Let’s start with a pop quiz: what do quantum physics, the perfectly-crafted pizza, and the US stock market all have in common? Answer: none of them are even close to being as complex as the US tax code. But, seeing as the word complex doesn’t even come close to showing just how intricate the IRS and its baby the IRM (Internal Revenue Manual) are, I’m going to draw a picture for you. There’s an online video of a guy who solves three Rubik’s cubes. Now, that in itself is downright impressive. Most of us can’t even solve one.
Here’s the kicker.
He solves all three of them while juggling them. Good God. If you don’t believe that someone actually has the coordination to do that, feel free to check out the video. The complexity of what this guy is doing lets us draw a pretty fair comparison to the IRS. Your average taxpayer – with enough time and a healthy dose of luck – could probably solve one Rubik’s cube. Given a few days and a massive amount of willpower, your average taxpayer might even be able to solve all three cubes. But solving them as they’re being tossed up and down is – I feel confident saying – well out of the reach of most people.
It might look serene, but this little monster is just waiting for its next victim.
That’s what tax professionals do every single day. We take on a system that forces us to solve multiple problems at the same time while juggling an insane amount of expectations and requirements. Trying to find that perfect combination for a positive resolution doesn’t just happen. It’s a project of dedication, persistence, and the experience of having solved a thousand cases before this one came along. And it’s tiring. Having to keep track of a hundred moving pieces can really wear you down.
The problem of a complex code
What bothers me about the complexity of “the code” (which makes it sound much cooler than it really is) is threefold:
- First and foremost, there’s simply too much to know. With the IRM sporting well over a thousand pages, not only has the IRS ensured that taxpayers are unable to know the ins and outs of the code, but they’ve also made it impossible for their own employees to know everything. So, when going into a situation where you’ll be dealing with the IRS, you might find it disconcerting that the Agent you’re working with doesn’t have a particularly strong grasp of the law they’re doling out. As you can imagine, this leads to plenty of situations where the Agent might implement improper techniques or suggest impossible/illegal ways to proceed.
- A complex code gives you a million different paths to take towards resolution. This one I really struggle with. While as the complexity of the code allows for a wildly expansive set of options for tackling a tax problem, it also makes quick and positive resolutions far rarer than they should be. My dream tax system involves simple and straightforward options that don’t take advantage of taxpayers’ lack of knowledge. Actually, that’s not true… my dream tax system would be one where we do away with the income tax entirely. A man can dream!
- Finally, a complex tax code litters the path to resolution with pitfalls. Everywhere you step might be a hole that’s just waiting to swallow you. Not only does this kind of system build – and then thrive on – fear, but it also leaves the taxpayer to tread so slowly that their tax problem stretches on for what feels like an eternity. There’s so much room for error that it causes many people to freeze in terror. Is that a problem? You bet it is.
The current standing
The code is complex and that’s not a good thing. So far we’re all on the same page, right? Good. So if that’s the state of the villain of our story — the dastardly tax code (because let’s face it, the real problem is the IRS and their mind-bogglingly complex set of rules) — then what do our heroes and heroines look like? Well, based off what my staff wears to work on a daily basis, I can tell you that there’s no capes to be seen. But that doesn’t mean they’re not determined and passionate. In order to actively protect people from the IRS, you have to be.
Unfortunately, that’s not necessarily the rule for the majority of attorneys and CPAs. Fighting the IRS on a daily basis is extremely taxing work. And when an attorney takes on the entirety of a taxation case and places it on their single set of shoulders, it can be a heavy burden to bear. Many attorneys are overworked and thoroughly exhausted.
Where this causes a huge problem is when cases demanding intense attention and expedition crop up. A case requiring entrance into the Offshore Voluntary Disclosure Program (OVDP) not only mandates a substantial investment of time, but the incredible scope of work also necessitates a master organizer. One of our more recent cases had us sending the IRS a stack of paperwork that weighed 15 pounds!
So maybe a single attorney isn’t going to be able to cope with the rigorous time investment and required expediency. When people realize that they need their problem resolved fast, it’s common for them to turn to the bane of real tax professionals – scam resolution companies.
