Increasing the Utility of Your Federal Tax Lien Lists

Federal tax lien lists are useful for a variety of lead generation purposes. However, far too many firms use these lists for only limited purposes. This article will explore several methods for increasing the utility of those tax lien lists you have.

First, make sure that you are running all tax liens through the National Change of Address (NCOA) database. Numerous companies provide this service, just do a Google search to find one. You can also obtain this service through a local direct mail service provider or list broker in your area, if you prefer to do business with local companies.

Not only is NCOA processing required by the US Postal Service, you’ll discover that it also reduces your returned mail volume substantially. Tax liens are, by definition, filed against companies and individuals that owe money to the government. Chances are, they also owe money to other organizations. As such, it is not uncommon for the businesses to close, and individuals to move. It’s simply the nature of the beast. Since tax liens are filed using the last known address, this is what goes into our database. Returned mail volumes of 15% to 30% are not uncommon when doing mailings to tax lien lists that have not been NCOA processed.

Second, if you are doing telemarketing, run the lists through a telephone data hygiene service and/or a phone append service. This will make sure you have the best phone numbers possible for your telemarketing efforts. Our database is connected to a robust phone append API, but that’s just one database. So even if you get phone numbers from us, it may still be worth your while to process them again through another service.

Third, don’t throw away your old tax lien lists. Tax debtors are bombarded by a tidal wave of tax resolution firms during the first two weeks after the tax lien is filed. Then, with the low hanging fruit gone, fewer companies are contacting them. After a few months, nobody is calling or mailing.

Every few months, pull up those old lists, and mail and call them again. For businesses that accrue new liabilities every quarter, they are starting a new collections cycle every 3 months, but a new lien may only be filed once a year. For individuals, the problem doesn’t go away even if it’s not addressed and the IRS isn’t taking enforced collections action at the present time.… Continue reading

Why You Should Become An Enrolled Agent

Note: If you’re already an EA, CPA, or attorney, then this post will be of zero interest to you. If you’re an unenrolled preparer, however, keep reading…

It’s becoming increasingly common for me to receive emails like this one from a return preparer in Sacramento, CA:

I would like to pursue this opportunity. I am currently not an EA. What ways have others moved ahead until they became an EA? Can I hire one? What do you suggest?

Here was my verbatim reply to this particular email:

By “this opportunity”, I presume you’re referring to collections representation services?

While hiring an EA, CPA, or attorney is definitely an option, I would still encourage you to obtain your Enrolled Agent license yourself. Honestly, the test isn’t that difficult for an experienced tax preparer that puts in a couple weeks of study. The Gleim test prep books are the ones I used, and they were pretty good.

The reason I would encourage you to get your license yourself, even if you hire a licensed person to do the work, is because by IRS regulation, you must be licensed in order to solicit representation services. In other words, it’s a violation for an unlicensed person, even an experienced preparer, to sell licensed representation services.

A couple weeks of study and a few hundred dollars for the tests is a tiny price to pay to be able to sell something as lucrative as tax resolution, in my biased opinion. 🙂

Since this comes up frequently, I figured it was finally worth it’s own blog post, so here we go.

Let’s start with the one thing that I feel I’ve become a broken record about over the past few years:

In order to sell tax resolution services, you MUST be licensed. This is non-negotiable.

I’m starting with this, instead of “why you should be licensed”, because I feel like it’s the most salient point for anybody reading this blog. Most folks end up here because of the information I provide on marketing and selling tax resolution services.

In case you’re not familiar with Revenue Procedure 81-38, this was the original Revenue Procedure covering limited practice without enrollment. Section 8 of this Revenue Procedure explicitly bars individuals that are NOT an EA, CPA, or attorney from soliciting representation services (which is what “tax resolution”) is.

Many folks erroneously believe that every provision of 81-38 was replaced by Revenue Procedure 2014-42… Continue reading

Tax Resolution Marketing: How To Save Yourself $15,000…

In other posts on this blog, I’ve covered the topic of client acquisition cost fairly extensively.

I’ve also written extensively about the lucrative nature of this particular service. To give you the short version, there are 12.4 million active IRS collections cases right now, and the average 1040 client pays about $2,500 for full service representation. Business clients are even more lucrative, paying average fees of $3,500 for straight forward 941 cases, and thousands more on top of that for a variety of unique situations, lien work, 6672 representation, etc.

Combining these two factors, something readily apparent should emerge: You need to determine how much you’re willing to spend to acquire a client.

Without a sales staff to pay commissions to (which skyrockets your client acquisition cost, plus introduces a host of other problems, of course), my cost of client acquisition has average around $400 for tax resolution work. That’s a rough average across all my lead generation efforts, both paid and free, as well as my lead follow up costs to convert leads into prospects over time (there’s a HUGE marketing lesson in that sentence, by the way).

I’m more than happy…no, I’m ecstatic to pay $400 to make $3,500. That math works for me. $400 in…$3,500 out. Sure, there are ups and downs. Some cringe-worthy marketing tests sometimes. But all in all, that’s the formula.

How much are you willing to spend to acquire a customer? Seriously, think it over. It’s one of the single most important questions you can ask yourself if your goal is to GROW your tax practice.

My answer to that question is actually much more than my $400 average. In fact, it’s three times as much. Yes, I’m willing to spend up to $1200 to acquire a single client. In fact, given some challenges with conducting tax resolution marketing campaigns in my new home town, that number is probably going to increase. By the end of summer, I expect to be willing to spend $1600 to acquire a high-fee tax resolution client. Mind you, that won’t be my average, just my maximum.

If those kinds of numbers induce a panic attack, I’ve got some good news for you.

Two years ago, while visiting the beautiful city of Tallinn, Estonia for a full month, I conducted an experiment. It was a wildly successful experiment, and over the following 18 months I repeated it twice.… Continue reading