Tax Chat: Eric Green Reveals The Tax Rep Guide to Tax Season

With Eric Green

Renowned tax attorney Eric L. Green delivers a roadmap for seizing tax resolution opportunities this tax season in the new video from last week’s first Tax Chat of the year, hosted by Seth Fineberg.

MORE TAX SEASON: FTC Nails TurboTax for ‘Free Filing’ Scam | | Offer Your Tax Clients Other Services |  Higher Fees to Start: Ten Ways to Make Your Tax Season Better | Tax Pros Handle 37.7% of E-filings | If Only the IRS’s Tax Pro Were Useful | Can Your Tax Reviewers Answer These 10 Questions? | Tax Pros File 33% of Early Returns | Can’t IRS Online Accounts Be More Useful?

In this live webinar, attendees – and now you – get the fundamentals for catching lucrative tax rep engagements without adding to busy season workloads. With live, real-time Q&A, everyone’s questions got answered.

The Hosts
Featuring Eric L. Green, founder of The Tax Rep Network.
Hosted by Seth Fineberg, Accountants Forward.
Presented by Rick Telberg, CPA Trendlines.

On the Agenda:

1 – Why tax representation is bigger than ever and growing fast.
2 – Identify the best prospects and lock them in.
3 – The essentials of tax resolution procedures, rules and regs.
4 – The hidden items in clients’ books that could cause nasty surprises.
5 – Why you don’t need to be an attorney and how to partner with one when you do.
6 – What tax rep certification can mean to your bottom line.
7 – BONUS: Eric Green’s powerful RCP Formula.

Transcript
(Transcripts are provided as soon as possible and could contain errors in spelling and grammar)

Seth: Welcome to our very first tax chat of the season. I am personally excited about this one. I’m going to be excited about all of them, I’m going to be honest. This one is really about– and thank you all for taking a break today and joining us for this chat. I have here with me Eric Green of Green & Sklarz and also of the Tax Rep Network. Rick, you want to get in a couple of words here?

Rick: Thank you. Yes. I wanted to take the opportunity to introduce Seth Feinberg and tell you things he would say about himself. You probably know him from Accounting Web and Accounting Today. These days, he’s built a business and building a business called Accountants Forward, which connects vendors and service providers with accountants. He is an experienced analyst and commentator on the business, and it’s a pleasure to be working with him.

Seth pulled together these tax chats. The next one, if you’re interested, is on March 8th, What to Do When You Hit a Wall. It’s all about maintaining your mental balance during tax season and figuring out how to put yourself first and more. That’s March 8th. You’ll be getting more information on it, I’m sure. Seth will introduce our special guest of the day, Eric Green.

Seth: Thank you. As I said, thank you all for taking a bit of a break today from your work, from your clients, from perhaps you’re even sitting on hold with the IRS as we’re speaking. We are here to pointedly discuss something that I think a lot of you as tax professionals know full well, and the pain associated therein is with the idea of tax resolution. Now, a lot of your clients probably sitting with notices right about now, maybe they owe back payroll taxes, other taxes. Eric Green, my guest today, is well-versed, well-familiar, with not only dealing with the IRS, but dealing with these notices and doing it in such a way that is going to be more profitable for you as a tax pro and possibly less painful for your clients.

Eric Green is a partner at Green & Sklarz out in Connecticut. He’s a tax attorney. He’s also the founder of the Tax Rep Network. Eric, a few words about yourself, and then we’re going to jump in to questions. Again, by the way, if anyone during this chat– this is not for CPE, by the way, this is an open chat. We just wanted to really introduce the idea, give you guys a break during this part of the day, and talk through a very pointed topic. Please ask your questions. Rick is here to help out. I’ll be addressing them with Eric throughout this chat today. Eric Green.

Eric: Listen, guys, thank you, and thank everyone for joining us today. I know you’re slightly busy probably this time of year, but hopefully we’re going to give you some good information. What about me? I am a recovering accountant. Went to law school after being an internal auditor for five years and focused my practice on civil and criminal taxpayer representation. I have just found that the greatest way to get referrals was to educate my network of accountants, some of whom approached me about getting more than educated, actually getting trained.

We launched Tax Rep Network, which was literally a hobby, but we were training a circle of around 20 accountants at the time. We’re now almost 500 accountants and lawyers across the globe. We have people in Europe, Guam, South America, and we’re helping them build their representation practices. That’s a little bit about me. The focus of my practice is, like I said, civil and criminal tax, so we do this every day. I’m a past columnist for Bloomberg Tax. I am a former chair of the Connecticut Tax Bar, et cetera, et cetera. It’s really rather boring. There is a tremendous opportunity because the IRS is staffed. Not well trained, but they are staffed. The automated notices are starting.

Seth: Yes, they are.

Eric: No, we are very busy already, and we’re just going to get busier. Hopefully everyone will get some good information out of today.

Seth: Excellent. Just jumping in here, and, again, we already have some questions flowing, which we will get to, I promise. The first question I have for you, so one of your, I guess, watch words or turns of phrase for the TRN, is life is too short to do another tax season. Now, in all seriousness, I’ve been covering this profession now for a good few decades, 22-plus years in total, and I don’t know that I’ve ever seen the true pain on the faces and in the voices of tax pros like I have in the last few years. Particularly a lot of them just wanting to really just be like, “This is literally my last tax season. I’m not doing this again.”

Again, I have heard this a bit before, but never more than right now. I don’t know that that’s necessarily the answer. I think that tax pros, EAs, CPAs, you’re all needed out there on the front lines. TRN is proposing a better way. Talk to us about some of the pain that you’re hearing accountants go through and where just the idea of tax representation has come in.

