Welcome to the Escaping the Accountants Trap podcast. It's a podcast to help accountants, CPAs and bookkeepers escape what we call the accountants trap. It's where accountants are not getting paid for their value and are forced to work long hours with high demand and clients with little pay. Well, how do you escape the trap? One way is the topic of today's episode, and that's by adding tax representation services to your practice so you can make more money while working less.

To help me with a discussion, I've invited Eric Green, the founder of Tax Rep Network. Tax Rapid Network provides training and mentoring for accountants looking to grow their own tax representation practices to create a new revenue stream and help your clients in the process. Eric, welcome to the show. Thanks for having me. Yeah. So this is sort of an interesting topic because essentially you're saying escape the accountants trap by adding a service that's needed.

That doesn't necessarily take a long time to do so. Tell us a little bit about this. Well, look, I mean, there's sort of economic reality to life. The easiest thing I think if you're an accountant and you're doing bookkeeping or tax returns, the easiest thing to do is to look for something that you can just add to what you're already doing, something that is, a higher value service you can charge more for versus like starting from scratch to try to build something.

If you're if you already have a practice, you're already ahead of the game. You have clients. You have people that like you. Irish representation is the hottest growth area in tax, bar none. Come in. Currently we have 25 million taxpayers in trouble. More than 15 million owe balances. There's another 10 million that have been identified as Non-filers.

So you're talking one out of every seven tax filers. Has a problem. Someone's got to help them. And I can tell you it's not lawyers. The number of lawyers doing this has dropped. Dropped tremendously because they don't leave the government anymore. It used to be when I. Adam, when I started this, when I began doing this, I was a part of a small component of the bar association that was all forward.

Department of justice, IRS lawyers. Okay. They went to the government, left, and they started doing this. No one leaves the government anymore. They literally stay and then retire. So we've watched, I think it was around 1000 lawyers back in 2010 listed this as a practice area. It's down to 133. Oh, wow. So it's not lawyers that are doing this.

And frankly, people are terrified of the IRS. But it's really just process and formula. If you understand the process and you can do a 1040, you can do an offer and compromise. You can do an innocent spouse case. It's not that complicated. It's just understanding the rules. Got it. Okay. So let's let's go into the how this works in just a minute.

But first, what is this sort of the business model for the accountant. How do they structure it. How do they sell it? Well, first, it's funny, my, my first tax rate member, was a CPA, Anthony DeLuca, who's now retired. He said to I originally, tax was simply a training course. It was an eight hour training course.

He sent a one page newsletter to 510 40 clients. What to do if you can't pay the taxes? He added 150,000 of new businesses first year, because what happened is people were like, oh, I didn't know you did this. My brother hasn't filed in three years. My son owes a balance to the IRS. We owe sales tax. You know, don't forget about the states in there, too.

Yeah. So the, the accountant, you know, just started doing this work. You know, they already know, pretty much feel comfortable doing audits. What happens is you start adding this, and as you get known for doing this, you know, I always thought Adam, you know, clients, they're going to kind of keep this quiet. No one wants to admit this.

Oh, no no no no no no. They will share with everybody. So you have one subcontractor. You got all the other subcontractors. Oh, yeah. No, you have one restaurant. You get the three brothers who also in different restaurants. They're all in your office. Okay. They share it with their network. And so what what has what happened is tax rep.

What it is today is we do tons of on demand training, but we're really a helpdesk. So our members actually can consult with us. Okay. They're not out trying to do this on their own. We're now over 500 members across the country. It just keeps growing and growing. What happens eventually is most of the members discover I can make more money.

I don't have to grind out tax season. And so it's like the skier where the skis are going in different directions. Yeah. You're going to have to make a choice. Interestingly, the the number one thing I get asked by the members is what do I do with my my 1040 practice? Should I get rid of it? And the answer is very simple.

Do you want to get rid of it because you don't have to. My suggestion would be why don't you go to your clients, rank them the A and the B clients, the ones that you like working with, the ones that pay you a fair fee. You're going to keep them. Maybe raise them to where they should be at market.

