#68: 2024 IRS Update

In this episode, we reconnect with tax expert Andrew Poulos to jump into the anticipated IRS updates for the year 2024. As we traverse through recent transformations within the IRS, Andrew sheds light on what lies ahead for taxpayers and practitioners. This episode is a treasure trove of information for those looking to stay ahead of the curve in tax planning and compliance.

Listeners will gain a comprehensive understanding of the IRS’s increased budget and its implications for enforcement, notices, and taxpayer interaction. Andrew highlights key areas the IRS is targeting, such as electric vehicle credits, worker classification, and the Employee Retention Credit (ERC). The discussion also ventures into the strategic side of tax representation, emphasizing the importance of building a professional rapport with the IRS for improved outcomes in tax resolution cases.

Key Takeaways:

  • The IRS is ramping up enforcement by increasing budgets and personnel, leading to a more aggressive approach to tax collection.
  • Priority areas for IRS enforcement include the Employee Retention Credit (ERC), electric vehicle (EV) credits, and the distinction between employees and independent contractors.
  • Strategies are key in tax representation, and a good rapport with IRS agents can significantly influence the resolution process.
  • The IRS is working towards better technology integration to streamline processes like amended returns, yet there are still challenges to overcome.
  • The IRS engages with tax professionals to bridge the understanding gap and improve the overall tax compliance and resolution landscape.

Notable Quotes:

  • “Most people will be proactive, but a lot will just kind of lay low either because they don’t have the money, they have other problems going on in life.” – Andrew Poulos
  • “As they beef up, you can expect more notices to be fired out. They’ll be a bit more aggressive. We’re trying to collect.” – Andrew Poulos
  • “With strategy… you got to discuss the options and the risks with the client. Let them make the decision and basically execute the strategy when you can.” – Andrew Poulos

Episode Sponsor:
Legacy Lock (http://www.teachingtaxflow.com/legacy)

0:00:04 John Tripolsky: Welcome to the Teaching Tax Flow podcast, where the goal is to empower and educate you to legally and ethically minimize taxes paid over your lifetime.

0:00:43 John Tripolsky: Welcome everybody back to your favorite tax related podcast. Wherever you are listening to this, welcome to the party. So before we jump into today’s topic, episode 68, our 2024 IRS updates from none other than one of our favorite returning guests here on the show. Let’s take a brief moment as always, and thank our episode sponsor.

0:00:45 Ad Read: This podcast is brought to you by Legacy Lock. If you are new to estate planning or simply need to review your current plan, Legacy Lock makes it as easy as PI. Legacy Lock is a unique platform that enables you to easily complete your attorney drafted documents conveniently from the comfort of your home or office. Your first step to this peace of mind is simply visiting teachingtaxflow.com slash Legacy.

0:01:02 John Tripolsky: Hey everybody, and welcome back to the Teaching Tax Flow podcast. If you read the show notes, looked at the title, or depending on where you’re listening to this at, looked at who the guest is on our show. It’s a very unique name in a good way. Probably looks familiar to you. Hopefully, if you haven’t yet, go back episode 38, believe it or not, IRS war stories we did with this gentleman, which is going all the way back to last July. So right after the holiday, Andrew Pulos is back on with us. But before we let this man give us the best updates, or I should say the updates to the IRS, as far as for 2024, I guess we should say hello to my partner in crime, Chris Picciurro. What’s happening, buddy? How are we today?

0:01:47 Chris Picciurro: Johnny T. It’s always a pleasure to spend time with you.

0:01:53 John Tripolsky: AI is a big thing now, right? As everybody knows, and we do all of our own production, all of our own editing of this show, I will honestly say that I did not duplicate Chris’s voice and put it on. When he says that, I think he may genuinely mean that, that he’s full of crap. Let’s skip on. Let’s get out of the good stuff. Andrew, what’s happening to me? Let’s talk about these IRS updates.

0:02:13 Andrew Poulos: What’s going on, guys? Happy New year to you.

0:02:15 Chris Picciurro: Welcome back and thank you so much for joining us. We appreciate it. I know we talk all the time. You’re not only an amazing tax practitioner, but a good friend. And if you’re my age, AI was Alan Iverson as a basketball player. But I guess there’s a new AI.

0:02:32 Andrew Poulos: In town now, man. Something’s got to be rewarded now, right? The old AI is gone. A new AI is, you know, it’s transition to good changes in the future. I think.

0:02:44 John Tripolsky: Oh, my gosh, listen to these guys. Listen to these guys going on. So let’s look at this. So we’ve talked about on previous podcasts, right? We’ve talked about the IRS. I think at that time we’re talking about war stories. We’ve talked know, we’ve referred to them as Darth Vader, not in a completely mean way, but getting notice letters. There’s a lot of things, and I think there might be a lot of confusion.