Eric: Look, here’s my thing. It’s not that necessarily people want to stop doing returns at all. The way that, and, again, I’m speaking to–

Seth: Some say they do, but, yes.

Eric: Yes. Some, from my own experience, because I did work for small firms, I did get literally the shoebox of stuff, a number of things. First of all, you should have automated. If you haven’t, you really have got to get your arms around this. So much of your practice can be automated. Seth, you and I could do a whole program just on automation.

Seth: Absolutely.

Eric: Everything from the organizer automated, to the letters getting signed, to the file being uploaded so that the days of digging through paper and doing all that should really, for the most part, be gone. For the EAs and the CPAs, you have skills that are valuable. What I would suggest is what can you do with those skills beyond bookkeeping, accounting, and return prep? I, of course, am focused on IRS representation. If you could do a 1040, you can do an offer in compromise. We’ll get into it. I think, Seth, we’re going to talk about the RCP formula later.

Seth: Absolutely.

Eric: IRS representation is really a very linear process, and it’s that way for a reason. The IRS doesn’t trust their people to try to figure things out. It is very formulaic. Once you learn the formula, one, you can do this work, which is not seasonal. It’s year-round. Two, these folks, and I hear this all the time, Eric, these people are broke. They’re not broke. By the way, when the IRS is after them or even the Department of Revenue, they need you. They’ll borrow the money from family. They will come up with the money. The other thing is this is not bookkeeping.

Seth: Or a payment plan or something.

Eric: Right. This is a specialized service. This is like going from general physician family practice to oral surgeon or orthopedic surgeon. We are now actually working as a specialist. Our rates are indicative of that. When folks have asked me, can we really add 100,000 to our bottom line, which I’ve told people. The average case, again, according to my tax rep members, on average, is around $8,700. That’s one case a month.

Seth: One case a month.

Eric: By the way, if rep’s not your thing and you like planning, why not go get your CFP and become a certified financial planner? You’re already a trusted advisor. There’s money to be made providing financial advice. Obviously, you have to get trained, financial advice. If you love accounting and that’s really your thing, go get your CFP and become a certified fraud examiner.

Seth: We’re here about representation, and that’s great, too. There’s a lot of paths.

Eric: There’s a lot you can do. Today, IRS representation is one of those things that’s an easy add-on. Probably, by the way, Seth, most of the people on here are probably already doing it and don’t even think of it as representation. If they’re responding to a letter, if they’re calling the government about a penalty, that’s representation.

Seth: Maybe some of you are on hold with the IRS right now, perhaps.

Eric: Right, that’s representation. It’s a little bit of a shift in thought process that a lot of preparers feel that they have to do this as part of their return service. Unless you’re charging 10,000 for your returns, no, it is not part of the service. This is something that if they need help, and we charge accordingly and get power of attorney, and then you can go and help them sort it out.

Seth: We have a comment from one of our attendees here, and I’ve heard this before too. They just feel that, while we know that enforcement automation has been turned on, there’s definitely practitioners like one of our attendees here that feels, look, there’s just no IRS enforcement whatsoever. What do you have to say to that?

Eric: It’s a little bit of history. When COVID started in spring of ’20, they turned off the automation. Now, officially, and I want to laugh when I say this, officially, it was to help taxpayers. It actually also helped the government because remember what was happening. Campuses went into shutdown because of COVID. Everyone was working remotely. Nobody wanted to have automated liens go out, automated levies, and not have taxpayers be able to get through to the government.

All of that got turned off. Now, they announced they were turning it back on last June, and what happens? Notices started to go out to remind people, and then the government threatened to shut down in the House of Representatives. They put everything on hold, got out to Labor Day. We were going to start again, another potential government shutdown. In January, they started. Now, Seth, to clarify for folks, when I say started, you’re talking about there were 3.2 million taxpayers that the IRS could levy today. They’ve already had their final notices prior to 2020. They had their final notices. The government doesn’t have to do anything. They can literally issue bank levies today.

Seth: That’s four years ago.

Eric: Nobody wants to do that because what happens? If you do that, now 3.2 million people and their representatives are calling. The phone lines get jammed. They’re going to the advocate that gets overrun. They’re going to stakeholder liaison that gets overrun, appeals. What they’re doing is in waves, threats to levy. They’re calling it a refresh. They don’t have to send this, but they’re sending it in the hopes that taxpayers will get this. Oh, they haven’t forgotten about that back tax debt.

Seth: They just want them to respond.

Eric: Maybe I can pick up the phone and call because I know a lot of practitioners have said, “Well, Eric, this sounds great, but I talked to taxpayers. No one’s bothering me now. Why should I do anything now?” That’s going to change. In fact, on March 18th, I’m doing a webinar with the Director of Collection Policy. Rocco Secco is joining us. The wave of notices are going out. We’ve already, I think I sent 27 retainer agreements out this week, including what will go out today. Representing, Nicole and I were just talking about this, about 137,000 in retainers. No, it’s starting. Give it another month or two. I think you will start to see taxpayers starting to scramble.

Seth: I want to get into a couple of types of notice. One of our attendees had posted. “Yes, Eric. I have a client that received CP3219A and CP22A. How do I proceed with this client?” Please explain for those following along at home, if they don’t know what that is, what these specific notices are and how they proceed. If you don’t know.

Eric: The 3219A and the CP22A, usually this is where information doesn’t match.

Seth: Oh, and also how much do I charge?

