Yesterday I shared with you that a handful of people have written negative comments about my tax law practice on the Internet (sites include ripoffreport dot com, complaintsboard dot com and scam dot com).  Today I’ll cover why I think people have complained.

Why do people complain even when we have a great record?

Unhappy with their circumstances
People with IRS tax problems are under serious psychological and financial pressure. Clients are unhappy with their circumstances. Who wouldn’t be? At times the anxiety and anger caused by a client’s tax problem spills over on to me and my staff. I understand this. I counsel my staff to put themselves in the shoes of our clients. It makes it easier to keep a level head when they’re getting yelled at by someone for something the IRS (or the client themselves) is responsible for.

Working with the IRS on a Tax Problem is not fun
I know you’ll be shocked to read this, but dealing with a tax case is not fun! In most cases we must ask you to give us a lot of financial information and documentation. Tax problems aren’t created overnight, and they typically can’t be fixed overnight. Working with the IRS is often frustratingly slow. Finding the solution that best fits a client’s unique circumstances can be painful and it takes time, effort, and patience.

Nickel and Dimed on Legal Fees
Many people still think that attorneys charge them for an hour of time after the attorney has sent an email or placed a phone call. Honestly, that’s rare today. Most attorneys bill in 30 minute or 15 minute increments. In our case, we only bill for our hourly services in six minute increments, the lowest time increment used by professional service providers.

Failure to Respond
Some clients simply don’t respond to our requests for information or action (or respond half-heartedly). These clients take months or years to do what other clients are willing to do in days or weeks. The job gets done, but even when billing in six minute increments, the legal costs go up. To avoid this my staff is trained to call this to our clients attention whenever we provide multiple follow up activities.

Some clients are such procrastinators that they don’t even check their mail. We’ve had clients who, when we’ve finished their case and mailed back a refund of their unearned legal fees, they don’t even cash the check! When a client pays us a retainer we don’t take it out of the Trust account until it’s earned. At the end of our representation of a client, if there is any money left over we mail that back to you.

We’ve had clients, and more than one, who have failed to cash $1,000 refund checks we’ve mailed them. I’ve had to get my administrative staff to call them, and call them, and then write them in an attempt to just open their mail and cash the refund check I’ve already sent them. Can you believe this actually happens?

Fake Reviews
I’ve read online complaints about my firm that bear no resemblance what so ever to any cases I’ve handled. They are filled with specific generalities that could be said about any tax law firm. It’s becoming obvious that competitors (or their marketing companies) are writing fake negative reviews of my business (and others), hiding behind the shield of anonymity the Internet provides. The motivation is simple, money.

We made an error or handled a case poorly
In 18 years I have had legitimate complaints against my tax law practice. Though, far less than one percent of my clients have ever made a complaint of any kind about me or my staff.

When someone has a legitimate issue I’ve apologized and given them part, or all of their money back. It’s good business. Then I evaluate if the problem is something that could happen again, and if the answer is yes, then I put a process in place designed to avoid future problems. I even rolled out a new business idea this year designed to eliminate fears of being ripped off. It’s a “capped” legal fee for IRS tax problems. Almost no one offers this in my legal specialty. The client gets the best of both worlds: he knows the maximum his case can cost, and if it ends up not costing that much than he pays the lesser amount.

Summary

Our goal is to have happy clients. I apologize to any client who has had an unhappy experience with us. I wish this small group of former clients all the best.

If you’re a new client considering me as your tax attorney, please consider all the facts, not just those of a few.

Until next time,

Jeffrey I. Fouts, Tax Attorney
You can put off your tax problem, or put us to work.

Here’s a bio of sorts. I’m happily married with two kids. I’m a real small town tax lawyer, (Ellijay, pop. 1,584) not some fictional marketing character. I’ve represented tax clients against the IRS in all 50 states, and in 21 foreign countries. I have 18 years experience, thousands of satisfied clients, about 8 critics at last count, and an A+ BBB Rating.

I’m a member in good standing of the bar and have active memberships in courts from Georgia to Washington D.C., including the U.S. Supreme Court. My competitors covet my Google ranking but my clients covet my sound legal counsel. I deal directly with my clients and have a small, tireless staff. You can put off your tax problem, or put us to work.