0:03:04 John Tripolsky: I mean, I’m pretty sure people know what the IRS is and what they do, but as far as for getting into 2024, so obviously some things have changed. I’m sure. I don’t know the answer to it, but I’m sure there had been some things that maybe have been on the horizon that they were working towards that maybe they tabled, maybe some stuff they got coming up this year. Just an overview. What might a taxpayer be looking at as far as for what in the world the IRS is up to as of today that we know about?

0:03:32 Andrew Poulos: Yeah, I think we’ve got a lot of changes going on, right. As far as our profession and the IRS itself, changes that they’re making. Look, undoubtedly they got more in the budget, more in the covers that Congress has given them over the next seven to ten years. They’re starting to beef up with their budgets, personnel, firepower essentially. Right. So as they beef up, you can expect more notices to be fired out.

0:03:59 Andrew Poulos: They’ll be a bit more aggressive. We’re trying to collect. Of course, Congress wants them to collect money. I think we’ve got what, probably hundreds of billions in tax gap, which is money that’s not collected, that’s sitting out there that taxpayers owe. So undoubtedly, from a psychological perspective, human nature, unless someone comes after you, if you owe, you’re not going to probably voluntarily go out and pay. Most likely right. When they come knocking on the door, you got to figure out a solution to your problem. I mean, I think that just goes to say that’s just how people usually operate. Long people will be proactive, but a lot will just kind of lay low either because they don’t have the money, they have other problems going on in life.

0:04:42 Andrew Poulos: And so they got multiple things to juggle and they’ll just leave the IRS as the last item on the list to be attendant to. But when a notice is start coming out at some point, then you’ve got to take action. So I think we’re going to start seeing more people coming back into the pipeline, essentially meaning that people who have either fallen off the bandwagon are in the system but just owe for back taxes and others that are catching up. And with that that entails, we’re going to start seeing the IRS floodgates open up with a bunch of notices coming into 2024 and of course, going out into 25 in future years.

0:05:18 John Tripolsky: You mean they’re really living up to their name of the Internal Revenue Service. Their job is to keep the dollars flowing in one direction. Although what we talk a lot about on teaching tax fall. Right. And Chris says is very, very well, is actually, I’ll let him say it. Chris, how would you describe the relationship with the IRS?

0:05:36 Chris Picciurro: Right. Well, we say tax agencies are your involuntary business partners, so. Meaning tax laws are written to encourage and discourage certain behavior. A couple things, Andrew. I think that the increased amount allocated to the IRS for enforcement, there’s some negatives.

0:05:53 Andrew Poulos: Right.

0:05:54 Chris Picciurro: I think we’re going to have a lot more tax notices. I want to get your take on what you think the financial commitment is going to be towards this AI and software, because a lot of those tax notices are automatically generated based on what’s on your tax record versus what has been reported on your tax return. I actually think that especially as a practitioner, as you know, and for taxpayers, the IRS is almost impossible to get a hold of.

0:06:28 Chris Picciurro: We have a client here in private CPA for actions. We set up a meeting for them to go on IRS website, helping them through a payment plan. And twice the chat popped up and said, hey, we’re happy to help. And twice you put some information and it says, I’m sorry, we’re not available. Ask us later. So in some ways, the funding could help resolve tax issues for taxpayers. In some ways. So my question is, do you see there being a commitment towards technology with IRS and personnel, and then are there any benefits to the IRS having more resources?

0:07:07 Andrew Poulos: Yeah, listen, I think there’s the good, the bad, and the ugly with everything, right? So with bigger budgets, it comes higher enforcement. You’ve got more personnel, you’ve got software and AI that are coming into the mean. The world’s constantly changing, so we as practitioners cannot help our clients properly until the IRS steps up to the table and does their part, which is answer phone calls without us having to wait on hold for 2 hours just to figure out that they answered them, would get disconnected. I mean, that’s just unacceptable. Things that have been going on for years, they’re still challenged coming off the pandemic.

0:07:47 Andrew Poulos: We’ve got, for example, notices that we’re receiving for clients where they’re alleging the taxpayers owe, for example, payroll tax dollars that truly have been paid in. We’ll send off a letter with complete support and documentation, and then 60 or 90 days later, we’ll get a letter back saying, hey, if you want to correct your 941 tax return, file an amended return. It’s like, what? Did you guys not read the letter? We put it in black and white, all the tax deposits when they were paid. So you’re going to have those challenges.

0:08:14 Andrew Poulos: It’s gotten to the point where someone like me, who deals with tax resolution or tax representation, at some point, for certain cases, I have to enlist the help of taxpayer advocate, and so that becomes challenging because they’re so backlogged. Literally, the last case I had to take to taxpayer advocate, which kind of was sort of a life and death situation. And by that I mean that it was a taxpayer that we had done an OIC for five years ago. And on the fifth year, which was last year, we filed their tax return timely on April 15 or 16th, whenever the deadline was, we got confirmation. The IRS says they never got it. They couldn’t even find the file in the system. That’s scary.