Eric: I don’t know. We’ll get to that. One of them, the 3219A is, we have information that doesn’t match. Usually this is like a 1099 or a W2 that the client forgot about or by the way, sometimes didn’t receive. I’ve had this. I actually had a notice a few years ago that I missed a 1099. I never received it. That happens. What do you do? First of all–

Seth: Pretty common, right?

Eric: Yes. First of all, we get retained. In these cases where something doesn’t match, the first thing I would, if you’re the preparer, is just review the file. Did you get everything? Usually they’ll tell you this doesn’t match, and there’ll be a 1099 or W2 that they’ll identify for you that didn’t match. The CP22 is, “Hey, we’re just going to make this change. If you agree, just sign and pay the bill. If you don’t, send in why.”

They’ll usually identify what doesn’t match. The first thing I would do is review my file. Am I missing something? Because this is going to come up with the client. The client says, “Well, I gave you everything.” Did they? If you’re really at a loss as to what happened, you’re going to want to pull what are called wage and income, wage and earning reports from the IRS. It’s a type of transcript that will have everything reported under that taxpayer’s social. The problem is they’re usually not available till April, May. That way you can see what the government thinks is missing.

The other thing you could do is a Freedom of Information Act request for the administrative file for that year. Assuming it’s a 2022, you would literally do a FOIA, Freedom of Information Act request, requesting the administrative file regarding the 2022, 1040 tax return and the notice of missing information. You want to limit it. That way you only get what you need versus 50,000 pages of garbage. That’s where I would start.

Now, how do you charge for it? First of all, if you have an hourly rate now, you’re going to increase it because we’re specialists, right? We’re no longer Army, we’re now Delta Force. We’re charging more. You could do it one of two ways. Either figure, look, this is going to take me three hours and I’m now $400 an hour, so it’s $1200. We usually will charge to pull transcripts and review them a 1500 flat fee.

Seth: Flat, yes.

Eric: My staff can do it in two hours and at their billable rate, it’s quite profitable for us. That’s what we’re doing. Now, again, you review the file and you made the mistake, listen, we’re professionals. I wouldn’t charge the client. Now you have to help them fix it because you’re a professional. Assuming this wasn’t your fault, you take the–

Seth: Client got to notice, yes.

Eric: Here’s the thing, by the way, I thought I saw a comment fly by that, what if the client doesn’t want to pay? Remember, the client’s an adult. They could figure this out. If the client doesn’t want to pay, in a way, when I talk to people, I said, look, actually, I live in Connecticut. I have an acre and a half. I hire someone to come every weekend with a rider mower and mow the lawn. I could go mow my lawn if I wanted to, spend four hours with the push mower or whatever. I could go invest in a rider mower. I don’t want to.

It would never cross my mind to not pay them. If they want you to do it, they pay for it. If not, they’re an adult. Go figure it out. Go on the IRS website. Read the correspondence. You call and stay on hold, get to a human being, figure it out. You’re an adult. Again, it’s not my problem. I got my own problems. If you want me to help you with your problem, this is what it costs.

Seth: There is actually a good question came in related to this. We could probably spend the full hour on how do I deal with a client who X? One of the problems that one of our attendees here is having is dealing with the taxpayer issues coming to us after that they’ve been fleeced on, from so-called scare tactics, tax resolution firms. How do we combat this?

Eric: After they’ve been fleeced, listen, we charge. Unfortunately, I feel bad that you went to that company. You can call the state attorney general if they’re actually one of these companies that are located in the US. You come to hire us, it’s us. How we deal with it, if folks come in and they’re comparing, I’ll say, look, what happens a lot, they get a notice that says proposal to settle. Now, just for everyone on here, if you called me up right now, if somebody went in the chat and said, “Eric, my client owes 200,000. They make 85,000 a year. Can we do an offer?”

I don’t know. How much time remains on the 10-year statute? Are they married with four kids or are they single? Do they own a home with equity or are they renting? Do they have serious medical bills on a monthly basis or are they in good health? I don’t know without doing the analysis. My point? That national company, by the way, they always pull 10%. The proposed settlement is always 10% of the amount on the notice of lien that they found. They don’t know if they can settle that or not.

What I would explain to clients, say, look, I walk them through the formula. I need to do the analysis in order to know what your options are and why. They’re just throwing that out there in the hopes that you hire them. They have no idea if they can help you or not. If you want to just throw your money at the wall and see if anything works, you can go with them. If after it doesn’t work, you can always call us and come back.

I’d much rather only take, and I can explain to people who are interested how we charge. We take part of the fee and do the analysis. We then do the consult where we walk them through what their options are and why. When you tell the client that, we close everybody. I say 99% because I can’t really find anyone who didn’t. Because what the client says, well, wait a minute, you’re a real human being. I can see you. I could even maybe come into your office. We have clients all over though, so usually it’s online.

You’re going to look at my info, then walk me through this reasonable collection potential formula, and then explain what my options are and why. I don’t have to put 5,000, 10,000. I only have to pay 2,500. They sign up. It’s because there’s a comfort level. You’re a human being. I know where you are. You have a real physical address. You’re going to actually give me real information, versus I’m sending someone money in the hopes that they can help me. I don’t really view them as competition. It does suck though, because we’ve had this too where people have been fleeced effectively, and they come to us, and they’re out now a lot of money, and I feel bad, but it’s really not my fault.