And you're going to very nicely fire everybody else or sell them. All right. You don't have to stop doing it. But I think we can all agree. Nobody wants to keep grinding six days a week to 11:00 at night. And tax season these days never ends. When I got out of undergrad in accounting back in, I hate to admit this 93 I actually interviewed with small firms that said, well, we work.

You know, we work February to April, then we have the summer basically off, right? It's down to three days a week and casual. Then we're back in for, you know, the extension season. And then kind of the holidays are quiet. That's not the case anymore. The accountants I know are going. It seems 365 days a year. Yeah. And part of that is it's become commoditized.

No offense to the big national chains, but they've made it. Tax return preparation is a commodity. Yeah. There are companies that are automating the bookkeeping. So I think if you have those skills, the easiest thing to do is use them in a different way versus like, starting a whole new career. And so Irish representation is really just it's not that it's not that big a reach for an Isa or a CPA, who's already doing accounting and tax work.

Okay. And so how does one charge for this type of service more than you charging for tax returns. So we actually we actually do put out some guides. But I'll give you an example. One of the things that we get a lot of yeah, is clients will call in meeting in my practice. Yeah. Clients will call and say, you know, I owe money.

I haven't heard from the IRS. I don't know which is the ten year that they have ten years to collect. It has a ten year statute run. We will get a power of attorney. We can upload it quietly through the IRS website. We have software. We can pull the transcripts and we will review them. Sometimes they're going to expire.

They may have already expired. We charge $1,500 for that. It takes about an hour. For an offering compromise. We charge $6,000. But here's what we do when we get a call. If somebody called Adam and said, look, I, you know, I, I, I owe 100,000 to the IRS. I make 70,000 a year. Can I do an offer?

I don't know. Are you married with four kids or are you single? Where do you live? Do you have major medical issues? Are you in good health? Is there ten years on the statute or only four? So we'd have to do an analysis. So here's what we tell the clients. Said, look, we'll send you the list of what we need.

We charge 2500 to do the analysis. And we're going to walk you through what your options are and why. Because there are often more than one option. Once we do that, if let's say you are an offer and compromise candidate, we charge 6000 for an offer minus the 2500 you've already paid. You don't have to do that again.

And this way, you know, I tell them, we tell them we have better things to do than file offers that have no chance of success. And you have better things to do with your limited funds. Right? We close almost everybody. They say, wait 2500, you'll do the work and walk me through it. That's way better than those 800 numbers where they're just.

They just want 6000 or 8000 from me. And I don't know what they can do or not do. Yeah. And so we there's an unending supply of work. But but from a business perspective, all the work got done on that, really the first 2500. If we're going to go forward with an offer, we put the package together, we write the cover letter.

And we've done so many. We're just tweaking one. We got another 3500. And then we submitted. They're quite profitable. In fact, it's funny, I get asked all the time, Eric, wouldn't you rather just do, like, big criminal cases? No. They're stressful. I mean, don't get me wrong, I built a very nice hourly rate, but I it's rate times our it's stressful.

I have a client that in many instances is going to jail. Okay. Now, I'd much rather do offers and get, you know, what we can do for 2500s, let's say, of our billable time and make 6000. They're very profitable. And truthfully, when you help somebody, if you're an accountant, you have a client for life. That's true.

They they will not leave you. And that's the other thing, is what's funny? We we survey our members every other year. They have found that their 1040 practices have gone up because the clients that they're helping instantly become regular clients. And and what's funny is, so we have a certification program when our members have gotten when people get certified, it's a certified tax representation consultant that we run.

We have about 300 people certified. They have actually attracted more accounting and tax work. And when they ask you why, they said, well, look, I know you do IRS stuff and we have a problem. I know you can handle it. Yeah. And that's attractive to a business owner. So, it really, for those folks listening who want to get out of the grind of tax season that and that and kind of the volume type work.

This is something that I've always found that's an easy add on to what they're already doing. There's not much in terms of what they have to spend to start up. They've already got the knowledge, the skills. It's it's sort of a, it's just an easy next step to what they're already doing. Okay. Very interesting. So is there any qualifications?