0:08:58 Andrew Poulos: And so they proposed. They sent out a threatening letter, proposal to terminate the client’s OIC. It’s like, wait a minute here. So I tried to make sense of it, called the IRS, finally got through. They’re like, yeah, we never even see this coming in our system. Never rejected, never nothing. I said, what do you mean? The files just gone missing in action in thin air. So, long story short, I had it. Enlist taxpayer advocate, guys.

0:09:22 Andrew Poulos: It took almost 120 days from start to finish with taxpayer advocate. It took almost eight weeks just for them to reach out to me, okay, taxpayer advocate. It took almost eight weeks just for taxpayer advocate to be assigned to the case. Reach out to me. We finally got it resolved right once they got involved, which probably would not have been resolved without tax advocate. But literally since June, late June, I just resolved it basically right before Christmas. I mean, this is unacceptable stuff going on. So I’m hoping that the positive with increased budgets is that we’ll get better assistance and better results.

0:09:58 Andrew Poulos: Of course, with that, you can expect more letters to go out. You can expect more taxpayers to have to become compliant and get into the system and do their part. So, yeah. Do I see challenges? Absolutely. I think the challenges will continue. The new commissioner, I’ve heard him speak at the tax forums last year. He had said that they still had several million amended returns to go through in process, so they are still challenged. I don’t know how this tax season is going to go, but overall, we’re at a point where it’s frustrating as a professional because we’re trying to help our clients and we can’t do our job, and then our clients are thinking that we’re just not helping them. Right. So it’s just a stressful situation.

0:10:37 John Tripolsky: And when you mentioned OIC, I’m going to assume that’s an offer and compromise. Correct. Done. On a client’s behalf.

0:10:42 Andrew Poulos: Yes. OIC offer. Sorry about that. Yeah. Correct. An offer and compromise.

0:10:46 Chris Picciurro: Yeah, I think that’s the challenging part, is we say in our private practice all the time, hey, we need chocolate chips to make chocolate chip cookies. In other words, if a client’s asking about, can we do this? Can we do that? Yeah, we can. But we need the ingredients. It’s hard to help a client and represent a client where you are national expert and when you can’t get access to the taxing authority that you’re representing your client for.

0:11:16 Chris Picciurro: I think that. Yeah, it’s nice now that we could do many of the amended returns electronically. File the amended returns, which is a huge advantage.

0:11:26 Andrew Poulos: It’s very frustrating not to interrupt, but even that. Right. If you look at it, we can only go back two years to file amended returns. So why not make it three, four, five years? It’s much easier for the government and for us as professionals. The e file, everything is processed. You leave out the human error factor of it. So why not go back? I mean, why only two years? It’s stuff like that comes frustrating.

0:11:48 Andrew Poulos: Or just two years to file a back return. Unfiled return. Right. Your current year and two previous years. Why not make it three or four or five years? We will alleviate so much of this paper and backlog. That’s the whole point of moving into technology age, is to get rid of paper and the human era and the processing mean. Have you seen the scanners that the Iris uses to scan these paper returns? They get mailed into them and it’s ridiculous.

0:12:17 Chris Picciurro: Yeah. No, they’re ten years behind at a minimum. So they’re like part of Europe listening to pop music. Right? They’re not swifties like John. They’re listening to old Taylor. Not the music.

0:12:32 Andrew Poulos: Stop.

0:12:33 John Tripolsky: Oh, my God.

0:12:33 Andrew Poulos: We had it coming.

0:12:34 John Tripolsky: There it is.

0:12:36 Chris Picciurro: Playing pickleball yet. Right. They don’t even know it exists in your.

0:12:41 Andrew Poulos: Nope.

0:12:42 John Tripolsky: And when it does, I’m sure you’ll be over there teaching lessons. So speaking of dates. So if I heard you right there. So the limitations on doing an amended return, if anybody’s wondering what that is, obviously a ton of information out there. That’s two years. Correct? Is that still two years to be able to file an amended return?

0:13:00 Andrew Poulos: No, but to file electronically is what I was referencing to file versus basically having to paper file, send it in certified mail and wait six or nine months or a year for it to get processed. Right. I was referring to just the electronic portion of us being able to file, not that there’s a two year statute.

0:13:16 John Tripolsky: Gotcha. Gotcha. So that basically follows similar, because what is it? The general statute of limitations for the IRS? Is three years still correct as far as for assessing any taxes. So dumb question with, and I can’t remember where we had this conversation with somebody. It might have been with a friend of ours in the past couple of weeks. I believe their situation was kind of unique. They had filed a couple years, did it for a couple of years, filed again, then didn’t again for a couple of years.