Seth: Eric, let’s back up a little bit. I do want to get into the RCP formula, because that’s going to be real key for the folks attending here. How does tax representation work? I get somebody commenting like, you can’t sell Christmas trees in July. I wouldn’t put a dime in advertising tax prep services right now. Let’s just assume that, look, these are the things, we’re not saying like right now, but you also have probably identified folks who are automatic, could use your help, and perhaps even partnering with a tax attorney like Eric, not necessarily Eric, but how does tax representation work? This is why we’re here.

Eric: By the way, I actually disagree. I would be advertising now, because one of the biggest thing about people that need help, there are people that have back balances of all over 15 million of them. There are more than 10 million non-filers. Right now, I’d be focused on the non-filers because as the government identifies them, if they can create a substitute for return, they are, they’re just issuing notices of deficiency. Getting people back into the system, these are actually quite lucrative.

If you think about it, you got to probably help them get their books together. They may not be the best record keepers. Getting the returns done, federal and possibly state, getting all that submitted, and then working out the resolution on that. I think the average non-filer case from my members was 17,000 from start to finish. We don’t ask for 17. First, you’re going to do the accounting, get the returns done. That’s one engagement. The next would be, we have to help you with, let’s say the state of New York, right? You need a payment plan. We’re going to do an offer and compromise with the IRS. Each of those is a separate engagement, and it adds up. They’re quite lucrative.

What is representation? It’s simply helping people work out whatever it is issue they’re having with the IRS. It could be like the CP22, where there’s an adjustment to the return and you’re responding. It could be an audit notice, literally a physical audit, right? We’re coming to our office and provide the documents, to we think you missed something, or a correspondence audit saying, “Hey, Seth, we looked at your return. Could you please provide us backup on the following three items?” It’s what’s called a correspondence audit.

That’s representation. Going to appeals if you disagree with what the IRS adjusted. Helping people work out if they’re uncollectible, get into a payment plan or an installment agreement. Offers and compromises, obviously a popular one. Helping a spouse get innocent spouse relief, penalty abatement, resolving payroll tax issues with a company. It runs the gamut of what representation is. If you’re into forensic accounting, we’re always looking for a good forensic accountant because between criminal tax cases, bankruptcy, there’s a huge need for forensic accounting divorce. If you want to talk about advertising, get in with some good divorce lawyers and some bankruptcy lawyers, you’ll have more than enough work.

Seth: Excellent.

Eric: Every case they need somebody to help them sort through this.

Seth: Absolutely. Clearly, lots of work out there if you want it. Talk to me and everyone here about the certification process to be a certified tax resolution– What’s the certification?

Eric: The background on this was I originally was approached by CCH and they said, “We’d like you to build an IRS representation certificate program.” Now, this was probably around 2010, 2009, sometime in around there. We created a– the time was 16 hours on the basics of representation, audit, collections, appeals, and innocent spouse. It has now grown to 20 hours. I got the legal rights back to it. I licensed it to the University of Connecticut Business School. Again, I have the rights back to it. It is the CTRC-certified tax representation consultant.

I have to tell you, when I first got approached by this, being a lawyer and a recovering accountant, my law partner and I were like, who wants to get certified by CCH? The whole thing was like, “Really?” Here’s what I’ll tell you.

Seth: [chuckles] We hear that.

Eric: If you go actually to the CTRC page on Tax Rep, look at the testimonials from the members. What it is it’s 20 hours. Five four-hour modules. You take them on demand.

Seth: It’s just through TRN or–

Eric: Through TRN. It’s four hours on IRS audits, four hours on collection, how the process works, liens, levies, all of that, four hours on offers and compromise, four hours on innocent spouse and resolving innocent spouse cases for your client, and four hours on resolving payroll tax.

Seth: 20 hours total.

Eric: 20 hours total. When folks get their CTRC, what they have noticed, one part I could’ve guessed, the other part I find fascinating. One, they start getting more referrals. Why? Because when people start looking, they say, “Wait a minute, you’re certified in this. You’ve got experience in this. That is a big–”

Seth: Rather than just going, “I don’t know. I’ll connect you with a tax attorney.”

Eric: Yes. I’ll go find it. I have to get–

Seth: That’s money on the table.

Eric: Yes. Here’s what’s interesting. The members reported also getting a lot more just regular tax business, returns, and accounting. We did a follow-up survey. I’m like, “Why? What do you think?” They said, “Here’s what happens.” People that come in and want to hire them now say, “Look, I don’t have a problem, but if I have a problem, I know you can handle it.” It is that outward statement that this is something we focus in, this is something I’m trained in, and we can handle– if you have a problem from an audit notice, you have a balance you can’t pay, you’re in the right place.

We can get you everything from bookkeeping right up to a closing arrangement on your audit to an offer and compromise to settle the debt. Start to finish. We got you covered. That message, it resonates with especially business owners, 1040s not so much, but the business owners find that to be almost– I wouldn’t say a relief, but there’s something comforting that they have a practitioner that can handle whatever comes in the mail.

Seth: Which is in many cases probably, you owe back payroll taxes, which, obviously it can be a–

Eric: Sales tax we haven’t filed in a while. How many returns do we have to do? Do I have to do 15 years of returns? No. It’s six with the IRS, and the state, depends on the state voluntary disclosure program. They can go from three years to seven years, three years to 10 years if you’re California. Just the fact that you’ve got the knowledge, I think, is a– first of all, it’s more comforting for them.

I’ve been through this training. Even if I’m new at it, it’s not a foreign language to me. I at least understand enough of what’s going on. With the seat, with the certification, what we found is people wanted some support, marketing, help growing, all of that. We’ve actually been giving them three months of just our gold membership in Tax Rep to help get them launched. They have our marketing material. They can go on our help desk and we will help them with cases. If you get a case, you’re like, “I don’t know what to do.” First of all, get the retainer, get the checklist, then we’ll help you figure out what to do. Don’t let that business walk out the door.