I mean, you mentioned CPAs and EAS, but can bookkeepers do this? Well, so so the so the answer is to do all the representation. No, because you have to be on a power of attorney. Okay. So it be being an IRS power of attorney, you have to be an enrolled agent, a CPA license somewhere, or an attorney license somewhere.

However, if you are a bookkeeper now, first of all, if you're a bookkeeper, my first suggestion is go get your year. I would spend the time I become go get your year. Yeah. Now, if you have clients to come to you, you can still help them. And so I'll tell you when we get these calls. Eric, look, I'm a bookkeeper.

I'm working on my e. I got part one done. Whatever. I have a client with a problem. I they look like an offer client. If I send them to you, you know, can you pay me? So, first of all, as an attorney, we can't. It's it's it's unauthorized. It's a it's an it's unethical. However, what I'll tell them is said.

Look, if we're going to do, you know, the 6000 for an offering, 2500 for the analysis, what we're going to do is I'm going to talk to your client. I'm going to tell them, look, we can sit and get all the documents and get them all done, but you're already working with let's call her Tina, your bookkeeper. Tina can do this, and she can do this cheaper.

So here's what I'm going to suggest. Tina has our list. She's going to pull this together. You're going to pay her $1,750. We charge 2500. So you're saving 750 right out of the gate. Once she's done, Tina will deliver it to us. We'll do the review with you, and we'll go forward. You'll save 750 instead of 6000. You'll in total, you'll pay 5250 clients.

Thrilled. Tina's thrilled and you know what? Tina has just delivered to us? What we need. I don't have to chase the client. It's kind of a win win win all the way around. So we do a lot with bookkeepers or unenrolled tax practitioners. But my message is always, you know, Tina, this is great. I'm glad to work with you.

Go get your way. You should be doing this. Interesting. Okay. Now, you sort of mentioned earlier the demand for this. You said. I think you said one out of seven taxpayers. Well, if you do the math, if you have, if you have 15 million, who. Oh, so there's about 152 million tax filers. But you remember, you have families.

I mean, there are 350 million people in America. Okay. I think it's around 150 to 154 million returns. Individuals that file. We have 10 million non-filers the IRS has identified, and we have 15 million that owe balances. Okay. I'm also willing to bet that many of those non-filers are also going to owe balances. That's why they're non-filers, right?

But if you do the math I'm looking at or at 152 million tax filers, we have 25 million that are in trouble one way or the other, or both. It comes out to roughly one out of six, one out of seven. You know, in terms of tax filers, one out of 15, if you do the math, as far as just people, but there is a huge demand.

And in fact, if you're listening to this, you probably know people that have an issue. And so the biggest thing like when we talk about marketing with our, our members, which we do help them with, you don't have to go crazy spending money on radio and TV. I mean, I suppose that'll work. It's really just get the word out.

Yeah. To first to your existing network. That's easy blogging, making sure your website is up to date, sending out a you know, I don't like newsletters. It's a lot of work and people tend to ignore them. But 1 or 2 times a year, a news alert very short IRS is doing this. If you know someone who has a tax issue, give us a call.

Yeah. They they you tend to get a lot of response. I members that say we're getting clients who aren't on our list, but they have it because their friend forwarded it to them. Their sister sent them our letter. So it's really, I like to term it, guerilla marketing is really. We don't spend a lot of money.

It's really just letting people know you do it. Putting out good information, the need, the demand is there. It's really just making sure they know where to find you. Yeah, it's very similar to what we our philosophy is in the CFO project. And I remember when I started my CFO practice, I would have clients just come from the woodwork because they were told by somebody else.

Yes, I mean it. And referrals are always the best clients. Course. Yeah. Because they already have trusted you through their friend. You're vetted, right. And they need help. There's the demand, like you said. Right. Interesting. And so you before the show started, we were talking about the fact that the IRS is starting back, enforcing this because I took a sort of a hiatus because of Covid.

And I want to pile on. Explain that. Yeah. So so on the Tax Rep Network podcast, I've had a number of the IRS executives, but, at NYU that there's a tax, controversy forum. I gave a talk with Nicky Johnson. Nicky is she is the director of the campus collections. All the automated messages and letters from the IRS.