Money? Dignity? Faith in humanity? They’ll take it all
I’ve written in great detail about these so-called “resolution firms.” Simply put, they promise you the entire world while intending to deliver on… well, pretty much none of it. Employing a churn-and-burn meets Ponzi scheme mentality, these firms take on a large number of clients, drop prices to get more people to sign on, use the new funds to do minimal work for the original cases, and then they hightail it out of town.
Unfortunately, that’s when we see a lot of their old clients come to us. If we can help them, then there’s still hope, but that’s not always the case. Dealing with the IRS can be very time-sensitive, and sometimes these scam companies have twiddled their thumbs long enough for their clients to have no way out of the hole they find themselves in. Much like dealing with the actual IRS, fear is used as a motivator to gain quick access to your bank account.
Meanwhile, the IRS continues to pound away at taxpayers, taking the same things – money, dignity, and that glorious faith in humanity – as the scam resolution companies. The only difference? You don’t expect the IRS to be your ally.
Overall, the current standing is not great for taxpayers. You have far too many incompetent “professionals,” scam companies with no moral compass, and an IRS that is looking to steamroll you at the first possible chance. Sometimes it can feel like the entire world is against you. The battle for your finances is a serious one, and serious situations call for strategic measures. When you’re up against an army, you need to surround yourself with your own team of specialized talent.
An army specializes
There’s a television program that I’ve caught a few times that’s really hammered this point home – it’s called “Surviving the Cut.” In this show, they take a look at different branches of the military, their specializations, and what the enlisted men and women have to do in order to be deemed ready for various elite units. From battling giant waves to climbing mountains, these young soldiers don’t quit. While many of them don’t make the cut to join the elite forces – army rangers, navy seals, etc. – the ones that do are hardened and ready for anything that comes their way.
The fact is that an army specializes. If you go to war, you go to war with all branches of your military. The army goes in on the ground, the navy takes the sea and helps by forming blockades and fighting enemy ships, the air force provides support from above, and the marines show up out of nowhere to give you the element of surprise. While training has ensured that all of these branches are capable of doing some serious damage on their own, together they make for an overwhelming force. Throw in the specialized elite and you become unstoppable.
The same mentality should be applied to taxes. There’s an extremely powerful enemy – the IRS – coming after your future, and what's going to stop them from an all-out assault on your finances? If you’re not protecting yourself with an army of specialized talents, then there’s a problem. You can go to one of the specialized tax forces – say a CPA – and get some great advice. But that advice is only taking into effect the training that a CPA receives. It doesn’t take into effect the possible laws that might interrupt that strategy. It doesn’t take into effect the grueling man hours that are necessary. It probably doesn’t take into consideration all of the necessary organization needed for even the simplest of cases. And it might not even take into consideration the fact that you can be on hold with the IRS for two hours before receiving a “courtesy disconnect” and having no choice but to call again.
That’s why, even though they might not look as tough as grizzled war veterans, I can rely on my colleagues Julia Zhai and Robert Hanson. They’ve fought enough cases and showed the necessary talent to make the cut as elite taxfighters. I’ve seen Julia expertly amend a sea of incomplete returns. I’ve seen Robert show the IRS that they can’t just run around doing whatever they want. And these are just two of my amazing staff. They have specialties that allow them to concentrate on what they do best and use it to help our clients. Being able to focus on individual strengths allows our team to run as a unit; each member specializes in order to help resolve cases as quickly as possible.
All of this battle talk isn’t meant to scare you. Instead, it’s supposed to show you how serious this situation is! Your future is at stake and protecting it with anything short of an army is giving the IRS a much better chance at victory than they deserve.
Why one is not always enough
Let’s say you’ve been practicing karate for the past few months. As a driven and strong-willed individual, you’ve even graduated to breaking boards with a killer karate chop. Chop! There goes a board. Chop! Two more split in half by your mighty hands. This is your task and you’ve learned how to do it to perfection. Well, your sensei then comes over to you and says something encouraging. Then, leading you by the hand to a giant brick wall, he tells you that punching through this is your next challenge. I don’t care how many boards you’ve chopped, but there’s no way your hands are ready for this. You’ve quite literally come up against a brick wall.
