Let’s talk credit card debt

I realize that this is a blog about taxes, but if you have tax debt, I assume that you have other debts as well. It has only been within the last few months that the IRS has softened their stance on allowing you to claim your minimum credit card payments as an allowable expense, so it’s a topic worth addressing.

Credit card debt in general is one of the biggest problems in our society. If you rack up a lot of it, and can’t pay it, life starts to suck when the creditors start calling. Five years ago, when I was heading into bankruptcy, one of my favorite days was the day that Qwest cut off my phone service because I couldn’t pay the bill. That was when the credit collection calls finally stopped!

If you’re looking to address your credit card debt, and other consumer debts as well, there is a simple and often repeated formula for paying down and eliminating those debts. You’ve probably heard two variations of this before, but I think they’re worth hearing again now and then.

The process is pretty simple: Make a list of all your debts, and rank them by priority based on either interest rate from highest to lowest, or by debt amount from lowest to highest. Then, take any extra money you have each month and put it towards the first item on the list.

Mathematically speaking, it’s best to rank them by interest rate. Most of the time, if you owe the IRS money, they’re going to be at the very tippy top because the combined interest and penalty rate can exceed 60% APR. However, many personal finance experts suggest doing it a little different, and paying off your smallest balances first. The rationale behind this is largely psychological, because paying off a smaller debt and being able to say, “It’s paid off!” gives a mental boost to the whole process.

After debt #1 is paid off, the money that was going towards it every month is now applied to debt #2. This accelerates payoff of that debt. Once debt #2 is paid off, the entire monthly amount from that goes to debt #3 until it’s paid off, etc. Eventually, everything is paid off.

While you’re making this debt paydown process, you’re generally making your minimum payments on your other credit cards. If you’re in a situation where money is extremely tight and you’re … Continue reading

“Done For You” Client Newsletter available in download area

The September 2012 “Done For You” client newsletter is now available in the download area on taxcrm.net for Gold, Platinum, and VIP Mastermind Group members.

This simple, 2-page newsletter will take about 10 minutes for you to customize. This newsletter is meant to be sent to your existing clients as part of your regular touch program with your clients (you DO have a regular touch program with your clients, right???). In addition, this client newsletter can also be used as a monthly direct mail or email touch to your list of ideal prospects.

If you have not already taken advantage of this and other valuable benefits that are available to members, please visit the membership benefits page for full information on available membership plans.

To customize the newsletter, simply open it up in Microsoft Word, and edit the items in curly braces {…} as I indicate. You can also add your own logo, and add a recent client success story of your own.

Newsletter tip: Your clients and prospects LOVE reading about your successes with other clients. Similar to how testimonials work, a client success story demonstrates that you know what you’re doing, and shows the results that can be obtained by working with you. This “social proof” is far more valuable than you saying how awesome you are.

Savings Reminder: If you are a tax resolution practitioner, don’t forget that the Tax Resolution Sales Handbook will be hitting Amazon in a few weeks. However, by ordering the Consultative Selling For Tax Resolution Professionals course before the end of August, you’ll get the book included with the course.

Tomorrow, we pick back up with our discussion regarding web site elements that convert visitors to leads.… Continue reading

The Truth About Tax Resolution Fees

Within the tax resolution industry, there are a variety of fee models that you should be aware of. Different fee models have different potentials for abuse by the firm offering the services, and it is important to do your due diligence and fully understand what you are paying for, how much, and when, before ever paying a single dime to a tax resolution firm.

One of the most common fee models is a retainer model, which is a carryover from the world of legal and CPA firms from which many tax practitioners come. Under this model, you pay an up front amount, which the firm holds on to and then bills against on an hourly basis. Close to the time when the retainer is all used up, you will  get a bill showing what was done, how long it took, and the hourly rate it was billed at. This bill will usually also include a request for additional retainer. The key thing to remember here is that if you don’t keep paying, they don’t keep working.

If you’ve been researching particular companies online, you may already have come across BBB, forum, Attorney General, and other complaints against some firms that aggressively bill down retainers, and are constantly asking their clients for more money, without making much significant progress on a client’s actual tax case. It is important that you thoroughly vet a company before giving them money, in order to avoid becoming another victim of a devious company.

Another common fee model is a flat fee-for-service model. This fee model has a large number of variations, from a flat fee for a specific package of quoted services, to a “menu of services” model where each service you can order off the menu has a specific fee. This latter method is very akin to the most common pricing model used in tax return preparation, where each specific tax form has a particular fee for preparing it. You’ll see this fee model used at many CPA firms and most retail tax preparation outlets.

When you are speaking with any tax firm regarding a package of services, it is very, very important that you understand exactly what services you are being quoted for, and what the company’s policy is regarding fees for additional services. When it comes to tax matters, it is not uncommon for additional services to be required, which will require additional fees if they are … Continue reading