Convinced that the client is entitled to the requested relief, we are now assisting him to prepare a petition to the US Tax Court. IRS wonders why taxpayers have a negative opinion of them. It’s employees like this that hurt relations with the taxpaying public. It’s particularly sad that this experience was in the Appeals Division as they are typically the place that taxpayers can get a fair hearing.

Before I get into that, the experience that finally got me started was an interview with a newspaper reporter doing an article on tax resolution firms and another interview with a different reporter who was writing an article on the IRS Offer in Compromise program. As each of the interviews progressed I became aware that the agenda of each interviewer was that the taxpayers who get offers approved and the companies who represent them are getting away with something.

Let’s take a look at some of the basic regulations governing the offer program. First, the IRS cannot approve an Offer in Compromise unless it is the best solution the government can get. IRS evaluates offers to assure they are getting everything possible from the troubled taxpayer. If the taxpayer has equity in assets, they have to give that up to the IRS as part of the offer. If they have income that exceeds the minimum cost of living, they have to give at least four years worth of the excess to the IRS as part of the offer. The result of this requirement is that the IRS strips the taxpayer of any wealth they may have had. Further, when IRS believes the taxpayer has an ability to increase their income after the offer is accepted, they can insist on a continuing interest in any increase.

The reporters’ perception of the offer program might change with a brief look at a typical offer case. A 26 year-old taxpayer with zero tax sophistication worked for a company who paid him as an independent contractor in 2004 and part of 2005. He quit the job after meeting with his accountant in April of 2005 when he learned he owed several thousand dollars in income and self-employment taxes. The accountant also advised him that he had a similar problem underway for 2005. He immediately quit and found a new job where they paid him as an employee. Not having the ability to pay the tax, he filed the return for 2004 without payment. Later he also filed the 2005 return without payment. He filed all subsequent returns and had small refunds that the IRS applied to the 2005 year. By the time he started to receive bills from IRS the amount due was huge due to the added penalties and interest.

In 2007 he was married and had his first child, in 2008 the second child was born, and in 2009 IRS was threatening to levy his wages, which would have destroyed his fragile financial condition. The recommended action was to file an Offer in Compromise and pay the IRS what he could. After a thorough review, the IRS accepted his offer. He is now fully compliant, able to care for his family, and will never allow another tax problem to sneak up on him.

The result in the above case is a winner for everyone. The taxpayer, who had the tax problem through no intentional act of his own, is back in the good graces of the government. The government has collected more than they would have under other scenarios and the taxpayer will be sure to meet his responsibilities.

Let’s move on to the question of the companies who represent taxpayers before the IRS. Admittedly, there are many who have given the industry a black eye. Practitioners who abuse the trust of their clients by failing to provide competent representation have been the subject of media reports that shine the light on their abuses. They deserve this exposure and more. If the IRS Office of Professional Responsibility determines failure to provide competent representation, the transgressor should suffer loss of the right to practice before IRS.

Like the silent majority in any area, good practitioners suffer painting by the broad brush of the nefarious. Many competent practitioners are willing to assist troubled taxpayers to navigate the IRS system. Recommended actions to taxpayer include:

• Hire only a practitioner who is an Enrolled Agent, a CPA, or an attorney
  • A tax preparer who is not one of these cannot represent before the IRS
• Inquire about the experience of the practitioner in representing taxpayers before IRS
  • Be specific about representation of the instant type of case
• Look for professional association designations of expertise in this area of practice
  • Certified Tax Resolution Specialist from American Society of Tax Problem Solvers
  • Fellow in National Tax Practice Institute from National Association of Enrolled Agents
  • Tax Specialization designation from a Bar Association
• Search for complaints about the practitioner or the firm on the internet
• Inquire of the local Better Business Bureau and/or the Chamber of Commerce
• Ask trusted advisors
  • Attorney, CPA, Enrolled Agent, banker, Insurance Agent, friends, and family

Practitioners who specialize in taxpayer representation generally have continuing education requirements that exceed the basic requirements of their profession. This continuing education assures the practitioner is current on IRS programs that will affect their case.

