Get a Call Regarding a Tax Lien?

Get a Call Regarding a Tax Lien? 

"Ms. X, we are calling you regarding a federal tax lien filed against you (or your business) are you aware of that?"

"Yes, I am."

"Well Ms. X (in pleasant "soft" voice, usually female) I am with Muddy Waters Financial, and we specialize in helping people resolve their back taxes.  How much is the IRS claiming you owe?"

"Around X amount."

"OK, hold on for me, we can help."

{Transfers you to the "closer" for a hard sell}

"Hello Ms. X, my name is Seth Gideon, I am a senior consultant here at Muddy Waters Financial. We have been in business since Aramaic was still a spoken language, hire us and all the penalty and interest will stop immediately.  If you don't the IRS will levy your bank account!"

Sound familiar?  If you have had the misfortune of the IRS or your State Taxing Authority place a tax lien against you and your property chances are very high, you have already received a call from one, if not several, of these ambulance chasers from all across the country.  The movie Boiler Room hits on how the system works (although they sell stocks the underlining principles remain the same) with tax help telemarketing companies.
 
Take away securities, replace with tax representation rhetoric and take away the suits and replace with t-shirts and jeans and you have a typical tax resolution salesroom floor.

If you are unsure what a boiler room refers to it is this: an unflattering term used to describe a place of business where high-pressure telemarketing tactics are used to solicit sales. The boiler room is a term most often associated with stock brokerage firms (in this case tax resolution companies). A boiler room may rely on aggressive cold calling to sell risky stocks (false or overreaching claims to resolve a taxpayer's debt) to willing investors (taxpayers). A boiler room may use sales methods which violate rules governing their industries. 
For example, an unlicensed salesperson (they call them openers and closers), working in a boiler room environment may try to sell a taxpayer a tax resolution service that has little or no chance to succeed. One example would be a taxpayer who has equity in his home, makes over $100,000 a year and has not filed his tax returns in 5 years, is sold an Offer in Compromise. These facts would tell any competent tax professional that an Offer in Compromise is highly unlikely to be accepted. And based on the circumstances (no reasonable cause for falling behind on his taxes other than he just neglected to file and pay them) the taxpayer does not qualify for what they are selling. Salespeople working in a boiler room environment may also try to create taxpayer interest in non-existent IRS programs to heighten their sales pitch (always easier to sell a lie than it is the truth).

In Colorado, every company that I know who deploys ambulance chasers telemarketers are not owned by licensed tax professionals who have experience representing and arguing cases before the IRS, but rather some former bill collector, salesperson, or a flat out conman.  This explosion and exploitation of "tax resolution firms" has hurt the reputation of real tax professionals. Those who are college educated and are required to earn their annual CPEs (continuing professional education credits) by attending IRS and other professional seminars on top of having to hit the books for years to earn their license. A stark contrast to these high-pressure Sales Floors. Trust me; you don't want to see where they "make the meat."  Walking into one of these salesrooms is similar to that bar scene in the first Star Wars. All kinds of "interesting" characters who talk a good game over the phone but if you met them face-to-face, I have no doubt you would have second thoughts about using their services.  The good news is I have spoken to several IRS Revenue Officer's who have said that the Service is trying to convince Congress to crack down on these snake oil salesmen.  The bad news is that Congress is constantly lobbied, as usual, by special interest groups and thus, unfortunately, the harassment of the potentially several million of taxpayers who are dealing with tax liens will continue for the unforeseeable future. 

Often tax resolution companies employ attorneys who would seem to be in direct violation of Federal and State solicitation laws by having others solicit their services. Circular 230, which prescribes the rules governing practice before the U.S. Internal Revenue Service (IRS), clearly states, per §10.30 Solicitation (2).  “A practitioner may not make, directly or indirectly, an uninvited written or oral solicitation of employment in matters related to the Internal Revenue Service if the solicitation violates Federal, or State law or other applicable rule, e.g., attorneys are precluded from making a solicitation that is prohibited by conduct rules applicable to all attorneys in their State(s) of licensure.” The good news is that we have seen in recent years various Attorney General Office’s step in and shut down a few of these companies (Tax Masters and Ronnie Deutsch to name a few). 

Things to watch out for when you talk to one of these "Financial/Tax Resolution" companies that are calling you

Some Common Lies that are Used to Manipulate People into Buying the Snake Oil
 
•    Penalties and Interest stop as soon as you hire us.
•    We have "special" relationships with the IRS that allows us to solve your case quick.
•    We will file an appeal to get the case out of the Revenue Officer's hands so we can settle faster. 
•    You don't have to pay your current taxes (federal tax deposits, estimated tax payments, withholding, etc.), we will include those in the agreement.
•    We have been in business for 30 years. 

These points are just the tip of the iceberg.  The bottom line doesn't fall victim to bully or a fast talking telemarketer.  As the person handling your case get paid on commission, they will be asking you for more money, then more, and yet again some more. I guarantee it. 

100% of these firms will pull the bait and switch on you.  The salesperson will tell you what you want to hear then hand your case off to a "team" to work your case where they will often "down sell" those promises. Funny story about a client who recently left one of these companies to sign on with me:  She said that she was told by her Representative to "forget about what the sales guy told you, this is how it is..."
Want proof? Ask them if they will allow you talk to an attorney or the person who will be assigned to your case if you choose to hire them.  They won't.  And when you do hire them your case will more than likely be worked by a low-level assistant with an attorney signing off on their work.  They are just there to put up a front so they can collect a check.  Most companies who telemarket may have one licensed person for every 5-6 of their representatives, so chances are you will not get anyone licensed assigned directly to your case.