0:13:41 John Tripolsky: So taking that unique scenario again, I don’t know all the details of it, but when there’s that statute of limitations of three years, is that basically saying like, hey, you know what if you didn’t file taxes twelve years ago and then you did and you haven’t gotten a notice, is there a, okay, you’re safe, they forgot about you in there. Or is that kind of in reference of you mentioned earlier on about them staffing up, they’re finally going to be catching up on themselves.

0:14:08 John Tripolsky: Can they go back beyond that statue of that three years and really start to get their act together?

0:14:14 Andrew Poulos: Yes and no, right? Yes. Typically what we have seen in the past, the past doesn’t predict the future in the past. If we have a taxpayer just not filed forever, 1012 years, 15, whatever the case is, usually if it gets assigned to, for example, if you file one year, the most recent year, and you have a balance due and you can’t pay, then it’ll go to collections and you’ll be doing potentially with a revenue officer.

0:14:39 Andrew Poulos: Revenue officer. Officer is going to have to do their due diligence and go back and figure out, well, hey, we got a taxpayer here who hasn’t. He just filed, gotten the system, hasn’t filed the last ten years. It’s depending upon the revenue officer and the government, really. Usually what we see is they’ll go back six years unless they have a reason to go back further if it’s a wage earner, meaning someone who’s w two employee. Usually they’ll go back six years and then just leave it at that. If it’s someone who’s self employed, who’s just been making a ton of money and just says, never filed, then the government sees dollars potential for to collect dollars, of course, and penalties and interest, then, yeah, they could force you to go back ten years, twelve years, whatever they want. But typically they’ll limit it to six years for the most part. Right. And so you got to take that with a grain of salt because every case is different.

0:15:26 Andrew Poulos: And like I tell clients when I take on tax resolution work, my past experience and my past cases don’t predict the results that I can provide potentially for your case. Right. It’s all individual case by case work that we deal with when it comes to dealing anything outside of the scope of just preparation.

0:15:45 Chris Picciurro: Well, what we want to talk about also is, in your opinion. No, we don’t have a crystal ball. We have a good friend of the show and crystal ball, but she would appreciate our shout out. But we don’t have a crystal ball. But what are the enforcement areas that you see? Obviously, reading the t leaps in our current landscape, the employee retention credit claim, I see some enforcement coming down on vehicle credits that may not have been properly taken.

0:16:23 Chris Picciurro: We’ve got employment. Employment versus independent Contractor.

0:16:27 Andrew Poulos: Yeah.

0:16:27 Chris Picciurro: What are you thinking?

0:16:28 Andrew Poulos: I think, Chris, the hot stuff that we’re seeing, I’m seeing probably as you’re seeing many others are in the profession on our side as professionals, we can expect enforcement on evs, electric vehicle know. And partly because there was just been a lot of confusion. Right. With which cars qualified for which know. Tesla was okay. It qualifies. Two years later it doesn’t. Now it does again. Oh, no, we don’t want it this year. We’ll have know. We’ll put it back on a calendar next.

0:16:55 Andrew Poulos: It’s been, there’s been a lot of confusion and issues with that. And I believe from what I’m seeing that they’re actually doing a project on that. A project means that they’re systematically just going and they’ve been doing auditing certain number of returns of any return, tax return that has, that qualifies with this element of it. Meaning with an EV credit. Right. So you could be just an unlucky one getting audited. Really just because it’s a project and your tax return has a certain element that they’re auditing.

0:17:25 Andrew Poulos: So that’s one thing. The ERC employee retention credits. Man, that’s hot right now. It’s been super hot. Just so much fraud. We’ve got all these mills that popped up during COVID like, hey, we’re the experts here. Forget about us tax professionals, right? All of a sudden we have someone who’s never done a tax return in your life and they’re the tax professional. They’re the experts in the, uh, they’re telling folks, you qualify, you qualified because it was a government shutdown. No, the IRS specifically said, just the government shutdown is not going to qualify. You better have a better reason to support your ERC claim. So that’s going to be a nightmare for both the IRS moving forward and for taxpayers, small businesses who have claimed ERC.

0:18:04 Andrew Poulos: Worker classification, right. I always reference it as worker classification. I’ve authored a lot of articles and presented on this topic. So for me, for some, it’s a drive, boring topic. For me, I find it interesting. But work classification, meaning employee versus independent contractor. Right. The good old handshake that we always hear, well, me and the guy just injured, we just decided that he’s going to be independent contractor. He’ll take care of his own taxes. No, it doesn’t quite work like that. Right. There’s rules, there’s laws. We have to abide by 20 common factor laws and a lot of that stuff.

0:18:36 Andrew Poulos: What folks and even a lot of practitioners don’t know is that most, not all, but most of your classification issues with worker classification don’t start at the federal level. They start at the local level, at the state level. Right. With the Labor Department. That’s where they begin. The feds and most states, not all, but the majority of states have a contract in place where they share results in exchange for tax dollars.

