Update on Individual (1040) Lien Leads

For those of you that specialize in assisting individual taxpayers instead of businesses, you may have noticed some recent upsets in the leads world. Due to increasing regulation and pressure from the Federal Trade Commission, it’s getting harder and harder to access individual taxpayers through the telephone. One of the largest list brokers in the country recently quit offering tax liens at all due to these issues.

Here at Tax Liens HQ, we are still offering 1040 tax lien leads, but we recently made the decision to no longer offer phone numbers on those leads, and I’d like to explain why that is and what your options are instead.

If you are calling individual consumers at all, the FTC requires that you have what is called a SAN number. This is a subscription number to the national Do Not Call list registry. Even if you purchase phone numbers from a list broker, you are still required to have your own SAN number and remove numbers from your list that are on the Do Not Call List, even if the list broker says they do it for you.

Subscribing to the Do Not Call list is not inconsequential. A SAN number that covers the entire United States costs around $15,000. However, this is nothing compared to the FTC fines for telemarketing to consumers without a SAN number. The fines can be as high as $11,000 PER PHONE CALL.

So what does this have to do with us no longer offering phone numbers? The FTC has recently begun to hold list brokers accountable for the actions of their customers. There is pending civil litigation around this issue, since depending on who you ask, the law doesn’t allow for this, but the FTC is doing it anyway. Since we are a fairly small “mom and pop” business, we simply cannot afford the liability exposure if the FTC were to make an issue with us providing phone numbers to our customers and our customers failed to obtain SAN numbers and comply with the Do Not Call List rules and the Telemarketing Sales Rule. So, long story short, our attorney told us to stop.

So where does this leave you for obtaining phone numbers? Check out various phone append services that exist online, and pick one that meets your needs.

Alternatively, have you considered direct mail? For the cost of a SAN number for the entire United States, you could Continue reading

Unfiled Tax Returns

Do you have past due tax returns? If so, you’re not alone. While the IRS does not publish statistics on this, nor are they really able to track this number, but my own research and statistical analysis (because I’m a numbers geek and do stuff like that), estimates that there are between 5 and 8 million outstanding personal income tax returns in the United States for the past three years alone.

If you owe a tax debt to the government and are seeking to get that situation resolved, you will first need to file any missing returns. The IRS will NOT negotiate a payment plan or a reduced settlement if you have past due tax returns. The reason for this is pretty simple: If you don’t file the returns, they don’t know how much you really owe.

While any tax preparer, CPA, or Enrolled Agent can probably assist you with filing your past due tax returns, it is important to note that many of these tax preparers focus their practices solely on current year tax return filings. Since the tax laws change literally every year, it’s a daunting task just to keep up with the tax code for the current year, so many tax preparers don’t bother trying to keep up with prior year tax matters.

A firm that specializes in taxpayer representation, on the other hand, often does exactly the opposite. Many of these firms don’t even offer current year tax return preparation. Since the tax code as applicable to prior years is fixed and no longer changes, they can maintain their skills and knowledge on prior years quite readily since they focus almost exclusively on preparing older tax returns. This lack of change in the past tax code and their experience preparing these returns also lets them complete them fairly quickly, since they don’t have to spend time researching the old laws, and therefore you don’t have to pay for that research time, keeping their fees reasonable for this sort of service.

Search our directory of taxpayer representation firms to find a tax professional in your area that specializes in preparing back tax returns.… Continue reading

IRS Penalty Abatement Reasonable Cause Criteria

One of the most common questions we are asked has to do with the reduction of interest and penalties on IRS accounts. Any reader of this blog knows that I am adamant about correcting the myths, lies, and half-truths perpetuated by tax resolution salespeople, and the IRS penalty abatement is one of the things least understood and grossly oversold by unlicensed salespeople at large, national tax resolution companies.

First of all, let’s get this out of the way: There is no reasonable cause interest abatement application process within the IRS. It simply doesn’t exist, period. If somebody is telling you they can get your interest reduced, you’re straight up being lied to, and you should seek assistance elsewhere.

There are two, and precisely two, instances in which interest is reduced:

  1. Any IRS employee gives you false information, which you acted on and resulted in the interest. This is one reason why all IRS correspondence should be conducted and follow up in writing.
  2. Since interest is calculated based on the tax liability, if an amended return is filed and the tax itself is lowered, then the interest is also reduced.

Now, on to penalties. The IRS charges dozens of different types of penalties, but the three that we most commonly talk about are the late filing penalty, the late payment penalty, and the penalty for not making Federal Tax Deposits. These three penalties combined can add a whopping 65% to your total IRS bill. If your tax debt is more than two years old, you’ve maxed out all these penalties, and therefore over half your total debt is penalties.

The IRS does actually have a compassionate side, and it’s generally found in the penalty abatement process. Penalty abatement applications can also be appealed if initially denied, so you can always get a second set of eyeballs on the issue. The thing to keep in mind is that the IRS has very strict guidelines for granting penalty abatements, and these guidelines are referred to as “reasonable cause criteria”.

It should be noted up front that “we didn’t have the money” is NOT a reasonable cause criteria. A drop in revenue, by itself, is insufficient argument for obtaining penalty relief. Any request for penalty abatement simply citing the economic recession will be immediately denied.

Why is this? Here is the IRS’ logic: You made the money, and should have paid the taxes at the time on that money. … Continue reading