Steven Klitzner, tax attorney with Florida Tax Solvers, joined Good Morning Keys on KeysTalk 96.9/102.5FM this morning to talk about tax issues.
How will the IRS reach out to you if you’ve got a problem?
Klitzner said, “The first contact is going to be by letter. That means no email. If you get an email from the IRS, it’s a scam. It’s spam. Ignore it. The IRS does not send you emails. I don’t know 100% about everything. But I know one thing – the IRS doesn’t send emails, it is not from them. The second thing is they don’t make first contact by telephone. If you get a call and the person says they’re from some made up thing, it’s not the IRS. That’s not how they make first contact. So you don’t have to worry about that. As of last year, first contact is not made by coming to your house or coming to your office, not that people scam, I’ve never heard of anyone impersonating the IRS going to someone’s house or office, but that’s not how they do it. It’s going to be by letter.”
Did the IRS ever visit in person?
Klitzner said, “What happened was last year, they decided for the safety of their revenue officers, they don’t want to do that anymore. Because there were instances and I can think of one specifically up in Broward County, where revenue officer comes to the door guy comes out with a shotgun and then when the police came, the guy admitted the shotgun was loaded, so he went to jail even longer. So for the safety of their people, they don’t want to go out there. Let me tell you, the revenue officers aren’t happy about that. They like showing up, surprising people, watching heart attacks happen. But they don’t do that anymore. It’s going to be by letter.
The IRS won’t ask for gift cards either.
Klitzner said, “What would happen was in the past, a guy would be running a business and he would think or she would think everything was being taken care of with the IRS and all of a sudden, they’d walk into their office and their bookkeepers are there and the bookkeeper would say this is the guy from the IRS. Oh, by the way, I haven’t been paying payroll taxes. So it came as a surprise to some business owners in the past, but now it’s going to be by mail and there’s three things they’re going to contact you on. Number one, you owe money. Number two, you haven’t filed your returns, or number three, you’re being audited. So those are the three reasons that they’re going to contact you and they’re going to write a letter to your last known address. So if you’ve moved since you last filed a return, or you moved since you filed a return six years ago, the old address is where they’re going to be contacting you initially, and you’re going to lose a lot of your rights if the IRS doesn’t know where you are. You want them to know where you are, because they’re going to catch up to you sooner or later. So the sooner you get letters, the better it is for you.”
The letters will escalate if the IRS doesn’t hear from you.
Klitzner said, “The first letter and usually your first letters is going to be from an 800 number and they start out very friendly. They start out with here’s your bill, please pay us. Now there’s two letters the IRS has started sending out from the 800 number people, that’s automated collections. One is a Notice of Intent to Levy, which is dangerous. It’s not the final notice, but it’s dangerous. The other is a new letter they developed, it’s the friendliest letter they ever send. The IRS found out about QR codes. So they’re so happy to throw them on letters and that’s a way to try to make a deal using the QR code and going online. That’s their new, friendly letter that they’re sending out. So those two letters mean one important thing – you’re on their radar, so you have to take some action. Now, if there’s a Revenue Officer, now things have heated up. That’s going to be a letter from somebody locally, first contact will be a letter, setting up an appointment for you to meet with them. That appointment’s not etched in stone. They’re just creating a unilateral appointment. They don’t know whether you’re available or not. But that’s what they do to get things rolling. You should as a general rule, not talk to the IRS yourself, because, as they say, everything you say can and will be used against you.”
Is the IRS actually vindictive?
Klitzner said, “I think most of the people, well, all of them are just doing their job. Some of them may tend to get pretty close or cross the line a little bit. But most of them are friendly. Because they have a lot of power. There’s no need for them to threaten or anything like that. But they’re not really on your side, they’re on their side, they’re not going to tell you all your rights. A Revenue Officer will send out a final Notice of Intent to Levy and if you don’t request a hearing within 30 days, they could levy. So if you’re dealing with the revenue officer, they’ll often say, oh, don’t worry about that letter. Don’t worry, we’re going to work together on this. But that is not in your best interest.”
Klitzner has worked for many years with the IRS.