Unless you're the second coming of Bruce Lee, punching is not advised.
That’s what dealing with OVDP cases can feel like for the unprepared attorney. Are they good at the things that they do and specialize in? Absolutely. But when tasked with a wildly difficult obstacle, you can’t blame them for wondering what they’ve gotten themselves into.
You see, an OVDP case is far more complicated than domestic taxation. The addition of rules, options, and paperwork can be completely and entirely overwhelming. If you’re not convinced, you might recall that 15 pounds of paperwork that a recent case required! The amount of time and energy needed to complete a proper OVDP can wipe out the unprepared attorney. That’s why I’ve always said that you can’t “dabble” in OVDP. There are certain things that require you to be all in or all out.
So, what does it take to beat the IRS?
When dealing with the IRS and an ugly tax problem, there are three necessary traits for a winning solution – time, patience, and knowledge. If you take away any of these three, you’re sure to see just how frustrating a tax problem can be.
Time: there’s nothing to get you stressed faster than not having enough time. From impending IRS deadlines to simply not having the time to sit down and work on a tax problem, time is absolutely necessary. For an attorney or a firm, they need time to put together a winning strategy, time to be on hold with the IRS, and time to keep their clients up to date on the case proceedings. For a client, time is necessary to put together all necessary documentation and to make sure you don’t fall prey to any of the IRS’s frustrating deadlines.
Patience: here’s a difficult truth – dealing with the IRS is frustrating. Not in the regular sense of frustration, but in the sense that this organization is potentially after everything you have and you still have to treat them civilly. Are there going to be times where you want to tap them on the head with the nearest lamp you can find? Absolutely. But it’s completely necessary that you keep a cool head and understand that the employees are just doing their job. Does their job cause a wild amount of pain and suffering? You bet! But that doesn’t change the fact that patience with the IRS is an absolutely integral part of any case.
Knowledge: I like to end a lot of my articles by saying that knowledge is power. The IRS has created a culture of fear around itself. People are afraid of the IRS like they are the boogeyman (or something even worse, like sitting next to Paul Reubens — also known as Pee-wee Herman — in a movie theater). But, when you start to understand the origins of the IRS, how they operate, and the laws that bind them, a lot of that fear falls away. Knowledge and experience are the enemies of fear. By keeping up to date with IRS changes, learning about all of the different programs, and realizing that there are options, you can throw off a lot of that fear.
While all of these traits are absolutely necessary for dealing with the IRS, it’s always important to understand just how serious a tax problem is. The IRS is not an empty threat to be ignored. They have the resources and the legal backing to dampen your future. But, by approaching a situation with the necessary time, patience, and knowledge, you can show them that you’re serious as well. Not only are you serious, but you’re ready to put in the effort to ensure that your future is everything that you want it to be. And that’s a powerful statement to be making.
When you’re able to find representation — an army willing to go to war for you — that takes all three of those factors into consideration, you can breathe a sigh of relief. Because even though there might be surprises popping up along the way, they’ll be taken care of. When dealing with something as serious as a tax problem, you have to be serious in building a proper defense.
So hire a tax-fighting army and rest easy knowing that your interests are protected. And when you hire an army that’s superbly skilled and trained in knowing the tactics and weaknesses of a single enemy – the IRS – you can know that your tax problem is going to melt away.
The IRS is complex and the IRM is shockingly dense. Unfortunately, I don’t see that changing anytime soon. So, if you find yourself on the wrong side of the IRS, ask yourself a simple question: “Do I want to hire a single attorney to take on the IRS, or do I want to hire a team of specialized talents to attack every angle of my problem?” For most people, the answer is going to be clear. When going up against an entity as powerful and vindictive as the IRS, you want to be protected. You want a multi-pronged attack and you want to show that your future is important.
When fighting the IRS, you need an army. If you need assistance, contact us. We're here to help.