Seth: Yes. All of this sounds really great, but what’s the bottom line here for tax pros, vis-à-vis tax representation? Okay, Eric, you’re making some sense to me. Maybe I will go through this certification and then we can get into the real meat, I really want everyone to hear about the RCP formula.

Eric: Right now, here’s what I would suggest to people. Right now, no one wants to start tackling certification. Let’s get through April 15th, right?

Seth: Sure. This isn’t tomorrow.

Eric: Right. What I would suggest is, yes, go get your certification, go through the course. Now you’ve got your free membership, you get the complete set of books, you’ve got your library, you’ve got our marketing stuff. The easiest marketing to do, honestly, is, and actually, there’s a letter in our Tax Rep members area you can download and use, it was from my first Tax Rep member. Literally sent a one-page letter, 8.5 by 11, what to do if he can’t pay the taxes. He sent it to a little under 500 tax clients.

He got 150,000 of new business because here’s what happened. People were like, “I didn’t know you did this. My brother has a problem. My son hasn’t filed.” No one can send you work if they don’t know that you do this. The first place, before you start on ad campaigns and Google, forget about that. First of all, just let your network know that you do this. I would look around where you are, talking to the family lawyers, the divorce lawyers, the bankruptcy lawyers, real estate lawyers.

They got to sell the house, there’s a tax lien. It’s simple. It’s really simple to resolve. You would think that it was like Martians or something, people going to meltdown, including the lawyers because it’s IRS. It’s IRS, they’re ahead of everyone. No, they’re not, okay? You start the process of just working through your network. Now, our marketing stuff covers everything. If you want Facebook ads, Google ads, directory sites-

Seth: I didn’t know that.

Eric: Oh, yes, all that kind of stuff. Actually, Seth, we got the lien database for businesses. There are 3 million business–

Seth: All right, you want work? [laughs] Here you go.

Eric: Here’s some businesses in your state that we know have a tax problem for your target marketing. We actually loaded that and put that in our members’ area. We update it about every four months. There’s a lot. There’s 170 hours of training in Tax Rep. The first thing though, you get certified, start with your network. What other training are you going to take? What walks in the door? You might find someone comes in and says, “Look, I haven’t filed in a while, I’ve been paying people under the table.” We have a whole thing on how to do a voluntary disclosure.

Whistleblowing. If you have somebody who wants to whistleblow, they’re very profitable. You’re going to wait a long time to get paid, but that’s a contingent fee kind of thing. There’s training in there on everything. Where do you start? What walks in your door or what interests you? You do that. What happens, I think, you start doing this, here’s what’s going to happen. Do you have to get rid of your 1040? You might want to sell off your practice.

Seth: Yes, maybe there’s some 1040s you want to just–

Eric: Yes, but here’s what happens. Most of our members because again, we’re always talking to our members. We put together think tanks for members-assisted feedback. Most of them found that what they did is they went out and those DNF clients, you know what I mean, the ones who suck your will to live, they waste your time, they don’t like to pay, those folks, they just get rid of. Just send them a letter, “Look, I’m too busy, can’t handle your account. Please feel free to go somewhere else.” The A and the B clients–

Seth: I think we have some folks here I identify. [chuckles]

Eric: Oh, yes, you start doing relationship pricing. Dawn Brolin has a whole course on relationship pricing. You’re going to convert them into the clients that they should be. You’re meeting them twice a year. These clients, Dawn said, most of our clients now, 10,000, 15,000.

Seth: Amazing.

Eric: The thing is they’re now getting the service they deserve because you’re not wasting time with all these other small things. What you’ll find is knowing you’ve got another stream of income, it frees you up now to really do what you’ve probably been white-knuckling before, which is your clients [unintelligible 00:44:55] net.

Seth: That’s what this is all about, for sure. Great comment, Dave. He said these cases come in every month through referrals, and it’s year-round. Somebody had a pretty pointed question that’s very specific about returns. They want to know, how do you submit an actual return after the IRS has prepared a substitute return? That’s a good one.

Eric: I just saw that one. Yes, no, Michael, I saw the same question come up. Actually, this is fascinating because what happens is people do an amended return, and they mail it in, and it gets returned. Here’s the deal. When the government does a substitute for return, there is no original return. What you do, Michael, is you prepare the original return, and you file it. Now, you can file it, and they should just accept it and process it. If they don’t, what you would actually do is what’s called audit reconsideration because that substitute for-

Seth: Audit reconsideration.

Eric: It’s effectively an audit. What the government did is they audited, they got your information, and put together a return for you. There’s a publication, I think it’s 3598, it’s like a two-page flyer the IRS has. The form is Form 12-661, Disputed Issue. It’s a simple one-page form. Basically, it says, “What do you disagree with?” What you’d say is, “We disagree with the substitute for return. Attached is the original return and all the supporting documents because remember, the burden is now on the taxpayer to prove why that assessment is wrong.

You would submit the original return signed and dated for filing, and you submit all the backup with it through the audit reconsideration. The first thing I would try is get the return done and submit the original return. Hopefully, it just goes through. If it gets kicked back, then you’re going to do the 12-661, the audit reconsideration process. Now, you have to submit all the backup with it, but that’s what you would do. You’d have to get the original return on file. You can’t amend what you didn’t file.