Related posts:

1. Tax Attorney Jeff Fouts Responds to Complaints, Negative Reviews – Part One
2. Tax Ripoff Report & Scams – Jeff Fouts
3. Is it Possible to Run a Business That Doesn’t Get a Complaint Occasionally?

The IRS can legally file tax liens any time a taxpayer owes money and has not fully paid it off. There are usually only limited circumstances when the IRS won’t file tax liens, including when the tax debt is for a small amount, or perhaps when the tax liability is for a deceased person who died without any assets, or when the taxpayer is in an active bankruptcy.

In the old days, the IRS would often not file a tax lien, but today, with the federal government needing revenue so badly, IRS collection folks are much more likely to file a tax lien and to to file it faster.

Of course this makes sense for the IRS: If someone owes tax money the IRS wants paid, and filing a tax lien is a a way to put pressure on the taxpayer. A tax lien also helps the IRS protect their position and increasing the odds that they will eventually get paid. Nowadays they try to file the lien as soon as they are legally allowed to do so.

We all know the IRS is a very large bureaucracy, and they make mistakes all the time, so it wasn’t a great surprise that when the IRS recently “audited” themselves that they discovered there were 210 files at two field offices that never had any contact or follow-up and accounted for a potential $6.4 million in collectible taxes. Basically, 210 files were just sitting there, being ignored. In addition to that, tax officers closed over 2,700 files and called them “uncollectable” but never gave a reason. In total, between 2002 and 2008, it was discovered that $1.4 billion in delinquent taxes were shelved rather than followed up on.

Are they getting lazy at the IRS offices? How are IRS officers deciding which files to pursue and which ones to ignore? How can we as taxpayers ever know if we are receiving fair treatment if we are hit with a tax lien while someone else who gets shelved?

The most likely answer is that there are so many “taxpayers” who are delinquent in paying their taxes or in filing their tax returns that the IRS doesn’t have the resources to deal with them all.

The IRS hasn’t gotten soft, in fact they’ve gotten much more aggressive, and busier. If you owe back taxes, you should still sleep with one eye open because the tax man will eventually come looking for you.

[Image source: austinevan]

Related posts:

1. Celebrity Tax Problems: Arnold Schwarzenegger
2. Celebrity Tax Problems: Conrad Murray

Of course, this story wouldn’t be complete without the step from acting to politics and now Arnold is the governor of California, a state that is teetering on the verge of financial collapse.

Californians can rest assured that their government officials will pay their federal taxes, as long as they are continuously reminded by the IRS.

Arnold Schwarzenegger tax problems
On May 11, 2009, the IRS filed a $79,000 tax lien against Arnold Schwarzenegger. (Source: The Los Angeles Times). While this is more than many people make in a year, Arnold’s people quickly dismissed it as an error and said the governor paid his tax debt right away.

[Image source: Nate Mandos]

Related posts:

1. Celebrity Tax Problems: Conrad Murray
2. Bad Beat: A Poker Player’s Tax Problems
3. Celebrity Tax Scandals – Wesley Snipes In Jail

It is said that Conrad Murray has a history of owing people money: According to the Huffington Post, Murray’s medical practice owed thousands of dollars in fines and judgments and overdue fees on loans and credit cards. To top of the “nice guy” image, he also owes thousands in child support and even had a fine of nearly $1,000 for driving with an expired license plate and no proof of insurance.

Conrad Murray tax problem
The Huffington Post also reported that Murray owed back taxes so we went hunting for them and found a tax lien of over $23,000 owing in back taxes in 1993, 1996, and 2003.

Related posts:

1. Celebrity Tax Scandals – Wesley Snipes In Jail
2. Celebrity Tax Problem: Anna Kournikova

Among his many insightful economic positions, he believed that taxes were a good thing but they should be “certain, and not arbitrary”.

No one here disputes that we shouldn’t have taxes. Taxes are necessary to pay for roads and police and the many other services that come with living in the US. But what we do have a problem with is that the tax code has become a tool to redistribute wealth, taking it from some and giving it to others, ultimately redefining the American Dream into something that looks more like a socialist economy.

Adam Smith believed that taxes should be “certain, not arbitrary” but our taxes right now are anything but certain! Filling out tax forms – accomplished by wading through an overwhelming number of forms and documents – is akin to pulling the lever on a slot machine… but a slot machine that punishes you instead of rewards you!

