Navigating the Swamp

I was explaining to my daughter last night what we’re creating at TaxLifeboat.com.  Tax professionals, I said, are excellent at advising and preparing taxes for their clients.  Once a client gets in trouble with the IRS, however, the client falls into what I call the ‘swamp.’  Lots of books and articles have been written by tax pros about different parts of this swamp but not many people know it well.  As a consequence, both delinquent taxpayers and advisors trying to help them end up stumbling around in the dark.

What we’ve done at TaxLifeboat.com is organize the voluminous amount of information on this subject and identify the possible solutions.  Staying with our ‘swamp’ analogy think of these possible solutions as the goals you want to reach on the other side of the swamp.  In creating the website, we were surprised to discover approximately 350,000 possible paths through the swamp to get to the desired result.  Which path is best depends on a taxpayer’s situation and the number of available solutions. 

Lastly, we provide all the tools needed to navigate the swamp with the least amount of effort.  These resources include sample letters, applications, and other materials; documentation creation software; assess to experts; research libraries and background sources; and even reminder emails about upcoming deadlines.  We’ve basically provided all the workflow management resources you’d want and put them at your disposal.  These aids come together in convenient, individual workspaces on our website which makes it much easier to organize and resolve even difficult cases.  The goals, paths and tools are continually updated for changing tax laws and regulations. 

As one tax professional recently exclaimed when told about TaxLifeboat.com, “Where have you been?!”

Uncovering “Tax Mills”

We’ve spoken quite a bit about the dark world of “tax mills” here on this blog and elsewhere in our outbound communications, for good reason — we don’t believe in taking advantage of those who need help the most.

We’re also in the early pre-launch phase and are looking for the right kinds of tax professionals to partner with, so we’re doing a lot of exploring — spelunking on Google, digging into qualified associations like the NAEA, and talking to a lot of people in the tax world.

Every once in a while, we come across an innocent enough sounding company name, and then the third natural search result links to a site like The Ripoff Report. This gives us pause. Particularly when there are ten to fifteen pages of links to complaints for a given tax provider.

I don’t know how often tax professionals like yourselves come across such companies in your daily lives, but of the many conversations I’ve had, most have a story or two (or ten) to tell. “Yes, I had this client who came to me two years ago… wanted “pennies on the dollar” for his $10,000 tax bill… I told him to pay the tax and get on with life, but he went to one of The Usual Suspects… he came back last month and still owes the tax bill plus penalties… and is out $10,000 extra for what he paid them…”

The age of social media makes uncovering shady companies a lot easier. Citizen Marketers aren’t shy about fingering people who have dealt with them poorly. The tools are out there (and easily found through a quick search on the engine of your choice).

Why Tax Professionals Want TaxLifeboat.com

I’ve stated in the past that every tax professional is a logical partner for our company.  That’s a pretty broad claim but does it make sense?  Interviews with hundreds of tax preparers suggest that the vast majority don’t want to deal with delinquent tax cases.  Such work is messy, time-consuming, getting compensated for the effort is never assured, and the potential solutions are not as evident or easy to implement as with normal tax and accounting activities.  Thus, tax professionals with an established clientele are less likely to be interested in this type of business. 

On the other hand, tax preparers who want to expand their practice, build their non-seasonal sources of revenue, gain expertise, and offer a comprehensive service to their clients are more willing to deal with tax delinquency situations.

We offer a solution for tax professionals in either circumstance.  For those who don’t want the business, TaxLifeboat.com provides a professional, comprehensive set of strategies that is backed by hands-on personal advice for those clients who need it.  As many tax preparers have said, “Please let me know when you’re operational.  I have clients to refer to you.”

For those tax professionals who do want cases like this, we provide client referrals, workflow automation tools, up-to-date solutions, diagnostic models to guide taxpayers to the most promising options as well as non-seasonal income and an opportunity to grow their practice.

Either way it’s a win-win-win for the client, the tax professional and our company.  That’s how Tax Lifeboat was designed from the beginning.

Tom Evans, President

Tax Professionals and Enforcement?

I attended a seminar two weeks ago here in Northern California. An interesting discussion came up on the subject of how the IRS is now fining tax professionals — not taxpayers — who submit returns with “frivolous” documentation. While this sounds good on paper, it raises a number of interesting questions.