Seth: Michael, hopefully, that answered your question. Another, a different Michael asked a different question, and I was going to ask this too. Look, for the enrolled agents out there, and those who are– we have someone who’s actually studying for their EA. Awesome. Currently studying for EA. Right now, just a taxpayer, tax preparer. They’re doing so, obviously, so that they may represent their clients. How does the TRC tax representation certification differ? Does the IRS recognize a CTRC representative instead of just being nasty to them, just the taxpayer? [chuckles]

Eric: No, the CTRC is not a license. For instance, if you’re unenrolled–

Seth: The certification.

Eric: Yes. What the CTRC are saying, “You’ve gotten this amount of training, we’re certifying to that. You need to get your EA first.” For those of you who are unenrolled–

Seth: You hear that? Definitely. Go for the EA.

Eric: Yes. Get your EA done because I think they shut it down for tax season. You can’t take the exam, but study as soon as tax season–

Seth: Right. I think that’s what they said. They’re studying.

Eric: Yes. Knock out your EA. I have staff in my office that are studying for their EA. Get your EA first. Once you have your EA, now you can represent. The CTRC is to start getting that specialized training. The CTRC designation, honestly, is really more of a marketing thing for the clients so that they know you have this expertise.

Seth: Okay. Hopefully, that answers that because, yes, when I first started talking to you, that was actually my initial question. I’m like, “Wait a minute, people get their EA so that they can represent their clients.” Actually, they were licensed by the IRS to do this. As a CPA, what would you say to CPAs who–

Eric: Same thing.

Seth: Same thing.

Eric: Once you have your CPA or EA– I’ll give you an example. There were some CPAs that are great forensic accountants, but I will tell you right now, as an attorney and my law partners, you do way more litigation than I do, they’re not going to hire you and put you on the stand if you don’t have the CFE designation. You could be the greatest forensic accountant as a CPA, but it doesn’t matter.

Seth: You don’t have it.

Eric: They have to sell you to a jury and a judge as a specialist. The CTRC is kind of the same thing. If you have an EA, there are some EAs that are former auditors and they’re excellent and they don’t need a CTRC, but yet they come get it because what they find from a marketing perspective for lawyers, for clients, it raises them as, “Oh, yes, I have this expertise.”

I just know that from my partners, we’ve had CPAs come to us, do forensic work with us, and they’ll look and say, “You don’t have a CFE. We don’t care how much experience you have. At some point, depending on the case, I may have to put you on a witness stand and we have to prove you’re an expert. Without the designation, we’re not doing it.”

Seth: CTRC, again, just to reiterate is really just for your clients to say, “Hey, look, I’m now certified to do this.”

Eric: Exactly. You need the license first, whether it’s a CPA attorney or EA, you need to get that first in order to represent the CTRC as a designation for your marketing and your networking to attract clients and charge more.

Seth: That is the bottom line. We did talk about the bottom line too. What could you be seeing? Let’s talk revenue. You’re hopefully starting to think about your practices as a business. This is all about, A, being able to finally go, “I really don’t need these kind of CT level clients anymore. I do want to work with more with my As and Bs,” and then obviously the folks that do have notices and are very likely sitting on them right now, or they’re getting them right now. “I want to be able to help them.” Let’s talk net-net here.

Eric: Look, at Tax Rep, we run monthly– we pause during tax season, but otherwise, we run what we call the $100,000 challenge because the tagline for Tax Rep for a long time was, “Add a $100,000 to your bottom line.” We started having members that would email us, “I hit the 100,000,” blah, blah, blah. Well, that’s great, but it didn’t dawn on us. Where’s everybody else?

We actually surveyed people and what we found was anyone who followed our marketing, I basically ask you to spend about an hour a week on marketing. That’s it. You don’t have to go nuts. Listen, you can do more if you want to, but you don’t have to. What we found is folks were like, “Well, I got busy. I haven’t really been doing it,” so we started the $100,000 challenge, which basically it says is monthly, “Just follow us and do what we tell you to do. If you do that-”

Seth: All the plan.

Eric: “-you’ll cross 100 000.” We have two members that have crossed the million-dollar mark in terms of their practice-

Seth: Nice.

Eric: -which is where I am and Jeff is. Here’s what it comes down to. The secret for me and Jeff and the secret for those two members, I can tell you, everyone, right now, they’re not on the sides of buses. They’re not doing radio ad, nothing. They are just constantly in networking mode. Other lawyers, unenrolled preparers, especially when they’ll say, “Look, I’m not taking your 1040 clients, but if you have a problem, I can represent. They’re your 1040 clients,” but it’s really the network because, like I said, you have some good divorce lawyers, a few good bankruptcy lawyers sending you– your network knows that you do this.

If the average case is $8,700, let’s say you get three cases, who wouldn’t like to make 300 grand? Remember it’s three cases a month. You’re actually working part-time to work three cases. It’s not like you’re killing yourself. It’s really about how fast or how slow you want this to go. Where you are does impact it. If you’re in New York City, there are tons of people with problems. There’s also more competition with the lawyers.

If you’re really out in the middle of nowhere, but I have to tell you, one of the big silver linings of COVID, people are now very comfortable with teams and Zoom. I had clients that they had to come in and see us. I haven’t had a client want to come in and see me probably since before COVID. We just get on a Zoom now, so I have clients everywhere. I’m actually working on a case now in Texas. They see us, they get referred to us, so cases come in from everywhere. It’s really about building that network and just the referrals coming in.