0:19:01 Andrew Poulos: And so therefore, basically your biggest threat in getting caught if you’re doing it wrong, is at the state level. And if it’s a big enough case, then you probably can expect the feds to come in afterwards. Right. In audit, the IRS could step in. One thing people have to understand, and the IRS has specifically said that with the federal Labor Department and Labor departments, that they’re going to increase enforcement. It’s a low hanging fruit. Similar like reasonable comp for s corps that we’re all worried about.

0:19:32 Andrew Poulos: This is probably just as much, if not more of a low hanging fruit for the government. You turn around. I think Chris would be hard pressed to say that from small business returns that we do, that probably the majority of them don’t have some form of contract labor. Even if they have w two employees, they still have some form of contract labor. Whether they’re classified correctly or not is not the point today. But what I’m saying is every return just about has some form of contract labor on it. So there’s some exposure for a majority of these returns that we prepare the majority of these small business owners. And so if you get it wrong, there’s no three year statute here. Oh, like the government can only go back three years? It’s like, oh no, they can go back way back in the days if they want. Well, that’s incumbent upon the government and how much money is on the table.

0:20:20 Andrew Poulos: So I think those who are doing it wrong need to tighten up because that’s going to be some huge exposure moving forward with audits. And when it starts getting out there, then people are going to get scared and they’re going to start talking that old traditional thing. Oh my budy got busted, got audited, my neighbor, whatever. Right. So I think that’s something that we have to, as professionals have to address with our clients.

0:20:42 Chris Picciurro: Well, yeah, I would agree. We know the 1099 not to bring up Taylor again, but what I call the Taylor Swift contract rule, the got kicked. I think the 1099 thresholds are rather punitive personally, but they’re there. And the penalties for not issuing these and the backup withholding fall on the hands of the person paying the money. And I agree with Andrew that our worker classification is going to continue to be a big issue because quite frankly, if you have ten subcontractors you failed to give a 1099 to, the government doesn’t want to chase those ten people around. And if you own a business, you might have more resources to collect from.

0:21:30 Andrew Poulos: Well not only that, you get into elements of trust fund penalties and trust fund. Right. The government is just a whole lot easier for the government to attach the business owner and chase after business owner who may have assets they can go after him or her personally than it is to chase 1020 other people who they know they’re going to have a hard time. Right. If these contractors, independent contractors, these subs haven’t filed, chances are the government knows statistically speaking that they’re going to have a hard time collecting from them. And it’s not worth the efforts potentially for them to go make them file and then chase them for tax dollars.

0:22:05 Andrew Poulos: Whereas on the employer side, on the business side, they can pursue it, get it potentially under willful negligence to where they go back as many years as they want and then they get the trust fund portion, the employer portion of the taxes. Right. So it’s a very interesting law that can become very dangerous. And it’s oftentimes when people get in trouble, it can easily put you out of business if you’re not careful.

0:22:29 John Tripolsky: Absolutely. So it sounds like a lot of the things that we’re seeing in 2024, it is a lot of carryover from previous years. And now this year, we’re kind of seeing where things are flowing. Obviously, there’s new things. Like we mentioned, the ERc. That’s an awful story, I think, for how good marketers are sometimes, right. Like you mentioned, these guys are all of a sudden running commercials, have no idea what they’re doing. They hired a spokesperson and they’re the expert.

0:22:56 Andrew Poulos: Pretty unfortunate.

0:22:57 John Tripolsky: We did a great podcast on that. I do want to touch on one quick thing before we wrap up. Mean, obviously, Andrew, we’re excited. We’ve been working with you. You and Chris have known each other for a long time. We’re going to be launching some products, for lack of better terms, where people can go directly through our website and actually have access to some of the things that are out there. Know, IRS representation, et cetera, et cetera, that they may have not had in the previous years. But I say that only as a preface.

0:23:25 John Tripolsky: Know, we’ve had multiple conversations about the IRS, specifically people’s perception of them and really how it’s awful. Right. Like you touched on, again, multiple conversations, multiple podcasts we’ve done here, as well as on our other show, the Mr. R show, which is more specific towards tax pros, is that it really boils down to the relationship you have with these IRS agents. Right. So you had mentioned on the one conversation I’m thinking of specifically, you have such great rapport with them that sometimes you can keep the situation from just spiraling into, the taxpayer is going to lose at the end of the day anyways.

0:24:06 John Tripolsky: There’s always some compromise in there, just having mutual respect across the board. It’s like going into the best analogy I can make of that, right, is it’s like, I don’t know if, like MMA or like boxing, you think of like old time boxing. They go into this like guns ablazing, but then at the end of it, one guy may be bleeding from the face, but they respect each other. They handshake it out, they go their separate ways.

0:24:30 John Tripolsky: And that’s right. That’s what comes to me visually when you talk about just having and maintaining a good professional relationship with the IRS.