Who determines if the deduction or expense is viable?

How much due diligence can be reasonably expected of a third party tax preparer with hundreds of clients?

What is reasonable to expect of a client who may or may not have full documentation to support deductions?

Is it the role of the tax professional to be the first line of enforcement?

I don’t believe the IRS thinks the tax professional community is supposed to be a surrogate police force, but I’m not sure — based on the conversations I had — that this feeling is universally shared by everyone who attended the meeting.

Here’s an open question to the community: how do you interpret this change? How are you dealing with it?

Regards.

Helping People at the Bottom of the Pyramid

Launching a business that helps those who need help the most is a fulfilling thing to spend your time doing.  Particularly when the alternatives are often more damaging than helpful.  

TaxLifeboat.com is one of those opportunities and it’s worth discussing for a moment.  

Look at the 20+ million people in the US who are either in collection or enforcement with the IRS or who aren’t filing (and should be). “Tax Mills” are looking for “deadbeats with money” (their words, per insiders in a position to know, not ours).  Such taxpayers represent roughly 25% to 30% of the total tax delinquent market. This begs the question of what happens to the 70% to 75% who don’t meet the needed criteria to qualify for this somewhat dubious service. Who helps those at the bottom of the pyramid?  

If you haven’t read it, look for The Fortune at the Bottom of the Pyramid, by CK Prahalad. Professor Prahalad has written a number of excellent books in the international marketing field, but TFBP tells a different story and is aimed at a broader audience. His point is simple. Many companies aim “high and to the right,” catering exclusively to the affluent market and to the exclusion of the rest. Creating a solution that meets the needs of the less-affluent is often very challenging – and often requires re-thinking the solution from the ground up, from market needs and usage to pricing and credit.  Once this is done, however, you end up with not just a viable business, but one that helps a lot of people.  

TaxLifeboat.com has been developed with this philosophy in mind. Many tax professionals have suggested raising the price five-fold, given its value to its chosen market segment. But affordability and the “no-brainer” nature of our solution kept us focused creating a viable business with very happy customers who are now free and clear of their tax problems.   

We’re still a few weeks away from our beta release, so stand by for more – thanks!

How We Got Here

Hi, I’m Tom Evans, President of TaxLifeboat.com.  TaxLifeboat is an expert knowledge website created to help taxpayers who are having trouble with the IRS.  We do this, in part, by partnering with tax professionals.  In simple terms, our website provides the tools to diagnose a tax problem, identify the most promising solutions and supply the user with all the resources to implement those solutions.  We’ve automated one of the most time-consuming, least-rewarding tasks that tax professionals face so they can either 1) recommend clients with this problem to us with confidence or 2) take on such cases themselves knowing we’ve done the research and assembled the materials for them.

That’s the service side of what we do.  There’s also a human side.  My business background and training includes systems analysis, decision theory, strategic planning, financial analysis, computer modeling, well you get the idea.  Note there’s an important word missing: Tax.  Yes, I’m president and I’m not a tax professional.  So how did I get here?  The answer is that some years ago I invested my time and money into a startup company.  Things didn’t go as we had expected which put me behind in my taxes and in trouble with the IRS.

I consulted with a tax professional, Terry Guy (now my current partner), on how to resolve the problem.  He explained about the Offer in Compromise program and soon I created a software analysis of how to qualify for it.  Terry mentioned that others could use this and about a year later I published a book and software program on OIC (see Amazon.com for Happy About Tax Relief, The Offer in Compromise Solution). 

In doing the research for the book I read many books and talked to numerous professionals about resolving tax problems.  I came to realize that there were many potential solutions, not just OIC.  I also concluded that taxpayers caught in this problem had very few good alternatives to seek help.  The “tax mills” were more interested in their fees than really helping the client.  Tax professionals (mostly) didn’t want the cases because they didn’t do enough of them to become proficient and, therefore, save time and lower the cost to their clients.  Likewise the IRS was of little help and one would have to read a lot of books just to find the one solution that would fit their situation.

So that’s why we started Tax Lifeboat and how we got here.  I’m proud to say that all the assistance we provide on the website to fully resolve a person’s tax problem costs less than one hour’s time with a tax attorney.  Yes, the full price is $199 and there are discounts for tax professionals who use our tools to help their clients.  Check it out at www.TaxLifeboat.com.