To All My Valued Employees, 
There have been some rumblings around the office about the future of this company, and more specifically, your job. As you know, the economy has changed for the worse and presents many challenges.  However, the good news is this: The economy doesn’t pose a threat to your job. What does threaten your job however, is the changing political landscape in this country. However, let me tell you some little tidbits of fact which might help you decide what is in your best interest.

 First, while it is easy to spew rhetoric that casts employers against employees, you have to understand that for every business owner there is a back story”. This back story is often neglected and overshadowed by what you see and hear. Sure, you see me park my Mercedes utside. You’ve seen my big home at last years Christmas party. I’m sure; all these flashy icons of luxury conjure up some idealized thoughts about my life. However, what you don’t see is the back story.
 
I started this company 28 years ago. At that time, I lived in a 300 square foot studio apartment for 3 years. My entire living apartment was converted into an office so I could put forth 100% effort into building a company, which by the way, would eventually employ you. My diet consisted of Ramen Pride noodles because every dollar I spent went back into this company. I drove a rusty Toyota Corolla with a defective transmission. I didn’t have time to date. Often times, I stayed home on weekends, while my friends went out drinking and partying. In fact, I was married to my business — hard work, discipline, and sacrifice. Meanwhile, my friends got jobs. They worked 40 hours a week and made a
 modest $50K a year and spent every dime they earned. They drove flashy cars and lived in expensive homes and wore fancy designer clothes.
 Instead of hitting the Nordstrom’s for the latest hot fashion item, I was trolling through the Goodwill store extracting any clothing item that didn’t look like it was birthed in the 70′s. My friends refinanced their mortgages and lived a life of luxury. I, however, did not. I put my time, my money, and my life into a business with a vision that eventually, some day, I too, will be able to afford these luxuries my friends supposedly had.
 
So, while you physically arrive at the office at 9am, mentally check in at about noon, and then leave at 5pm, I don’t. There is no “off” button for me. When you leave the office, you are done and you have a weekend all to yourself. I unfortunately do not have the freedom. I eat and breathe this company every minute of the day. There is no rest. There is no weekend. There is no happy hour. Every day this business is attached to my hip like a 1 year old special-needs child. You, of course, only see the fruits of that garden — the nice house, the Mercedes, the vacations… You never realize the back story and the sacrifices I’ve made.
 
Now, the economy is falling apart and I, the guy that made all the right decisions and saved his money, have to bail-out all the people who didn’t. The people that overspent their pay checks suddenly feel entitled to the same luxuries that I earned and sacrificed a decade of my life for.

Yes, business ownership has its benefits but the price I’ve paid is steep and not without wounds. Unfortunately, the cost of running this business, and employing you, is starting to eclipse the threshold of marginal benefit and let me tell you why:

I am being taxed to death and the government thinks I don’t pay enough. I have state taxes. Federal taxes. Property taxes. Sales and
use taxes. Payroll taxes. Workers compensation taxes. Unemployment taxes. Taxes on taxes. I have to hire a tax man to manage all these
taxes and then guess what? I have to pay taxes for employing him. Government mandates and regulations and all the accounting that goes
with it, now occupy most of my time. On Oct 15th, I wrote a check to the US Treasury for $288,000 for quarterly taxes. You know what my
“stimulus” check was? Zero. Nada. Zilch.
 
The question I have is this: Who is stimulating the economy? Me, the guy who has provided 14 people good paying jobs and serves over
 2,200,000 people per year with a flourishing business? Or, the single mother sitting at home pregnant with her fourth child waiting for her
 next welfare check? Obviously, government feels the latter is the economic stimulus of this country.
 
The fact is, if I deducted (Read: Stole) 50% of your paycheck you’d quit and you wouldn’t work here. I mean, why should you? That’s nuts.
 Who wants to get rewarded only 50% of their hard work? Well, I agree which is why your job is in jeopardy. 

Here is what many of you don’t understand … to stimulate the economy you need to stimulate what runs the economy. Had suddenly government mandated to me that I didn’t need to pay taxes, guess what? Instead of depositing that $288,000 into the Washington black-hole, I would have spent it, hired more employees, and generated substantial economic growth. My employees would have enjoyed the wealth of that tax cut in the form of promotions and better salaries. But you can forget it, now.
 