Okay. During Covid, the IRS, paused. All the automated enforcement, the automated levies, the automated substitute for return because they didn't want to start piling on to people where people were scared. We were shut down. Lockdown. People were afraid. Businesses were going under. The IRS thought, you know what, not a really great idea to come piling on to people, right?

So they turned all that off. Then as we came out of Covid, they left it off because they were behind in the mail. They had like 10 million unopened pieces of mail. So who wants to start leaving people if they're going to say, well, wait a minute, I sent it to you three months ago and sitting in a trailer in Kansas City or wherever.

So, now the mail is caught up. They now are have it rolled out. Bots that are answering the phones. They can answer the phones, give basic information, and set up an installment agreement if you owe 25,000 or less. All the people that have. You said, I think it's about 8 million so far. I may be a little off on that.

60% responded to a survey being pleased with the outcome. Wow. So between the bot addressing the demand on the phone and the mail being caught up, IRS said, you know what? We can get back to business now. And the IRS, you know, Congress said, look, that's what the 80 billion, by the way, they're not hiring 87,000 auditors. It's nonsensical.

Someone did some math and said, oh, they could hire 87,000 auditors. And that became a thing. It's really designed to upgrade. I mean, the IRS, a lot of the reasons we can't just log in and interact. The IRS has a million attempted hacks a week on there. 6 million a week. Yes. So security for them is big. Yeah.

So it's very limiting what they have been able to do. But they had been using systems from the 70s and 80s that, you know, they have to put new systems in place, run them parallel for a while, make sure there's no problems so that there's a lot going into infrastructure, hiring people to answer the phones, open the mail, etc..

But enforcement is starting on the upswing. In June, they sent out 8 million, balanced due notices to people who had not gotten them for the last several years. The automated the other thing Nicki told us is they could levy 4 million people today that have already gotten their final notice from before, and they can levy them.

But what happens if they do that? The phone lines get jammed, taxpayer advocate gets overrun. So start. So what they're doing is they're sending out what they call soft notices. You know, basically a reminder, hey, we can levy you, please call us. Starting in August, the automated enforcement notices levies will start going out again. But they're going to go out in wave, so it's going to really go through the end of the year.

They're going to be sending it out in waves to try to avoid this mad rush under the phones, when people who've been ignoring the government because what happens is, are like, you know, no one's bothering me right now. You know, why do I want to call them? The truth is, now is the time to call them and work something out.

I mean, the the point of the levy is they want you to come in and resolve your issue. If you're uncollectible, they'll deem you uncollectible. You can do an offering compromise. You can get into a payment plan, penalty abatement, innocent spouts. I mean, everything's getting hot right now. So the goal is the IRS want people to come in and work with them.

If you don't, they have means of making you do it, which is just unpleasant. When they hit your bank account and they garnish the wages. So hopefully more people will keep coming in voluntarily. But we're going to watch enforcement go up starting end of August through the end of the year. So we're already busy. We're all going to get a lot busier.

So I'm telling the accountants that are on my webinars or listen to the podcast, you know, now's a great time to start adding this to your practice. What do you want to focus on entirely, or just be able to handle those cases that come in and make an extra 30 40,000? We have 100,000, a challenge we run because every, every everyone, I mean, an average cases around 8000 when you factor in getting them in appeals, if you have to go to it's one case a month.

So you know, everyone, this is a great thing to add. Again, whether you want to completely pivot away or just simply add it on as something else to do to your existing practice. The IRS is going to make it easy because they're they're finally going to they're going to start taking the gloves off again. Wow. Well, Eric, it's been very fascinating.

If somebody is listening right now and they're thinking, okay, this makes sense, I would like to learn more from Eric about how I can add tax rep service to my practice. What do they go? Well, tax rep llc.com tax rep See them? Okay. Yeah. Is is is our website. Although, truthfully, if you Google me, I'm pretty easy between my blogging and my speaking and my fear.

I'm pretty easy to find, but, Yeah. Tax rep. Elle.com. Okay, perfect. And so, Erica, we'll put that in the show notes as well. Thank you so much for being with us today. Thanks for having me. Yeah. And to everyone listening or watching. Thank you so much for spending the last few minutes with us as we discussed how to escape the accounts trap.

Bye for now.