0:24:40 Andrew Poulos: Yeah. When you deal, listen, you’re absolutely right. And so, John, when you deal with tax resolution, tax representation, whatever you want to refer to, it as. And you do it frequently as part of your practice in your area, your demographic area. You got to deal most times with the same professionals on the other side. And I call them professionals. Some are, some don’t act as professionals, and others are very easy and accommodating to work with. But revenue officers and revenue agents. Right.

0:25:13 Andrew Poulos: If you deal in the scope of work, you’re going to deal with over and over, most of the same people, they get to know you. You get to know them. You know their quirks. They know your quirks. Right. So sometimes you push their buttons. They push your buttons. But at the end of the day, the objective is to get resolution for the client’s case, for the taxpayer’s case. So, yeah, I’ve had cases where I’ve dealt with the same revenue agents on multiple audits saying revenue officers, revenue officers here in Atlanta, for example. I mean, there’s the staff finger office, for example. Right? And powers ferry office. Those are two main offices.

0:25:49 Andrew Poulos: Those guys in there know someone one day was like, hey, I got a case going on. And the other revenue officers, like, with them, they’re like, andrew. Oh, Andrew Pulis. Yeah. You’ll have a good time working with him. Just don’t push his buttons. Know, uh, he’ll take, you know, I, as a professional, represent the taxpayer, and I don’t let my clients get run over, get thrown under the bus. You got to know the laws. You got to basically be professional and you got to get a resolution.

0:26:21 Andrew Poulos: But there’s times when you can’t come to an agreement. So there’s options out there for taxpayers that you’ve got to know. And that sometimes is filing a CDP, kicking it out of the revenue officer’s hands. Or if you got an exam, an audit, and you can’t come to terms with the revenue agent, you work it enough, then the strategy might be going into it. And I think Chris and I have dealt with this before going into it. We know that we got to mitigate risk for the taxpayer, so we create a strategy that we work it enough. But basically, the end result we know going into it is we want to go to appeals because we’re going to get a better shake for the taxpayer than if we deal with the revenue agent, whether we know the revenue agent or we don’t. Right. So this strategy to everything, as I’ve said before in previous shows that we’ve done, it’s always about strategy.

0:27:07 Andrew Poulos: What strategy do you develop as a professional to get the best possible results for your client? Sometimes listen, sometimes it’s filing a CDP because you know, you’re not going to be able to get anywhere with the revenue officer, whether they’re difficult to work with or not or for whatever case you’re trying to buy some know, to go to appeals for a collection case because you can get a better deal there for, you know, based on your previous experience. So there’s so much strategy know.

0:27:37 Andrew Poulos: Chris and I were having a beer, what, a couple of years ago you were in Atlanta. You had come in town so we can film a show for financial smarts that I was working on and we were out having a beer. It’s like, man, I got a got a know. What do you think? I’m like, oh, this is stuff I love, right? So we’re tying and drink, eating some wings at the bar, and I’m like, dude, what are you going to do? He’s like, guys, this involves XYZ. And I’m like, oh, this should be your strategy. He’s like, things going to work? I’m like, 100%.

0:28:00 Andrew Poulos: I think what you mitigated the risk that you were trying to mitigate on the client, right? So it’s partly fun for us, right? Those of us who do it and partly getting the results. For me, there’s no better satisfaction as a professional beyond the money that we’re out to make, of course, as a living. But to get the results pretty much and see a client who’s satisfied now. Right. And you know that you would help someone who otherwise would probably get thrown under the bus by the government that they were representing themselves or if they went somewhere that tax repair or professional wasn’t schooled enough to be able to help.

0:28:35 Chris Picciurro: Right. To wrap it up, one thing, collection due process, I believe is a CDP. I could be wrong. And the other thing is one of the positives of maybe the IRS having more resources, and I give them a little bit of empathy here, is having more training for the stormtroopers out there, for the auditors, people on the front lines, because a lot of times those folks are inexperienced and they are very, to say it bluntly, they’re rigid.

0:29:08 Chris Picciurro: And to prevent that, if you could resolve the examination or the tax notice with your first point of contact, that would save everyone a lot of time. But unfortunately, that’s just not how they’re structured right now.

0:29:21 Andrew Poulos: No, it’s tough, right? Like you said, a lot of them are new. We started as new in our profession at some point, right, almost 30 years ago. We all start from somewhere. But I’ve been fortunate that I got invited a couple of years ago, and I may be getting invited again, from what I heard, over to the Atlanta office where they did a roundtable for new revenue officers, all the new trainees, and they brought in a panel of tax professionals from the metro Atlanta area. I think there was four of us.

0:29:50 Andrew Poulos: So we can meet them, they can meet us. And basically what they want us to do is explain to these revenue officers our challenges from our side so they can understand our side. Most of them have never worked on our side. Right. So they don’t understand and we don’t want them coming knocking on the being. I don’t want to put this out wrong, but effectively having them being bullies, right, because you’re not supposed to be that. You’re supposed to be a professional. You’re supposed to follow the law. You’re supposed to do your job.