 When you have a comatose man on the verge of death, you don’t defibrillate and shock his thumb, thinking that will bring him back to life, do you? Or, do you defibrillate his heart? Business is at the heart of America and always has been. To restart it, you must stimulate it, not kill it. Suddenly, the power brokers in Washington believe the poor of America are the essential drivers of the American economic engine. Nothing could be further from the truth and this is the type of change you can keep. 

So where am I going with all this? It’s quite simple. If any new taxes are levied on me, or my company, my reaction will be swift and simple.
 I fire you. I fire your co-workers. You can then plead with the government to pay for your mortgage, your SUV, and your child’s future. Frankly, it isn’t my problem any more. Then, I will close this company down, move to another country, and retire. You see, I’m done.
 I’m done with a country that penalizes the productive and gives to the unproductive. My motivation to work and to provide jobs will be
destroyed, and with it, will be my citizenship.

If you lose your job, it won’t be at the hands of the economy; it will be at the hands of a political hurricane that swept through this country, steamrolled the constitution, and will have changed its landscape forever. If that happens, you can find me sitting on a beach, retired, and with no employees to worry about….
Signed,

Your boss

Regards,
 
Mark Harger
mark_harger2828@yahoo.com
Superior Mechanical Contractors
131 Pennsylvania St SE
Albuquerque, New Mexico 87108
o 505 266-7267
c 505 515-7065

Capitalism works and is proving it, look at the state of the economy. Our economy is not broken; it is showing us what happens when irresponsible government builds on a bad foundation. Encouraging economically unsound investments (home loans) must ultimately collapse. Why don’t the government hacks see it? There was a time when people actually had to qualify for the mortgage they wanted. Qualifying had nothing to do with race or religion; it had to do with the ability to repay the mortgage. If your income could not support the cost of the home you were after, you waited and continued to save toward a down payment. Or, you scaled back on your appetite, purchased a “starter” home you could afford, and continued to work your way up to the home you really wanted. No deep thinking required to see how well this reasonable system served us.

Along comes the out-of-control Fannie and Freddie scheme and suddenly the time tested (and logical) approach is history. Now, virtually everyone is approved for whatever they want. Couldn’t the geniuses in DC see they were building  the proverbial house of cards? Despite Harvard degrees and high faluting government titles, most of them never had a real job. Never had to balance their personal budget; the government provided all the benefits and steady paycheck.  Never had to make payroll for employees. Oh yeah, that’s right, the government (read that you and me) also paid the people who worked for them too. Or, should I say the people who actually did their work for them.

They fault the previous administration, but in 2001 and 2003 Bush warned of the impending disaster, McCain also tried to get his peers to listen. Responses from my own Senator Schumer and the financial wizard Blarney Frank lauded the fine job Fannie &  Freddie were doing.

Now they are hocking my children’s future with a pork-laden stick-it-to-us stimulus bill. Can you spell compounding of errors? I have a different plan for economic stimulus; it will rebuild the economy by creating jobs and achieve an Obama campaign goal. Let’s reimburse every small business up to $25,000 of the wages they pay to each new employee for the first 12 months of employment. Given that there are 24 million small businesses and at least one in five could be induced to hire one person at $25,000, there would be 4.8 million new jobs at a cost of 120 billion. Reduce the 120 billion by the tax revenues and the real cost initially is likely to fall below 100 billion. The cost would be further reduced by those new workers paying tax in future years. President Obama campaigned on a plan to create 5 million new jobs in 10 years, this accelerates the time to one year and will restore faith in the economy among those who are its backbone: small businesses.

Ultimately, small business will adjust to conditions, keep working, and get the economy restarted. Once that happens you can be sure the politicos will take credit for it. Where is Ronald Reagan when you need him? He took office during when the Carter years had us in a recession and turned it around in a few years primarily through tax cuts and small business friendly policies. Too bad this stimulus package couldn’t follow the lesson learned back then.

An amnesty program might bring in enough of the back tax dollars to make a difference in the deficit level. Once the IRS sees how well that works perhaps they will then treat the Offer in Compromise program with more respect and accept more of the offers submitted. The current approach seems to be to deny offers for any reason, and often seemingly without a reason, except to reduce their workload.