For millions of Americans, their tax professional is the only financial or business-oriented adviser in their life. Even if you don’t offer financial planning or advisory services, you are very likely the de facto financial services professional for many of your clients.
As such, here are five practical ways in which you can be a hero to your clients right now…
1. Remind them to “stay the course”.
We’re hearing the words “unprecedented” and “uncertain” thrown around a lot right now in relation to both the COVID-19 pandemic and the ensuing market volatility and pending recession. The problem that I have with those words is that they simply aren’t true. Both pandemics (2009, 1968, 1957, 1918, etc.) and recessions (2008, 2001, 1990, 1981, 1974, 1970, 1960, 1958, 1953, etc., etc.) are fairly common occurrences, even in modern times. Coronavirus is not the first pandemic, and this won’t be the last recession.
There is also always going to be volatility in the markets. Do folks forget the February 2018 bond drawdowns? Or the 20% decline in the stock market in the 4th quarter of 2018?
People do forget these things.
Yes, the recent stock market decline was extremely rapid (but let’s face it, valuations were overbid anyway and needed a correction).
But some people are saying that “this time is different”, and that the economy will never recover. Well, they said that during ever prior recession, also. This too shall pass.
Right now, you need to be communicating these facts to your clients, in an effort to help ease the pain and panic.
More than anything, you need to stress to your clients to NOT panic sell their investments. We’re seeing way too many people doing this, and all they’re doing is locking in their losses. Panic selling stocks and bonds is literally the stupidest financial move a person can make right now. They should just be leaving those accounts alone, doing nothing with them.
In fact, for your clients that can, they should continue making their normal monthly investment contributions. Why? Dollar cost averaging, that’s why. More shares for fewer bucks.
Do some research on staying the course. Write a series of emails to your client/prospect email list (you have one, right?). Communicate to them the importance of doing nothing. Yes, doing nothing. In the infamous words of Vanguard founder Jack Bogle, “Don’t just do something, stand there!”. One of my favorite resources on this topic, from which you can pull tidbits for sharing with your clients, is found on the Bogleheads Wiki.
There is, of course, one exception to this concept of not selling investments. For your clients that are able to do so…
2. Take advantage of tax loss harvesting opportunities.
You may have some clients that can actually benefit from the recent stock/bond market drops, and use this as a tax reduction opportunity. Assuming you have the appropriate 7216 disclosure in place, you can data mine your client files for those with past Schedule D, 1099-B, -DIV, etc. activity to find those with taxable brokerage accounts. Then, reach out to them and offer to assist them with tax loss harvesting opportunities.
3. Help them apply for unemployment.
We’re now coming out of the longest continuous period of economic expansion in American history. Because of this, you may have a lot of younger clients that have just never seen a recession before, or even if they have they didn’t lose their job back in the 2007-2009 financial crisis or back in the dot com crash. Because so many sectors of the economy are being impacted by the coronavirus and the shelter-in-place mandates, short-term layoffs are already happening, and there is a massive surge in people seeking unemployment benefits.
But, because they’ve never done it before, they have no clue how to apply. Same goes for other benefit programs, like SNAP (food stamps). You can help your affected clients apply for these programs. Perhaps walk them through the process via screen share on a Zoom or Join.me call. Obviously provide whatever financial information they’ll need to apply. If you’re doing content marketing, create a screen-capture walk through of the process for your state. Email your client/prospect list (again, you have this, right?) and provide links to the various state resources.
What about your self-employed and small business clients? Well, help them, too, with…
4. Help business owners apply for SBA emergency funding.
The Small Business Administration is offering loans up to $2 million at rates of only 3.75% to help businesses impacted by COVID-19. These loans are meant to help make payroll, pay overhead costs while the business may be without revenue, etc. The application process is not as short and simple as you might think, and is something many of your business clients could use a hand with. Again, provide them the necessary financial data, walk them through it via screen sharing tools, or even complete most of it for them.
If you’re an active Tax Resolution Academy® member, we’re having a robust discussion about this topic on this thread.
Helping your business clients to stay in business is not only good karma, but you obviously benefit in the long term from it. A business client is no longer a paying client if they’re out of business, after all. So, I could clearly make an argument for providing this service for free to your business clients. But, it’s also a service with value, and you can and should get paid for it if you choose to. Either way works.
And lastly, we cannot forget about my favorite group of clients…
5. For tax debtors, start the tax debt resolution process.
Each year, about 7 to 8 million new tax debt cases emerge. More than half of these are businesses that owe payroll taxes. That’s a typical year.
This year won’t be typical.
Even with the 90-day extension of time to pay, plenty of folks with a 1040 liability for 2019 probably won’t be in a position to pay it. Businesses are also getting hammered pretty hard, and the first thing they usually stop paying is payroll taxes. I also anticipate that numerous individuals and small businesses will not be able to pay on their existing installment agreements, and will wind up in default.
All of these factors mean that there will be a surge in IRS Collections representation opportunity. Frankly, it’s one of the things I like about that kind of work — the fact that it’s inherently recession-proof.
Also, contrary to what you may have heard through the rumor mill or simply assumed, IRS Collections has NOT shut down. The ACS call centers are still open, even though they’ve temporarily suspended issuance of automated levy notices. PPS is still open. Return processing is still taking place. The CAF unit is still processing 2848’s. Revenue Officers in the field are working from home in many places, but they’re still working (they all have government-issued cell phones).
The IRS is going to great lengths to keep call centers staffed in locations where they can. Most of their operations have NOT been disrupted. So, yes, you can still call and obtain Collection holds, get people into CNC, set up IAs, etc. It may be slower due to reduced head count, but you can still get cases closed or halted.
But aside from that, here’s what I think many practitioners don’t realize: You need TIME to “fix” the root cause of your client’s tax debt problem. This is an inherent part of the resolution process. You need time to prepare back tax returns, get bookkeeping in order, rearrange personal and business expenses, etc. This 90-day extension on 2019 payment, plus the temporary halt on automated levy action, is a huge opportunity for you to do these basic, necessary tax resolution processes.
For more detail on the necessary early steps, Academy members can watch the recording of our Client Intake class, or you can refer to the Initial Resolution Actions checklist on page 152 of Tax Resolution Systems.
Right now, you should be taking advantage of the gift of TIME that you have been given to help tax debt clients to get their root cause issues sussed out, and create a plan for ultimate resolution. In addition, you should be increasing your lead generation marketing efforts in order to bring in new tax resolution clients — start attracting those future Collections representation clients NOW so that you can start working on their cases immediately, while the big bad wolf (IRS) is mostly sleeping and leaving people alone.
You may need to be open to alternative payment arrangements on your representation fee for the next couple months, but the work is most certainly out there for you to go get.
So there you have it. Within these five ideas, there should be at least one or two that you can implement TODAY to help your existing clients, and help you create future revenue as well.