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MAY 2024 VOLUME 8, ISSUE 1
TOPH’S TAX RESOLUTION TIMES
513-342-4000 WWW.513TAX.COM
It’s been a crazy year in the tax resolution business, but one thing stands out. Since our last newsletter, I’ve been seeing some significant changes in the IRS’s enforcement activity. The agency has resumed collection actions, which has made the first quarter of 2024 an extremely busy one for us. Clearly, the IRS is back! Here’s a short overview: Starting in January, the IRS began sending what I call “soft notices.” These letters are called LT38 notices, and they let people know that while some collection efforts were suspended due to the pandemic, the IRS is resuming action. The notices also update recipients on the outstanding balance the agency says they owe. These letters basically say, “Please contact us so we can resolve your account.” The IRS isn’t demanding payment. Even though the letter says you owe X number of dollars, the LT38 notices are very non- threatening. The IRS hopes they will get people to resolve their cases before the agency has to escalate enforcement. Of course, a lot of people procrastinate. Most of our prospective clients don’t act when they get these letters. Instead, they wait to see what happens. What comes next are typically more threatening letters that escalate the process. This is the first time since February 2022 that the IRS has sent threatening letters, so the increased activity is creating a stir. It’s also generating high demand for our services from people who have waited as long as possible and now realize they must take action. THE IRS IS BACK! IRS Steps Up Collection Efforts
I’ve written in the past about the $80 billion the IRS was appropriated in 2022, which Congress later reduced to $60 billion. Another tidbit I just learned recently is that even though the IRS has hired many new collections officers and resumed sending out collection notices, the agency has spent less than 1% of the money it was allocated for enforcement. The IRS has not even scratched the surface of its likely expansion plans. Specifically, I understand from an inside source that the IRS has hired and processed 3,000 new field collection officers and is training them from scratch before throwing them into the field. The agency is clearly building some infrastructure at this stage. It’s interesting to think back to when we started the business before the pandemic hit in 2020. We handled many different types of cases for clients back then. And when COVID-19 hit, the whole dynamic of providing tax resolution services changed dramatically. Fortunately, we were able to weather the storm.
–Toph Sheldon
DON’T LIVE IN FEAR - TOPH IS HERE!
513TAX.COM • 1
Successful marketing campaigns require an understanding of the human condition and effective strategies. These seven marketing secrets will aid you on your journey to build brand awareness and make impactful conversions. TARGET AUDIENCE Market to the audience most likely to buy your products and return. But if your target audience is “everyone,” reconsider. When you try to market to “everyone,” you dilute your message. Narrowing it down allows you to focus. IDEAL CUSTOMER AVATAR (ICA) An ICA is the person to whom you’re going to sell. Generally, you should know the following information about them: • Demographics: What’s their age, gender, and job title? • Location: Is your customer base in town, in-state, or international? • Psychographic: What are their values, political beliefs, and lifestyle? 7 Marketing Secrets Every Business Should Know
A 6-Figure Tax Nightmare
HERE’S HOW I FIXED IT
There’s plenty of room for the IRS and business owners to disagree on whether workers are employees or independent contractors. If you assume yours are independent contractors, as one of my clients did, and your assumption turns out to be wrong, you could be looking at a six-figure tax bill on income you never even received. This client — let’s call him Bill — owned a staffing agency that provided temporary staffers to companies. Bill never collected payroll taxes on people he placed in these jobs because employers aren’t required to do so for independent contractors. However, the IRS took issue with Bill’s decision. After a 2018 audit, the agency determined that workers Bill had placed in 2014 and 2015 were actually employees and that he should have been collecting payroll taxes from them all along. The IRS hit Bill with an $800,000 assessment for unpaid payroll taxes and civil penalties. Add to that an additional $80,000 in personal income taxes the agency said Bill owed, and he was looking at a total IRS tab approaching $1 million. That began Bill’s long IRS nightmare. An unusual aspect of this case is that unlike most people embroiled in tax disputes, the issue wasn’t that Bill had collected money and neglected to give the IRS its share. He had never even collected the payroll taxes in the first place, believing he was under no obligation to do so. The net effect was that Bill had to shut down his business — but that’s not all. Based on rules requiring employers to hold employees’ payroll taxes in a trust fund, the IRS has the power to assess a Trust Fund Recovery Penalty against the individual the agency holds responsible for noncompliance with payroll tax rules. These penalties can’t be discharged in bankruptcy, so Bill was left holding the bag. He tried to fight the IRS by himself. Back in September 2020, he sent the agency an Offer in Compromise, attempting to settle his tax liabilities for $43,000. The IRS rejected the offer. In February 2022, Bill contacted us and asked us to get involved, and we represented him during his appeal. We finally got word earlier this year that the IRS would accept a revised Offer in Compromise for $137,000 to cover both the employment tax penalty and Bill’s personal income tax bill. In effect, the IRS reduced his Trust Fund Recovery Penalty by nearly 90%. Bill’s long IRS nightmare was finally over, and he was thrilled with the result. Reaching a reasonable agreement with the IRS took perseverance. But it was gratifying to be able to carve hundreds of thousands of dollars off the tax debt hanging over our client’s head.
After determining how best to market to your ICA, put ads on their favorite blogs, social media sites, and media outlets.