Seth: A good question just came in and keep them coming because we can go to the top of the hour. I know that we were looking for this to be maybe like a 40, 45-minute chat, but good questions coming in. Thank you all really for taking your time. Again, I’ll remind you of the gift that you can get from Eric at the end of this. Can an EA or can the EA revenue share with the unenrolled preparer who got the lead on a commission cut? Is it a commission cut?

Eric: Yes. I think CPAs and EAs can. Lawyers are not allowed to split fees, but I’ll tell you how we do it. The way that we work– I’ll get this and I do have some unenrolled preparers that send me a lot of work. I’ll walk you through. Let’s talk about an offering compromise. Let’s say–

Seth: Good example.

Eric: Yes. Seth, you are unenrolled and you call me and say, “Look, Eric, I have somebody, I think she’s a perfect offering compromise candidate. Here’s the situation. She owes $500,000 from a failed business payroll and everything. Business is gone and she’s now retired. She’s 69 years old. Social security and a small pension.”

What I tell the client, the way we would normally work, if Seth just referred her, we would say $2,500 upfront, do the analysis, walk her through the options, and what we tell them is, “Look, we charge $6,000 for an offer.” If we are an offer candidate, then $6,000 minus the $2,500 you’ve already paid. We would just need the other $3,500 and we can go forward with the offer.

Seth: Do you go based on also– is there some adjustment based on how much somebody might owe? What if they only owe $5,000 or–

Eric: If you look at circular 230, you can’t do it as a contingent fee. It’s against the rules now.

Seth: Okay. Good to know.

Eric: Now, here’s the interesting thing. Do I always do six? Is it always flat fee? No. I’ve actually had a billionaire who was in the middle of a legal battle, so he is going to pay them. He just needed time and he had three businesses, two home–

Seth: I think you told me about this one.

Eric: What we did is we took a $25,000 retainer and we billed hourly because there was no way I was going to do that flat, but for the most part, here’s how we would work. Seth, you have this. Okay, we get on with the client. I walked the client through and say, “Look, you’re already working with Seth. Seth, would you mind if you can help pull together that 433, which is the financial, and work with the client? Ma’am, Ms. Client, instead of $2,500 for us, Seth can do this for $1,500. You’re going to save a thousand dollars.” Now, Seth, you just got $1,500 to gather their info, put it in the form, and send it to us.

Normally, it’s pretty lucrative. We get it, we’ll review it, do the call with them, and then from there– I don’t split fees. You’ve effectively been hired to do one part. We will then take it and run with the other. I think we charge $500 to do the review. Instead of $2,500, it’s $1,500 to Seth, only $500. They’ve saved $500. They’re thrilled. You are happy. We get everything handed to us. It’s easy for us to review, and then we do the rest of it. That’s how without splitting fees– because I can’t charge it, and then cut Seth a check. It’s an ethical [unintelligible 00:58:12] for lawyers.

Seth: Eric, another question, and this is a really good one. “Eric, I’m a CPA, 24 years’ experience at Big Four and CFO of multiple companies. Tired of the grind. How realistic is it for me to start a resolution company in order to leave my corporate job? Essentially I’m coming in with no leads in the resolution area.”

Eric: Now, I’ll tell you how I did it because I was Big Four-

Seth: Good one.

Eric: -when I jumped to do this. I did what I’m not supposed to do, which is I started my own side business. What I did is I went to my network and when I had enough referrals lined up, what I did is– I think it was a weekend or over two weeks or three weeks, I literally went and signed everybody up. Then I went and gave notice knowing– I think it was $55,000 in retainers I had in hand. Now I had a young family and I wasn’t walking away from a probably multi-six-figure corporate job.

The first thing I’d ask is, what do you need to replace just to keep your household going? If you tell me, “Oh, I need the $400,000,” that’s going to take that time. You’re going to take a pay cut for a while. If you’re somebody who has reached a point where I want to get out of this, my house is paid, my kids are gone, grown up, I really need 100, 150 to keep even keel, but I’d obviously like to bill to 600, 700, whatever it is, yes, you could do 100 to 150 in a year, but I would actually start your networking. You can start that before you actually jump.

Seth: Right. It’s coming in. No leads at all, just–

Eric: Right. Yes, unless the person’s independently wealthy and said, “You know what? I cannot take another day of walking into this place, and I’m going to quit, and now I have a game plan–” [crosstalk]

Seth: Sounds that way with this person.

Eric: It’s going to take six months to a year to ramp up. By all means. Today I could do that, but when I started this, I needed that income stream. I did take a small pay cut, but it was worth it for me to jump. I could not have gone and gone unpaid for a year. I would’ve gone bankrupt.

Seth: They said they’re pretty lean about $120K.

Eric: I think that if you start some of the guerrilla marketing early, get everything together so that you’re not– You don’t want to leave and now spend two months trying to ramp up, you’d like to try to hit the ground running. I would start laying the groundwork, talking to folks. You’re networking, putting all the pieces in place, and you’ll probably have a pretty good sense. “Oh, yes, I can get to $120 pretty easy,” or, “I’ve been trying this and I’m getting nothing,” in which case you might want to rethink it, but it may just take longer.

I find that when people focus on this and they market this, look, there are $25 million taxpayers in trouble. $10 million non-filers that we know about and more than 15 that have back balances, and by the way, those $10 million when they get filed will owe back balances. There’s a huge number of taxpayers who need help. The biggest marketing thing– [crosstalk]

Seth: You said you have– TRN has lead like you have.

Eric: Yes. It’s really about getting the message out that you do this because– It’s like, build it. They will come. They just need to know where to come.

Seth: That you do this. Again, we’ve got a few minutes left here, folks. I wanted to ask Eric, why aren’t more tax pros doing this?