What if I Already Hired Them?!?
 

Because of the high level of competition in the tax help/resolution industry, there are several telemarketing companies slick enough to realize that it is smarter to refund a client in full then to get another BBB complaint.  Once aware of being hoodwinked, I can assist you by drafting a demand of refund letter (i.e. the sales guy tells them one thing, the person assigned to their case tells them another and asks them several more thousands of dollars in the process).  

As I stated earlier, I represent many taxpayers who were once using one of these financial/tax resolution firms, and I hear all the time about how nothing ever got resolved and how they had to keep throwing good money after bad. When these companies tell prospects that they will have a "team" of "professionals" on their case who will help them resolve their taxes the reality is that they will have two inexperienced, unlicensed paper pushers sending out all their boilerplate letters and faxes. A licensed tax professional will rubberstamp their work so they can bill you over $200 an hour (I worked for a firm years ago that told me they wanted to get an actual stamp of my signature!).  These "assistants/para's" charge clients up to $150 an hour for sending out a simple fax, boilerplate letters, etc. which adds up quite nicely for them if they are billing you on a retainer.  
 

They Operate Like a Pyramid Scheme

After the well-polished sales person (the Closer) succeeds in signing you up, they then quickly dump your case to a "team" of tax professionals (i.e. unlicensed assistants making $12.00 an hour but billing $125-$175 an hour).  These "teams" are required to milk their book of clients for as much as $30,000 - $40,000 + each month.  When it is your turn to pay, and you push back for any reason, they will simply revoke their power of attorney and stop doing work on your case until you do. When employees speak out against the company’s billing practices are shown the door (I would like to see the statistics of these firms rate of resolving cases vs. their turnover ratio).  I ran across an interesting blog which details what it is like working for one of these large tax resolution companies:

http://blog.jonathanharrington.com/2004/08/what-you-need-to-know-about-omni.html
http://blog.jonathanharrington.com/2004/04/farewell-omni-financial-i-did-indeed.html

These "consulting/financial" firms can be very pushy.  If you want them to stop calling you tell them to take you off their list and that you have the situation handled, tell them auf wiedersehen and hang-up. 

For all you ambulance chasers out there reading (I have a lot of them that do and many of them that leave messages late at night on my phone, spam, slander, and commit libel by posting anonymous/pseudonymous material on me on extortionist websites after I beat them out on a deal), I say to you, quit, save your soul and get an honest job.  And all of you licensed representatives who are stuck working at one of these ambulance chaser firms I would like to say:

When leads are not flowing your way, the first thing you should do is check your two-pronged marketing plan and ask, "Am I implementing it properly and fully?" If yes, then consider doing a full evaluation of how your firm operates. But whatever you do, do NOT take a loving look at the telephone and consider calling prospects. It is an easy temptation, especially when you know their names.

But you are an education resource, an accessible expert, with years of experience, skills, and successes. You are a professional. People come to you. You do not go after them, other than indirectly through providing education and creating relationships with your marketing. It is salespeople who call you at home or work and try to pressure you into giving them your money ASAP or lose out on the deal of the century.

The moment you place a cold-call, you are no longer you. You are no longer a high-value, high-priced professional provider of quality services that only people like you can provide. Put another way; calling is like begging. It demolishes your credibility. You look desperate. If you are supposed to be so good, why would you be chasing after clients?

Are these companies trying to scare you? Here is something to scare them

Why I am, by far, the better value

• No Bait and Switch. I am admitted to practice before the Internal Revenue Service, to perform the work and will be the only person you talk to, no paralegals, no assistants, no low-level clerks. I am the only one working your case from start to finish. The majority, most likely all, of these companies that have contacted you, has done so with an unlicensed salesperson. If their fear tactics don't work, they will tell you anything to get you in the door then flip your case over to someone else to work who has to downplay those expectations. 

• No Outrageous Retainer Fees. Most of these companies, if you read the fine print, will charge on an hourly basis. They will bill you anywhere from $50-$1,000 for a boilerplate letter. They do this so they can “re-write” you for additional fees. Click here to read the post and to see the actual retainer statement of a current client of mine received from one of these companies before hiring me.  All companies who perform the “bait and switch” have a “production” or “services” department who also earn their paycheck on commission. The person assigned to your case is expected to generate a monthly quota by re-writing existing clients (even though they will most likely tell you otherwise).  Why throw good money on bad?  I offer a FLAT FEE. 

• Admitted to Practice Before the Internal Revenue Service. Many companies use unlicensed salespeople who never argued a case yet alone resolved a case in their lives (although many will lie and say they have), to talk to you about the case and outsource the work to someone else who is licensed. You may, or may not even get an opportunity to speak to the person who talks the Internal Revenue Service. And if you do, the only time you will hear from them is at the start of the case, and when they ask you for more money. The majority of the time the company will contact you through one of their assistants (they call them paras, easily confused with paralegals, which they are not).

• Full Disclosure. If you have a business that has fallen behind on its quarterlies (941s) and now has a payroll tax liability the IRS will be looking to assess you personally for the Trust Fund portion of the taxes. The Trust Fund is the amount withheld directly from the employee’s pay (not including FICA and Medicare, or penalties and interest). That is why my Service Agreement includes both your business as well as you personally.

Remember the adage: "A man who represents himself has a fool for a client."

Nicholas Hartney, E.A. not only has very reasonable fees but more importantly provides a value of service that is unprecedented in the field of tax representation. Feel free to email Nick at nick@genesistaxconsultants.com