0:30:15 Andrew Poulos: Most of them do. But there’s the exception to the rule with everything in life, right? And even on our side, pretty much, you got great tax professionals and then you got some who just aren’t so great, don’t follow, blah, blah, same thing on their side. So I enjoyed it because I got to meet a lot of these folks that I would be working with potentially in the future and just put a face and a name together. Right. So once they know you, sometimes it’s just a whole lot easier.

0:30:40 Andrew Poulos: They ease up a little bit from being so hardcore and intimidating, in a sense. Right. Because there’s laws. You got notice of intent to love you. Well, you got to collection due process rights and you know who’s going to work with you and who’s not. You got a revenue officer that you’ve had bad relationship with in the past. Well, you know that there’s just no sense in working with them because you’re not going to accomplish anything for your taxpayer. So it’s all about relationships.

0:31:04 Andrew Poulos: And the more you deal in this field and the scope of work in this relationship based, you get to know them, you get to know who you’re going to work with, who you’re not, how you’re going to represent your taxpayer and move it along. But we can expect more of that stuff. And tax pros have to be well versed with these letters. The LT eleven, the 1058, the CP 2000 notices. You got to know what time limits there are, what options you have. Because a lot of times there is a strategy is, okay, well, we want to file a collection due process hearing. Why? Because we know that we’re going to get a better shake with appeals and we’re going to basically buy it two years before it comes up or a year or nine months or whatnot. Right.

0:31:41 Andrew Poulos: I’ve had successful resolutions where the statute ran out on the government on cases that were towards the end because we filed a collection due process hearing, but we filed it late. So there’s elements of that and people would see out here and said, you filed it late. Wow, you’re running the risk. Well, you discuss the risk with a taxpayer and ultimately the taxpayer makes a decision. But during the pandemic, just not run over tangent.

0:32:06 Andrew Poulos: I had a taxpayer who owed some money. She, two years each year had different statutes, but it was toward the end, I think there was like seven years left on one, maybe eight years on the other. And I said, listen, I said, you know, let’s file it for a collection due process. We weren’t going to get the IRS on the phone anyway. At that is, I think this should be a strategy. We file it late by one day.

0:32:28 Andrew Poulos: She goes, what does that tell said? I said, it’s a CDP collection due process. We file it late effectively, and it doesn’t told the statute, right. But they could also levy on you. She goes, where’s the chances? I said, the only thing lay was retired has Social Security. I said, probably unlikely. Not that it’s not possible, but unlikely. But it doesn’t toll the statute. Which means while we’re waiting for this case to get docketed in and gets assigned to an appeals officer for this collection case that essentially continuing to run on the government, if I had filed it timely, the statute were told. So if it took the government three years to bring this up, basically they just bought another three years.

0:33:04 Andrew Poulos: And you know what? It finally got to an appeals officer for CDP. We had three months left on one statute and about a year less than the other. And I’m on the phone with the case, I remember, and the appeals officer says, Mr. Pulis, we’re talking through everything. She goes, Mr. Pulis. She goes, I see that the statute’s been running. She goes, this has been a delayed file, CDP. She goes, did you intentionally do.

0:33:31 Andrew Poulos: I’m like, goof, you know, I’m like, what do I tell this? You know, there was silence and then she kind of knew I wasn’t going to answer. She goes, I’ll tell you why. She goes, you did an amazing job. She goes, for your class. She goes, and if I was on your side, she goes, I would have done the same thing, right? And she helped me. I said, listen. Said, we want a CNC currently non collectible. I said, the taxpayer doesn’t have the ability to pay. She’s retired. This is old debt. For whom she was married. Joint return.

0:33:53 Andrew Poulos: And she gave us what we wanted. She said, there’s no point, really. She goes in not doing a CNC. She goes, you got three months left on one year for the statute. And she goes, and nine or ten months or a year left on the other one. She goes, this will just run out and expire. She usually did an amazing job. She goes, the case is concluded. Right. So I got the tax free of what they wanted, but it was all I’m going back to. What was it? The strategy. Right. You got to discuss the options and the risks with the client. Let them make the decision and basically execute the strategy when you can.

0:34:22 John Tripolsky: Awesome. Well, Andrew, thank you again for joining us, man. I think looking at for one, I can’t believe that it’s 2024 already. It’s wild.

0:34:30 Andrew Poulos: But, dude, time flies, man. Let me look. Yeah, I got more gray hair than I had last year. Chris keeps it minimal, so you can’t tell his age. He looks 30 still.