He said, “They have to follow the Internal Revenue manual and it’s my job to make sure they follow it. Sometimes they take a little leeway there. You mentioned are they vindictive? And the answer is generally, no. But when you say to the IRS, look, I’m a good guy. I’ve always done this. I’ve always done that I haven’t been hiding from you. They don’t really care. That’s not what they’re thinking. They’re thinking you’re not paying your taxes. We’ve got to find a way to collect, but as a general rule, when you cooperate, the IRS looks at it as, let’s just get this thing resolved. What gets them mad is when you don’t respond, you don’t cooperate, you miss deadlines without asking for an extension, or you lie to them, or you just basically don’t do what they’re asking you to do. Now, I wouldn’t call it vindictive, but they’re going to take action. Action means your bank account could be frozen, your wages could be taken and they’re going to do what they need to do to get you to cooperate.”
Does the IRS kind of consider people guilty until they’re proven innocent?
Klitzner said, “In an audit case, for instance, if the IRS had the burden of proof, they could never prove their case. So they shift the burden to the taxpayers. So if the IRS said, you made this much more money, or you didn’t have these expenses, it’s up to the taxpayer, to prove them wrong and it can be a very difficult burden to prove something, especially sometimes when we have to prove a negative. The IRS says we made money, we say no, we didn’t. They say prove it. So how can I prove it? I didn’t make the money. So it can be very difficult. You do have rights, but the burden is on you and especially in an audit case, you have to prove your case, which when we go to tax court on an audit case, as the petitioner, the burden of proof is on us.”
Even without an audit, any time someone deals with the IRS, it’s smart to bring an expert in.
Klitzner said, “My job is to protect the taxpayer rights. My job is not to fight with the IRS, not to turn it into a personal battle, or as you mentioned, the word vindictive battle. That’s not the purpose. The purpose is, how can we make a deal that my client can live with that the IRS will agree to? That’s the bottom line to every case. What can we do not to set my client up for failure that the IRS will go along with? So I have to prove to the IRS that every time we deal with them, we prove to the IRS that what deal we’re making is good for the IRS. If I could convince them, this is what you should take. It’s in your the IRS has best interest, then I can get them to make a deal.”
What if it was a bookkeeper that was making the mistake and the business owner didn’t know?
Klitzner said, “Intent helps when it comes to trying to get rid of penalty, but for the most part, you also can’t have willful blindness. It’s like the Three Stooges. When Larry said, I can’t see, I can’t see. And Moe said, what’s the matter? And he says, I got my eyes closed, and then he pokes him in the eyes, and he really can’t see. You can’t just have your eyes closed to everything. But if you can show you acted reasonably, and in good faith, at least from a penalty standpoint, we can save a lot of money with that.”
Klitzner doesn’t charge by the hour.
He said, “The consultation is free, and the fee is a flat fee. The fee, once we know what we’re going to do, covers everything until the end of the case. I always tell people, alright, I’m going to do this. If it doesn’t work, I’ll appeal. If that doesn’t work, I’m going to do this and maybe later down the road we can go back to the first thing. I don’t like people to think that every time I call them, they’re going to get a bill for my services. They have to know we’re in it together and it’s in my best interest to resolve their case, not to let it go forever and ever.”
Some of the 800 numbers that claim all tax problems will be solved may not be all they seem.
Klitzner said, “You’re dealing with some unknown company, sometimes they have a website, sometimes they don’t, but you never know who’s running the company. It’s usually not an attorney, or CPA. It’s just a business person and if you’re dealing with a company 2000 miles away, and the IRS contacts you at nine in the morning, or you got levied at nine in the morning, they’re not even open yet. You’ve got to wait a few hours to get a hold of them. I can tell you, from experience and talking with the IRS, when they see those companies, they know that they’re going to have to handle it different because they’re not going to get any cooperation, and they’re going to have to be more aggressive in order to get that company to act. They just don’t do the work and if you’re dealing with someone far away, the IRS really has no respect for them. I don’t mind when people call to ask a question. Certain things, I can’t help people. Where’s my refund? I can’t do anything really to speed that up. If you owe just a couple of $1,000, you can just start paying it. Nothing’s going happen in the meantime. But when you have a serious problem, or when you’re really worried that you don’t know what you owe, or what years you filed, then that’s where I come in to get answers and start working something out so that you don’t get that surprise, frozen bank account, or frozen wages.”
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