This is the inevitable question.
On every webinar, every Tax Resolution Fast Start Boot Camp, every open Q&A call, and via numerous emails, this is the #1 most frequently asked question in the tax resolution universe.
As such, I figure it’s about high time that I write out a formal response that I can refer folks to in the future.
So if you sent me an email or otherwise posed this question, and I sent you here, welcome, and know that you are not alone. 🙂
First, I’ll give you the short answer: People find the money to pay for what’s important to them.
Here in the United States, the wealthiest nation in human history, there is no shortage of money. Money is literally everywhere. Compared to most other countries, and most other times in history, money is also relatively easy to get.
“Pfttt!” I hear some readers saying. But statistically speaking, it’s true. Here in America, even our lowest income earners make more money in a year than billions of people around the world make in 5 or 10 years.
But money here doesn’t just come from earned income. We also have one of the greatest credit facilities in the world (be that for good or bad). Many people (not everybody, but most), can tap into credit almost at will, and many people do exactly that in order to obtain the money to pay for what matters most to them.
Starting to make sense?
What you’ll find when you start doing tax resolution work is a very simple truth: People had the money to pay their taxes, they simply chose to do something else with the money instead. This is where tax debts come from in the first place.
Many times, people are using their tax money to support a lifestyle that is more grandiose than they should be. This applies equally across the socioeconomic spectrum, by the way. People making $25,000 per year can wind up with a tax debt just as easily as people making $250,000 per year.
So, the money is flowing through them, they’re just not doing with it what they’re supposed to be doing with it (in the eyes of the IRS, that is).
By the way, if you don’t believe me in regards to this matter, I’d encourage you to take the Trailer Park Challenge. This challenge doesn’t involve a bucket of ice water or anything crazy like that. Instead, it just requires you to go out for a walk or a drive.
Visit your nearest mobile home park. Yes, seriously. I grew up in trailer parks, and made this observation as a child. It’s not absolutely true for every trailer park household (it certainly wasn’t for mine!), but you’ll notice something striking as you drive through one: You’ll see a lot of really nice, new cars. If you go in the evening, you’ll see a lot of big screen TV’s glaring through the windows. You’ll see a lot of Dish and DirectTV antennas on the roof.
In other words, you see a tremendous amount of discretionary spending going on. If it wasn’t discretionary, they would ALL be driving beat up old cars, and there would be no TV at all, let alone a satellite dish.
When a client hires you, be they a business or an individual taxpayer, you’ll conduct a thorough financial analysis in order to determine what tax resolution options are available to them. When you conduct this financial analysis, you’re going to see directly where all the money goes. You’re going to see the frivolous things that people are spending money on. IRS Revenue Officers are not allowed to tell a taxpayer the specific expense items they need to cut back on, but YOU can, and you should.
As a matter of fact, I firmly believe that a competent taxpayer representative also inherently takes on a secondary role. This role is incredibly important to the long-term financial success of your client, and you have an opportunity to help them.
For individual taxpayers, you are taking on the role of “budget planner” or “personal finance adviser”. For businesses, you are taking on a role as “business consultant” or “management advisor”. As an inherent part of resolving their tax debts, you need to fix the root cause of the tax debt itself.
You’ll need to advise the taxpayer on where to cut expenses, how to manage credit, what assets to refinance or sell. You’ll inherently be advising businesses where to cut costs, how to streamline some operations, and yes, even when to lay off employees.
Are you starting to see now where the money comes from to pay your fee?
For most clients, it’s already there. They simply have to make a choice to hire you instead of buying the latest iPhone or other gadget.
For other clients, especially those with lower incomes, it may not be so obvious. Every tax professional should be set up to accept credit cards already, and if you’re doing tax resolution work and choosing to serve a lower income clientele, then you definitely need to accept credit cards. This is often how you’ll get paid.
Other options exist, too. It’s not uncommon for representation fees to be paid by family members, business partners, or even employers (yes, that actually happens). You may have heard the common tactic of writing “loans from friends and family” on the source of funds line for an OIC application — your fee can come from the same place.
So be it by credit card, loans from family, or deferring purchase of new tech toys, the money exists for your fee to get paid. You may just have to help them find it.