BE THE SOLUTION Research customer challenges and develop a message
emphasizing how buying your product will solve their problems. Provide evidence and explanations whenever possible to show you understand and relate to their issues. ‘MERE EXPOSURE EFFECT’ People tend to trust familiarity. If they keep coming back to their internet haunts and notice your brand repeatedly, they’re more likely to trust you and convert. Keep pushing those ads; you’ll build a loyal clientele over time. DO MORE Businesses often get discouraged when they start social media marketing to attract new leads without success. However, they can try posting multiple times every day, making a daily video, or using SEO more effectively. Developing a following takes time and perseverance. ‘RULE OF 7’ Customers generally have an issue to solve or a pain point to alleviate by coming to your business. They will typically require seven touchpoints before making a purchase. So, optimize every moment of the customer journey. SELL BENEFITS The most successful marketing typically explains why potential customers need something, not what it is. It targets customers’ emotions because they compel action. Marketing is always challenging. However, you can always accomplish your marketing goals through a carefully structured approach leveraging these secrets.
–Toph Sheldon
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Published by Newsletter Pro • www.newsletterpro.com
ASHLEY’S CORNER 6 Kids + Spring Sports = Controlled Chaos!
It’s been a while since we sent out a newsletter, and it’s been a crazy year already. I want to update you on our last few months. We’ve been off and running! This tax season has been really busy, and the kids are back outdoors with their activities. We have two kids playing soccer, two playing football, one playing baseball, and one doing Ninja. It’s been controlled chaos! Toph has been crazy busy this tax season, but he has still found the time to help coach Rex’s soccer team. We’re a little overscheduled right now. Moving forward, we’ll have the kids pick one sport at a time or an activity that takes less of a time commitment. But for now, we’re just running from one thing to another. We’ve also been doing a special night with each of our kids. We pick one night each week, and Toph takes one of the kids out one week, and I take one the next. Each of the kids picks what they want to do. They get all of our attention, and they love it. We aren’t on the phone, and I’m not cooking, cleaning, or doing laundry. Toph’s family started the tradition when he was a kid, and he remembers thinking it was really cool. Rex recently had his special night with me, and we went to the trampoline park. I wound up chasing Rex all around the park. They have these big foam pits you can jump into, and it was like quicksand,
meaning I got stuck a lot! Meanwhile, Rex was jumping in and jumping out, yelling, “Come on!” And I was calling back, “Throw me a life rope!” We had so much fun.
I’ve also been doing more marketing for the business. Some afternoons, I’ve been
working while the kids play, and they’ll rope me into their games, saying, “Come on! We want you to play with us!” So, we’ve been playing board games together, taking our scooters out, and biking. Of course, the house looks like a bomb exploded in it, but we’ve been having a lot of fun. I always enjoy running into my readers at the grocery store or around town, and I hope to see some of you soon! Meanwhile, we wish you a great summer!
Inspired by StarTribune.com
Take a Break
GRILLED RED CURRY BEEF SATAY WITH PEANUT SAUCE
Ingredients
Directions
• •
1 1/2 lb flank steak 1/2 cup unsweetened coconut milk
1.
Freeze flank steak for 30 minutes. Cut crosswise, against the grain, into thin slices.
2. In a medium bowl, whisk together coconut milk, lime juice, curry paste, and fish sauce. Add steak and toss to coat. Cover and chill for 8 hours. 3. In a small saucepan over medium heat, combine coconut milk, curry paste, brown sugar, and fish sauce. Bring to a gentle boil for 3 minutes, stirring occasionally. Add peanut butter and stir until well blended. Remove from heat and add lime juice. 4. Thread the marinated meat onto 12 long skewers. Grill until beef is medium rare, 1–2 minutes per side. 5. Transfer satay to a platter and serve with peanut sauce.
• 2 tbsp lime juice • 1–3 tbsp Thai red curry paste • 1 tbsp fish sauce For sauce: • 1 cup unsweetened coconut milk • • 1 tbsp brown sugar • 1 tbsp fish sauce •
1–2 tbsp Thai red curry paste
1/2 cup creamy peanut butter
Solution on Page 4
• 1 tbsp lime juice
513TAX.COM • 3
Published by Newsletter Pro • www.newsletterpro.com
Cincinnati Tax Resolution Powered by Toph Sheldon 9200 Montgomery Rd., Ste. 7B Cincinnati, OH 45242
PRST STD US POSTAGE PAID BOISE, ID PERMIT 411
513-342-4000 513TAX.COM
INSIDE 1
Toph’s Update on Recent IRS Activity
2
Marketing Secrets to Stay Ahead of the Curve Toph Resolves a Client’s Long IRS Nightmare Ashley’s Corner: Off and Running Into Summer Grilled Red Curry Beef Satay With Peanut Sauce
3
4
Another Musician Caught by the IRS
Lil’ Kim, iconic rapper and trendsetter, has once again found herself entangled in a financial fiasco, this time with the IRS. Known for her groundbreaking contributions to the music industry and her flamboyant fashion sense, Lil’ Kim’s financial dealings have often been as headline-grabbing as her career highs and lows. This story unfolded as the Queen Bee faced a string of tax liens. The IRS is no stranger to chasing after high-profile figures for unpaid taxes. In Lil’ Kim’s case, tax liens accumulated over several years, dating back to 2003, the largest of which was worth $400,000 in 2008. Lil’ Kim declared Chapter 13 bankruptcy in June 2018 to catch up on her finances in preparation to repay her outstanding liens. Fast forward to 2023, and the rapper reached a settlement with the IRS totaling $1.4 million, a hefty chunk of change for anyone. But how do world-renowned artists find themselves in such a predicament? High earnings come with high taxes, and failing to adequately plan and allocate funds for tax obligations can lead to significant legal and financial consequences. Managing cash flow and tax obligations proved challenging for Lil’ Kim, whose career has seen both platinum records and periods of relative quiet. Lil’ Kim’s tangle with the IRS is a cautionary tale and a testament to the complexities of celebrity life. It’s a reminder that behind the glamour and the hits, there’s a world of financial responsibility that should never be ignored. RAPPER LIL’ KIM PAID HER DUES TAX NIGHTMARE
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DON’T LIVE IN FEAR - TOPH IS HERE!
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