Smith proposed a flat tax. While I realize that there are many challenges to implementing a flat tax, and there are reasons why a flat tax might not work, it is the most equitable form of taxation because it is certain and knowable. In fact, a flat tax might actually decrease the amount of bureaucracy and expense incurred by the IRS every single year in trying to understand their own tax code and then trying to enforce it.

The Washington Times has a fascinating article that starts by talking about the IRS and how IRS employees are receiving a growing number of threats for trying to enforce Congress’ tax laws but then, on page 2 of the article, it launches into a scathing examination of IRS employee culpability and ultimately concludes with other great thoughts by Adam Smith. Read the full article here.

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That’s right, the IRS can and will seize your assets in lieu of your tax payments. Now, don’t think of them as a giant pawnshop where you can get your favorite chair or your mother’s wedding ring back once you’ve paid. The IRS will put your stuff up for auction! Airplanes, boats, vehicles, homes, property, the list goes on and on. (Check out the IRS Auction Site… if you don’t see something you like today, new items are listed regularly, all “donated” by tax payers who are unable to pay their taxes).

Now, more than ever, people with tax problems need to take an active approach to fighting the IRS to clear up their tax issues and their good name. Leaving your tax problem and hoping it will go away could mean that you’ll get a knock at your door and they’ll be asking for the clothes on your back (figuratively speaking)! Wishing that the IRS won’t come after you isn’t much of a game plan, and it isn’t going to work. If you have tax problems, they’re looking for you so they can look through your stuff like a kid with a catalog at Christmas.

[image source: bsabarnowl]

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Michael Mizrachi’s nickname is “The Grinder” and he does exactly that, “working” at poker in a way that others might work at picking up garbage or running a cash register. And, like the rest of us, he has taxes to pay.

Unfortunately for Mr. Mizrachi, the IRS has recently put a lien on his home for $340,000 in unpaid taxes.

Over the course of his poker-playing career, the young Mizrachi has earned a whopping $6.9 million but, though poor money management and accounting practices, he owes $339,711, and he is facing foreclosure.

For many taxpayers, especially younger ones who begin to make a lot of money quickly in business, sports, Hollywood, or poker, taxes come as a nasty shock. People expect to pay taxes but making a lot of money can bump you up into a higher tax bracket very quickly, resulting in taxes owed that are far greater than you expected. It’s even more difficult to estimate the amount of tax you will owe when you don’t make a regular wage but rather earn your money in fits and starts (as a poker player might win a few times a year or a movie star might earn a few checks a year). Lots of my self-employed clients have this problem.

In Mizrachi’s case, it’s not simply a matter of putting in overtime or asking the boss for a raise. If he plans to continue “running his poker business”, he needs to play… And he needs to win… And he must develop the discipline to pay his taxes – on time.

This is a cautionary tale for those who want to play professional poker, professional sports, get into acting, or be a normal self-employed person: With every single paycheck, estimate the amount of taxes you owe and set that money aside (or pay quarterly) to avoid tax problems down the road.

(Read the full article here)

(Photo credit: plutor)

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What should you do? Some might accept it as their unlucky situation, as if their tax return was a slot machine and it came up as three different symbols instead of the 3 lemons you were expecting. I suspect the IRS is banking on this. After all, they are the faceless, bureaucratic giant and you are the lowly person afraid that you’ll open Pandora’s Box of Audits if you say anything.

But you do have options if you don’t like what the IRS is dishing out. The IRS has a system in place for taxpayers to file appeals. It’s with the IRS Appeals office, which is a separate and independent office so you don’t have to deal directly with the people who worked on your return.

When appealing an IRS decision (including your refunds or other things like penalties, interest, trust fund recovery penalties, offers in compromise, liens and levies), you should pull together as much information as you can in order to support your case. And, when appealing, you can represent yourself or have representation from a tax attorney.

For more information about filing an appeal with the IRS, download this IRS-created PDF called
“Your Appeal Rights and How to Prepare a Protest if You Don’t Agree“.

The IRS is a tough, hard organization, but if it has a softer side at all, it’s the folks who work for the Appeals Division.

