Epic Real Estate Investing - You Get What You Pay For | 431

Episode Date: July 24, 2018

This week on Tax Hacker Tuesday, Matt Theriault and Tim Berry share how the phrase, “you get what you pay for” applies to the tax world. Learn how to avoid getting scammed by tax “experts,” the harsh truth behind most tax return preparers and tax “savings” commercials, and how to save yourself if you’re already knee-deep in a tax mess. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is Terrio Media. Did you know that up to 50% of your lifetime income will be wiped out by taxes? What if you could stop this madness? Isn't it about time you play on a level playing field with the wealthiest 1%? Now you can. Tim Berry, attorney at law, shares here each and every week current tactics and strategies that anyone can implement to hack the tax code. Protect your assets and keep what's rightfully yours.

It's time. for Tax Hacker Tuesday. Welcome to the Epic Real Estate Investing Show. It is Tax Hacker Tuesday. Once again, it feels like we just did this last week. With my attorney and friend, Mr. Tim Berry, on Mondays here at Epic, we show you new and creative ways as well as time-honor ways of making money using real estate. On Tuesdays, Tim shows you how to keep it.

So if you have a question for Tim, you can go to Taxhacker.com forward slash questions, and you can post it there. Hey, Tim. Hey, Matt. How are you doing, sir? Doing very well. Good to hear you again. Yeah, it's been a while. It has been like seven whole days. You just got back from vacation, though. I did. Lovely Costa Rica. Wow, what is it like there? I have no clue. Is it a third world country or a first world? Is it all surfing? Is it all partying? What is it?

Yes to all of that. I thought of all of those things when I hear that name, but I don't know which one is accurate. Well, they're pretty much all accurate. There's a lot of partying. There's a lot of partying. There's a lot of surfing. A lot of areas are first world. A lot of areas are third world. So it's just a very interesting place. And I guess I shouldn't say third world because that's kind of me, but my judgments,

you know, they don't have my mazorati's and all that other stuff. But it's a nice place, very nice place. They got plumbing indoors. They do. But I'll tell you, I stayed at one place that the plumbing was outdoors.

It was very interesting. But it was unique in that you had to go outdoors and do what you had to do. It was like an experience. It was. It was. It was. And it was an experience. It was. And it's right on the side of a cliff. So I'm not going to go on with rest of the details. That's great. Let's see. We're talking about you were just sharing with me before we started recording that you just got a phone call from somebody who got a nasty letter from the IRS. Yeah. She got a little love letter from the IRS saying that she owed $80,000. And you know, this kind of goes to you'd get a little. You'd get a little love letter from the IRS. I'm what you pay for. And so I was asking her some questions, find out what the situation was. And she said,

yeah, I talked to my current tax preparer. And my current tax preparer says, you're either going to pay it now or you're going to pay it later and you're going to have interest and penalties on it. So won't you just pay it? Now, the thing is, as I was talking with her, I thought, well, gosh, this is something really easy to get away from. And I said, well, who's your tax preparer? And am I allowed to use names? Are we going to get thrown in jail if we use names for things? Not if it's actually their name. Okay. Okay.

Well, this is a nationwide tax preparation group. Let's just keep it really simple and say that, a nationwide tax preparation group. All right. And these people, who they blow billions of dollars probably doing advertising on TV and people go to them, what most people don't realize is the way they get these tax return preparers is they offer courses during the summer on the teach retirees, and other people how to do taxes about tax knowledge. And now these retirees who don't know what's happening, they just think they're going to learn about taxes.

For some reason, they're turned on by learning about taxes. I think it's going to help with their portfolio. And so now this organization trains people. They have six weeks of courses or something like that. And at the end of it, they say, oh, by the way, now that you know about taxes, would you like to be a tax preparer? And in short, they have no knowledge, no background. And they get sucked into this thing.

I think this would be kind of cool. And unfortunately, regular people go to these people to have taxes done and to have tax advice given, and it's going to end up costing them a fortune. And really the point I wanted to make on this is you get what you pay for. If you're going to go to these national organizations, you've got to ask the person, hey, do you have any fancy initials behind your name? How long have you been doing this? Are you aware of basic tax stuff?

because if you got somebody who just started last month, they're going to end up costing you a fortune. They might have saved you on the front end of you only paid $99 for your tax return getting done. But on the back end up, if you have a tax issue, you're going to end up owning tens of thousands, if not hundreds of thousands of dollars in taxes due to their incompetence. Got it. So this person, this lady that called you, went for a second opinion after getting this initial advice. Yeah, she called me, yeah. Okay, can you share like what are the actions she, you advise her to take to not pay this $80,000? Oh, yeah, write a letter to the IRS and attach her bank statement to it.

And what does that do? Oh, it showed that she did nothing wrong. It was just backing up and giving proof of what she put on her tax return. But once again, the genius at the national tax prep firm didn't understand that, didn't know that. They probably didn't know anything about audits whatsoever. And so since they didn't have that knowledge base to go to, they couldn't tell her it's as easy as writing a letter to the IRS and giving it a bank statement showing proof of backing up what she put on her tax return. Got it.

So it was just really just more of a she called someone who actually knew what they were looking at because you've done this before. Yeah. Once or twice. Once or twice. You know that it just made me think of something because you just shared with us a little bit, behind the secrets of these tax prepares of what they go. What happens behind the curtain is that it's a six-week crash course

and then they're put in front of a computer and a customer. Something else I was always curious about. Maybe you could shed some light on it. It's on TV a lot, people that are companies that promote their ability to minimize your tax obligation, like the debt that you owe, like we can slash it pennies on the dollar. What is the strategy? What does they do?