Eric: I’ll tell you, no one teaches this. I was an accountant, they never did. They didn’t even do audits. They did public auditing for your CPA exam. That’s what they covered. In law school, I did law school and I did an LLM master’s in Tax for lawyers. There was one course once on tax litigation. That was it. The way that I learned to do this, I’m going to date myself, is way back when there were these things at the IRS, I know it’s crazy, called human beings. You can actually meet with them. If anyone who’s read my book How to Build a Million Dollar Tax Rep Practice, I actually recount the story–

Seth: They had those? Oh, man, you are dating yourself. [laughs]

Eric: I know. I recount the story of going and sitting down with someone. His name was Jim Morrie, he’s retired, long retired now, and he literally sat– Of course, I’m a lawyer, I’m going to come in and argue. He literally sat there and looked at me like I had two heads and he finally said, “You have no idea what you’re doing, do you?” [chuckles] “I guess not.” He said, “All right, we got to talk about compliance.” “Compliance, okay, Mr. Green, let’s back up.”

I learned to do this because they taught you how to do it. “You need to get me this, you need to do this,” and you just learned doing it. Today because of the automation, it’s much harder because there’s really no one you can interact with consistently, but that’s what Tax Rep is here for, to provide that kind of training and bridge that, that help desk, so you’re not out there trying to figure this out on your own.

Seth: Right. Just a few minutes left. Like I said, somebody asked a pretty pointed question. They just wanted to be clear on can they start networking now pre-certification or just wait, “Hey, wait till you get it and then–”

Eric: Listen, you don’t have to get the certification. We have Tax Rep members– [crosstalk]

Seth: To do rep work.

Eric: Right. As long as you have an EA CPA or you’re an attorney, you can do rep work. The CTRC is a great thing to have for marketing. It’s also a great way in [unintelligible 01:04:03]. [crosstalk]

Seth: A requirement, but it’s just a lot of people get a lot of these certifications because it looks–

Eric: If you’re an accountant, now with tax season is the time to send something out, and here’s what my approach would be.

Seth: Right. That’s why we’re really having this chat right now versus in July or whatever.

Eric: Right. The IRS is ramping up. If you haven’t filed in a while or know people that haven’t, if there’s a balance due that– Even if the IRS isn’t bothering you, the time to get in and deal with it proactively is now. Set up a time. It could even wait till after April 15th, but let’s deal with this problem now before you get a knock at the door. The first thing I would be doing now before you get the CTRC or any– is just to get– You want your network to know that you do this because, like I said, Anthony Deluccia was my first CPA Tax Rep member, he sent that letter, what to do if you can’t pay the taxes, and got cases like that.

The biggest reason was nobody could send him cases. No one knew he did this. They’re like, “Oh, you do this? I was divorced and now they’re saying I owe this and I never saw the returns. Can you help me with an innocent spouse?” People just all of a sudden realized that he was the guy to go to. Absolutely, I would start the marketing now in terms of networking, making sure your network knows you do this.

Look at the attorneys that you may have a connection to, that you can talk to and meet with. That kind of stuff is easy. The best referral sources are from people who know you and people who like you. Before you start spending on Google ads and buses and radio and all that crap, which do work, you just have to have a budget.

Seth: And a bus. [laughs]

Eric: The easiest, simplest thing is simply start with your own network, the people that already know you and like you.

Seth: Of course. Listen, everyone, we’re grinding up to the top of the hour here. I wanted to, of course, share. If you look in the chat here, you will see everyone attending here, please– I’m sorry, Nicole, you’re hopefully going to get a lot of emails about this. Eric’s assistant, Nicole, email her. She is going to ship you the original 1913 income tax code and income tax return as a gift for attending today.

Thank you all for taking the time, taking a break. We know that you all need it. The email address is right there. Please do email her. Next tax chat, we hope you will also take a break, in a couple of weeks, we got a good one. We’re going to be promoting it out through CPA Trendlines and also my own newsletter, The Fineberg Review. What to do when you hit a wall. This comes at a perfect time, March 8th.

You might all be starting to feel like, you just hit that, when you’re running the marathon, or if anyone’s run a marathon or people who have run marathons, marathons are officially 26 miles. Usually, by mile 12, 14, around halfway or so, you get that wall. What do you do? I am going to be speaking with the one and only Randy Crabtree, CPA, co-founder of the Tri-Merit Group, and also a podcaster of The Unique CPA.

Randy is an advocate for mental health in this profession. He’s a stroke survivor. He loves this profession. I could go on and on about Randy, but he is in a great position to talk about the things that you can do practically, realistically in the middle of tax season when you hit that wall, how to just get through, learn some real steps that you can take right now and going forward to put yourself first. By just coming here today, you’ve all done that. You said, “You know what? I’m going to just listen to Seth and Eric.” Rick Tilburg, any final words for the audience here? Thank you so much everyone for attending today.

Rick: Thank you, Seth. Thank you, Eric. It was a terrific hour. One last request from the audience which was terrific today, thank you very much, we have a link to a survey for the evaluations. It helps us make this even better.

Seth: Yes, it’s right there.

Rick: I’ll see you March 8th.

Seth: Yes, come on back. Tell your friends to take a break, East Coast, West Coast, wherever you are. You are in the middle of tax season. We want to see you on the next tax chat after that. For now, so long, have a great rest of your day and please put yourselves first. Thank you, Eric and Rick.

Eric: Thank you.

Seth: Take care all.

[01:09:25] [END OF AUDIO]

Posted on February 26, 2024