Related posts:

1. The IRS was giving away money. Did you get yours?

While a sales tax SEEMS like a good way to redistribute taxes to everyone who buys (instead of charging higher income taxes to people who earn more money), it is not a good solution. Implementing a VAT is complicated and, as Samuelson suggests, will only increase government.

And that is what concerns me more. Of course I don’t want higher taxes, but a bigger government is even more worrisome – because they create unnecessary spending (case in point: More of our income taxes go towards the federal pension than to education).

What’s the perfect size of government? I want it to be no larger than it was approximately 100 years ago. It want it small, the way it was before the big government era when we thought “the bigger, the better.”

Here’s why: The government is killing us while it benevolently attempts to provide us with a cradle-to-grave safety net:

• It’s killing us with taxes
• It’s killing our spirit of independence and non-government dependence
• It’s killing our “can-do” spirit

The US was founded on liberty and opportunity and both of those things are quickly disappearing as we become overtaxed and then enslaved to debt.

Large groups of Americans now wait eagerly for their government check:

• Farmers
• Corporations
• Earned Income Credit recipients
• Seniors who obtain more in benefits/insurance value than their tax contributions would have ever bought on the open market

The government, through its hand-outs, is creating class warfare, age warfare, and warfare between small business and large business.

• Those that earn more are encouraged to dislike those that earn less.
• Those that earn less are encouraged to be suspicious of those that earn more.
• Those that are older are encouraged to be hyper sensitive to younger folks who don’t want to pay for their benefits.
• Those that are younger are beginning to begrudge the payments they must make to seniors who are better off than they are, or already have their homes paid off, while they also receive extra tax deductions, and in some instances may be excluded from paying property tax on the local level.
• Small businesses looks askance at corporate welfare.
• Large businesses seek to gain preferential tax treatment over smaller competitors.

Everyone SAYS they don’t like taxes and big government, but they’ve already been “bought”. They want everybody else’s government check be reduced or stopped – but they don’t want their government benefits or preferential treatment touched.

Do we have the guts to have a smaller government? Do we have the will to fight for reduced government that may actually cause our own governmental benefits to be cut? As I survey the present landscape, I don’t see much reason to be optimistic.

Related posts:

1. The Four Stresses You’ll Face During Tax Time

The good, the bad, and the ugly
Just to give you a range for some context: At the top of this is the Post Office with an 83% favorability rating. At the bottom of this is education, earning only 40% favorability among Americans.

The FBI, Defense Department, and Center for Disease Control all rated 67%. The CIA rated 52%.

Now let’s talk about the IRS
Politico reported that the IRS made the biggest jump, up 9 percentage points to 47%. At first glance, this could be good news for the IRS, but let’s take a little closer look at the poll.

Three problems with these findings
First of all, there’s a 4 point margin of error. So the CIA might only be favored at 48% and the IRS might be favored as high as 51%.

Second, they polled 2,505 people. According to US Census data from July 2009, there just over 307 million people. I did the math. 2,505 is 0.000816% of 307 million people. Now, I’m not a statistician but I do wonder whether or not that is a statistically valid sample. And I wonder who they are asking: Are they asking confirmed taxpayers? Is it an equal representation of “wealthy” people who pay disproportionately higher taxes? Is it middle-income earners Americans? Is it “poorer” Americans? Did they divide it up equally among all the states? I’m not sure how they conducted the poll but we can be sure of one thing: Those 2,505 respondents were the ones who answered – either by picking up the phone or responding to questions at the door. I’m confident that this is not an accurate sample.

Third, they conducted the poll between March 11 and March 21. That’s about one month prior to when people’s taxes are due. The people who know they are getting money back on their tax return are likely going to respond positively. If this same poll was conducted one month later, while people were wading through difficult-to-understand tax forms, I’m sure that the number of folks expressing favorable feelings toward the IRS would have been lower.

So, while the IRS might be happy that it jumped 9 percentage points, let’s also consider that while tax burdens have dropped for some, the reality is the tax burden has become more burdensome for that decreasing number of citizens who actually pay taxes (see my recent blog post about the Tax Freedom Day).

The reality is, no matter how many people view the IRS favorably, the IRS is an aggressive tax collection agency whose only job is collect money. And they are becoming more aggressive as Congress needs more and more money to spend.

Don’t be fooled by recent IRS public relations platitudes about wanting to serve the public. They get paid to collect your money.

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