0:34:43 Chris Picciurro: This was recorded after happy hour, obviously. No, but thank you. And it’s interesting because these war stories are important because what we’re seeing is there is going to be more IRS enforcement, an opportunity to strategize is going to be more important and be aware of it and make sure that you have the proper representation is absolutely. Start preventing the problem before it’s a problem. Make sure that you are reporting on your income and sharing as much information as you can with your tax professional.

0:35:16 Andrew Poulos: Yeah, absolutely. I agree. Chris. Basically, being proactive versus reactive is key in this business. And for taxpayers.

0:35:23 John Tripolsky: Sure. Two things just to wrap us out and close out the show here. Andrew, you mentioned know strategy, as we always talk about strategy, and I’ve experienced it with you, and I’ve seen and I’ve heard fantastic things about just the relationship that you and Chris have had and Clyde. Relationships, I think it goes without saying. Right. Strategy and experience go hand in hand. So that’s awesome to see that that’s actually the case in this. But then also for our listeners as well, too, just to recap and reiterate that that was a fantastic, excellent example that you gave there about the IRS bringing in for new revenue officers, tax pros, so they can meet, I think. And me as a taxpayer, I’m not a tax pro like you gentlemen.

0:36:08 John Tripolsky: It’s almost like an added sense of comfort that the federal government is doing that they’re trying to do something and at least bringing people together in that sense, instead of saying, hey, we’re going to hire a bunch of revenue officers and here’s your equipment, go to battle. It’s not necessarily the case. So that’s excellent to hear.

0:36:28 Andrew Poulos: No, I enjoyed it and I was glad that they did that. And they’re talking about possibly doing it again now from what I’m hearing, because we need to understand their side and they need to understand our side. Right? It’s a two way street, man here. The government can’t just do what they want to run over people and taxpayers feel like they’re doing that. And when you get to that point, that’s when we have problems in the world and in society. Right. Taxpayers don’t want to be compliant. They’re like, well, heck, they’re dropping bombs pretty much overseas using my money for that or whatever. The taxpayer feels disgruntled, so they don’t want to be compliant because they’re like, well, what’s the point?

0:37:03 Andrew Poulos: I’m just paying taxes. I’m not getting any benefit out of it. These revenue officers, revenue agents, they’re just out to throw me under the bus. So it just makes a whole lot more sense long term. If there’s sort of a relationship there, whether it’s part of their training, that’s up for the government to decide. But I think there needs to be some relationship between their side and our side in order for us to be able to function and work together with the work that we do as professionals.

0:37:28 John Tripolsky: Excellent. Well, thank you both, gentlemen, for joining us on this. I know this is one of our longer shows, but we anticipated that. Lots of good information. Again, anybody who’s listening to this, Andrew has been a fantastic resource for us on multiple levels as well as yourselves in the audience. This may be about as close as you could possibly get to having an insight into the IRS. I mean, we already know you can’t just call them up and have a conversation with them.

0:37:52 John Tripolsky: So go back, share this with your friends. Hopefully you got a little bit of comedy throughout the process here to lighten up the subject. But as I always like to close these shows out, as you know, if you are an avid listener and subscriber, if you’re not, then this is new to you. Shame on you. You haven’t been here before. Subscribe so you get the next shows. We will see you back here same time, same place next week here on the teaching tax Flow podcast.

0:38:20 John Tripolsky: John here from the teaching tax flow team. Thank you, Andrew, for hanging out with us here on this episode, looking at the IRS, what’s happening in their world, efforts they’re making to really kind of not break the mold, but I will say bridge the gap between the federal government, the IRS and the taxpayer. So we went into some great topics. Obviously, we talked about a lot there, and I look forward to doing these again. I mean, obviously something that we touched on there, the IRS is making a very conscious effort. It appears to kind of ease that transition or ease the gap, bridge the gap, less muddy the waters, I guess we could say, and build the relationship between those that work for the IRS and the taxpayers, which, just saying, me as a taxpayer, I appreciate that greatly. So excited to hear that.

0:39:10 John Tripolsky: And honestly, we look forward to having Andrew back and touching on this, really as the year progresses and obviously in years to come. I think it’s a great topic to look at and probably the closest we can get in a lot of cases to really having a deeper insight into how the IRS is handling things right. We talked about technology, budgeting, et cetera. So I appreciate everybody’s time for joining us on this episode.

0:39:38 John Tripolsky: Andrew and Chris, thank you, as always, as I mentioned, and we look forward to doing it again. So see everybody back here next week. New topic, let’s do it.

0:39:53 Ad Read: The content provided is for educational purposes only. We encourage you to seek personalized investment advice from your financial professional. For all hacks and legal advice, please consult your CPA or attorney. Investment advisory services are offered through Cabin Advisors, a registered investment advisor. Securities are offered through cabin Securities, a registered broker dealer. The content of this podcast does not constitute an offer of securities. Offerings can only be made through an offering memorandum, and you should carefully examine the risk factors and other information contained in the memorandum.