What's going on there on those TV commercials? Woo, where do I begin on that? And you know, this is a perfect segue. Do you know what I'm talking about? Oh, yeah, I know exactly what you're talking about. The fancy legal phrase is OIC, offer and compromise, where you make an offer to the IRS to mitigate your taxes and you guys work out some sort of compromise. That's the fancy name.

And that's a perfect segue because, and let's kind of parse the phrase you use, you get these people advertising on TV. So you have all these people who are now self-proclaimed experts. And most of these people don't have a clue what they're doing. They're just following a flow chart. And if your situation gets a little bit off the flow chart, they're lost, but they really don't care because what those organizations do, they, whenever you call it and say, hey, I owe the IRS $100,000. They say, cool, give us $8,000. We're going to submit this offer and compromise to the IRS. We're going to settle for pennies on the dollar and your life's going to be perfect and you're going to live happily ever after. What they don't tell you is a lot of these OICs are rejected and kicked out.

And so now you pay them the $8,000.000. They do their work and they may not test it to see if it's going to work out. The IRS even has a website for you to test it, but these people typically don't do that. They just do the work. They submit it to the IRS. It takes about a year for the IRS to get back and whenever the IRS rejects their offer, they say, whoops, sorry, we did the best we could, we earned our $8,000, you're just out of luck. And what they don't tell people, a lot of these organizations don't tell people, some might be good, but most of them don't, is that 90% of the OICs are rejected, and the real fun, the real reason why you're paying someone is to overcome the objection, stick with it,

and then get the ultimate offer and compromise. Let me follow that up a little bit. These things can be super duper effective. I've had a lot of clients who've owed a lot of money. I literally had one guy who owed over a million dollars. We were able to get the IRS to agree to $2,000 to settle his tax bill. Wow. So these things can be effective if you fit the right fact pattern.

Quick side note, the guy who could have settled for 2000, he was complaining because he didn't know where he was going to get the 2000 from. you just can't make people happy you just can't make them happy that's funny so these companies they don't have any more leverage over that situation and a personal load acting on their on behalf then they don't have more leverage what they hopefully do is have a lot more knowledge because the o ic it's almost a piece of art what you submit to the IRS and the way that you fill it in and do the proper stuff got it Got it. And then quick side note, too, since we're on this subject, if you're somebody who hasn't filed

taxes in years and you're terrified of the IRS coming in, kicking down the door, and you hauling you away to jail, because either A, you haven't filed or B, you owe a ton in taxes, there was a court case the other day of somebody owed $2 million to the IRS, and they're still squabbling about collecting. No talk about throwing the guy in jail or anything like that, but they're just squabbling about collecting. And even now this guy who owes the $2 million, if he does things right, more than likely, you just file, if you haven't filed in a few years, you file everything right now today as fast as possible, get back into the system, you raise your hand, tell the IRS you owe $5 million. And then you file one of these offer on compromises and say, hey, I owe this $5 million, but I can only afford to pay you $50,000. Will you accept it? And there's a very high likelihood it will be accepted. Hmm. So you're saying people like Nicholas Cage has options? Well, I don't know. Does he owe back taxes?

Oh, he's kind of notorious for that. That's why he's come out with so many crummy movies because he's working to pay off the IRS. And then Wesley Snipes actually went to jail. Yeah, well, he did fraudulent stuff. He followed the wrong. He followed the wrong type of advice. So, oh, that's okay. Yeah, he's done wrong. He went to the Al Capone School of Taxivation. That's exactly it. That's exactly it. But yeah, these people, Nicholas Cage or whoever, if they owe taxes, and this is the mindblower to me, if they only knew and or went to somebody who knew how to do things correctly, a lot of these taxes can be just wiped out. If people only knew how easy it was to get away from IRS collection activity, a lot of people wouldn't be paying taxes. It's insane.

Huh. All right, so we can end it with that. You get what you pay for. You get what you pay for. All righty. That's awesome. So whenever you're ready to have Tim customize a tax hacker blueprint for you, we talked about that a few episodes ago, and we've led off each episode with sharing what that's all about. Whenever you're ready for that, so you can minimize the amount of the harder money you send to Uncle Sam and how to protect and keep what you got. Go to taxhacker.com, download Tim's free book to help you navigate the new tax plan, and then after you've done that, you'll have the opportunity to schedule some time with Tim.

And either one or many, no, either he or one of his team members, we'll get on the phone with you for a short five to 10 minute call to assess your situation and tell them that you want your tax hacker blueprint and then I'll just take it from there. All righty? Boy, it's been a while since I read that closing and stumbled all over it. Any last bits of advice there, Tim? Nothing other than you get what you pay for. And by the way, you don't have to overpay for things either.

But if you go to the cheapest source, you're probably going to end up paying in the long run. Get the cheapest service, right? Yeah. Sweet. All righty. So that's it for Tim and myself. And we'll see you next week for another episode of Tax Hacker Tuesday on the epic real estate investing show. That's it for today as we dream of a tax system that works just for you. But until then, you have Tim Berry. See you next Tuesday for another episode of Tax Hacker Tuesday. This podcast is a part of the C Suite Radio Network. For more top business podcasts, visit C-desweet Radio. dot com.