we are and who Tax Mex is. There's one finance company who actually will allow the fourth quarter program. And forgive me, I cannot remember their name right now, but it's one of the major players. So if you check with them, they will allow it they may say, okay, you can only do the program starting in December, November. Or your lender may say, no, we have had some dealers actually get a waiver specifically just for tax season. Say, look, normally we can't do this, but you can do this for December, January. So once again, reach out to your lender. If you have a lender that says absolutely not, well, then you can use the program. January, February, advertise, bring your W2 drive out today. We can basically tap into a customer's refund up to eight weeks before the IRS releases it and basically get that refund advance up to $6,000. You know, you just print the card or print the check in your printer or something new we have is you can assign it to a debit card and just swipe the card for the money and the down payment. Hand the customer the card back for the difference.

Yeah, I want to make sure people heard that in the first quarter program. So if you have a W2 in hand when you file, you can also apply, have them apply for the refund advance, right?

Correct.

So you have a, you have a, whoever is going to front these guys the money that day, within two hours. Within two hours, you could know if you could cut that $6,000 check or whatever, the 2000, the $3,000 down payment directly. They're gonna front that money. And that's not recourse to the dealer. Right. That's your refund advance. People saying, hey, we're gonna front that money. You take the check, you cash it, it's yours. If this guy's tax return gets kiboshed or intercepted or something, it's on us.

Yeah, there's no recourse. And weirdly enough, there's no recourse to the customer either, with all the new changes. And you know, this is a. I won't get into the 15 year history of this, but there's definitely been some administrations in the government who were not a fan of this. And then when Trump came back into office and slightly before that, there were some changes to the program. So basically that the consumers could get a refund advance on their tax refund. But if for whatever reason it didn't pay out, the banks could not go after the customer and it didn't ding. Their credit didn't do anything. So it was just a free secured.

Yeah, yeah. So. So if you are a CAC dealer or, or one of these other dealers, you can still make this work for you. There's opportunities to get your money, your hands on that money, and that's really the whole point of this is you don't want to be the one of the dealers scrambling mid April or mid February whenever those tax returns actually hit the street. And all of a sudden it's a frenzy for two weeks. Like you don't want to be that guy.

Yeah. And actually the way tax season used to be, you're right, Tax season was spread out from maybe January 2nd all the way till March. Now tax seasons all smashed into literally like there's two major drops. Yeah. And it's usually within the same week. So you can't sell a year's worth of cars in five days. So utilizing the irregular payments program, the fourth quarter program, you're stretching this out over the course of the year and selling those deals and bettering your deals. And then, Jeff, like you said, when the money's released, it all gets released in your printer versus you have to chase the money all around your county.

Yeah. What I like is I've already taken care of my clientele. You know, my current customers, my upgrades, my SEC people that are buying second vehicles or trading in those have all happened in December, January, February. Those guys got the cream of the crop that I had out here because they're my preferred clients and I'm upgrading them. And then all the, you know, all the last minute tax type deals that show up, I have capacity to handle them because I'm not dealing with, you know, I have a captive audience. My customers that currently have a car with me, they're kind of a captive audience. Like they're coming back to me for their second cars or their upgrades so I can take care of those outside of the busy time before things get crazy and save my salesman for those two weekends when, you know, the money might be on the street and I might be able to pick up new clients and new customers that, that haven't heard about me.

Right. That's the perfect way of doing it.

How are people going to get a hold of you? Tell us, tell us how we get a hold of you. How dealers can learn more.

Okay, so basically go to taxmax.com on our website, has our email address, has our phone number. We even have a spot where you can click on and request a demo and get a one on one demo with one of our tax max specialists. We call them success managers. Something new we started the last two years. You had mentioned a couple things, right? I don't have time to do this. Well, now we have our VIP program where it just takes 60 seconds and basically you create the link Tax max and the customer work together, but the money goes to the dealership. So that takes care of. I don't have time for this anymore. The second big thing is, you know, I don't have time for training or I really don't know what to say to the customer. Now. We say, call us. Put the phone on speakerphone. We will talk to your customer for you. Explain the process, explain how much money you're saving. And until that dealership gets comfortable doing on their own, they can call us. So that's something new we've been doing. So we say call, you know, one of our success managers. But, yeah, go to taxmax.com, our phone number is 813-987-2199. I'm also speaking at the Niada NABD conference in November in Orlando. So if anybody happens to be there, we're actually something new we're doing this year. We're going to send an email blast out in the next couple weeks where you can book a private appointment, you know, instead of coming to our booth and, you know, we'll have six reps there and, you know, we'll have maybe 10 dealers at a time in there. We're doing something where you can book a private appointment with us and sit down for up to 15 minutes and talk to us about anything, whether you're a customer of ours. You hate tax. Max, I'll never be a customer. I invite you, come sit down with us for 15 minutes, and let's just talk. That's all. We just want to hear what you're doing, what you can do better. And, you know, one thing we've learned from the pandemic, like I said, we've been going on. We're going on our 27th tax season, going back to the Great Recession. Keeping dealers in business is really important to this industry. During the Great Recession, you know, we used to have 4000 dealers, and we lost 1000 of our 4000 dealers went out of business. We were really scared with the pandemic, and we are still losing some small dealers. Some small dealers are saying, I can't afford the price of these cars. I'm folding up shop, or I'm gonna close up for two years and see what happens, or I'm gonna retire. We're seeing a lot of dealers exit the business, which is not good for consumers, you know, and it's not good for the industry as a whole. So one of our goals, and I challenge you to. To take my challenge, I guess if you hate us, come talk to us. And we're not going to try and strong arm you or sell you. We just want to see what you're doing and maybe give you some suggestions on how to do things better to stay in business. Shrinking your term is so important right now because what happens when the price of these vehicles plummet? Let's say the chip crisis solves itself in two years. Now you have excess inventory. The book value of that vehicle you sold two years, which is today at such a high price, will plummet even faster and depreciate even faster. So I do foresee some, see some problems two years from now when customers are really, really upside down because dealers extended the term too far in a car that really should be booked at 5000. But is the market values now is 7 or 8 conversation maybe for the future.

But yeah, that's a big conversation for your future. But Bill, we appreciate you being here. We appreciate Tax Max being committed to our industry and hopefully dealers will stop by and see you. Look forward to seeing you as well.

I appreciate you guys so much.

Thanks Bill.

Thank you for the time and the platform. So glad you joined us. Please take a minute to leave us a review and share this podcast with a friend, the Independent Dealer Podcast Dealers Helping Dealers SA.