Welcome to Resilience and Resolve with Lance Drury. Welcome to Resilience and Resolve with Attorney Lance Drury. For more than 30 years, Lance has helped individuals and small business owners regain control when IRS problems feel overwhelming. I'm Lisa Mosbey and today we're talking about years of partial compliance with the IRS, filing some returns, missing others, making occasional payments but never fully resolving the problem. Understanding how the IRS views this pattern is key to finally breaking out of it. Welcome Lance, thanks for being with me today. How are you, Lisa? It's good to see you. I am so good and I'm excited to talk about this topic with you because there are so many small business owners that are challenged by this. And so some people believe they've been doing enough because they've filed some returns or made some payments. How does the IRS actually view partial compliance? Well, the IRS views partial compliance is no compliance. And it's interesting you bring up small business owners because 70% or more of my clientele are self-employed individuals, those are the people that get in trouble because the taxes aren't automatically taken out and they don't make estimated tax payments. So when the time comes to pay the tax, guess what, they've spent the money. The money's not there. And everybody thinks running your own businesses, the American dream, but you know, most small businesses, 75% or more of them are not all that profitable and then you've got to fund your own retirement. You've got to fund your own health care. So if you make $75,000 a year and you got all of that, you're not making a whole lot of money being self-employed and there's long hours, there's more paperwork. So that's the problem. People get home seven, eight o'clock at night. They've had a hard day. They've had a long day. And the last thing they want to do is paperwork. And it's just kind of spirals out of control. But yeah, you have got to be 100% compliant before the IRS is even going to talk to you about a settlement on the back taxes. You pay in a 941 payroll taxes, one quarter, but that the next, that's not going to get you anywhere at least. And the other problem is if you have a long history of non-compliance, which means you could have been compliant part of the time. But if you've done that, it's going to take you longer to get a resolution because now you have to prove to the IRS before they're willing to give you a deal, that you're going to be compliant for more than just one quarter. They're going to want to see two, three quarters before they're going to give you an agreement because it's a condition of any agreement that you're 100% compliant moving forward or guess what? The deal goes down the drain. You're back to square one. You've wasted all your money in hire and me or anybody else to solve your problem because you haven't done what you're supposed to do. And Lance, what tends to happen when tax issues stretch out over years without a clear resolution strategy? Well, you know, you're going to end up getting levied. You're going to end up having your bank account wiped out. You're going to have your 1099s taken and for somebody who's self-employed, if they go after your customers, your customers are going to say at least some of them we don't want to work with you anymore because we don't want to get involved with somebody that's got problems with the IRS and we don't want to have to go through that red tape. We don't want to have to send them the money we should be sending to you so it can cause lots of problems if you're not compliant for a great length of time with the IRS. It takes longer to get a resolution. You've got to get a longer time of full compliance. And so if you don't and this happens some of the time, the IRS is just going to put you out of business because what happens in a lot of businesses is there's economic downturns or somebody goes belly up on them. That's why they get in trouble with the IRS. So to keep the business going, they pay their suppliers, they pay their employees, they don't have the money to pay Uncle Sam. They think they're going to catch up the next quarter and it's just kind of mushrooms out of control. So, you know, that's the other problem is, you know, if the IRS sees this and they're going to say your business is in viable because you can't pay all your bills. You're operating a business that's losing money and the last thing they want you to do is keep paramitting payroll liability. That is their highest priority. I went to a conference once with the next IRS big shot and she said, you know, that's our red flag. That's what really gets to us is when people continue to pyramid payroll tax liability, we don't want them in business because they're just going to keep doing this and, you know, we just want to shut them down if that's what they're going to do. Lance, I want to give listeners a specific case. You've worked with many people stuck in this cycle for a long time. Can you share a situation where changing the approach finally moved the case forward? Well, I don't know if it was so much the approach as they had the wrong firm to solve their problem. But probably a year or two ago, I had a firm out of Illinois about an hour away. They had, I was on the phone with their accountant and I don't know how they heard of me. I'm on the radio up there. They didn't hear that. I don't know how they got hold of my name. But they had hired a group out of Colorado. They owed a million dollars in business tax liability. And then, of course, they come after you personally for a portion of that payroll tax liability. So it's two separate agreements. They paid them $30,000. And again, I tell people, stay away from the big national firms. They take your money. They don't do anything for you. And that's what happened here because the IRS then they had a revenue officer who will send out what's called a 92 97 a summary of taxpayer contact. And they want all this information. And they give you about three weeks normally. It can vary. But normally it's about three weeks to get them all this financial information. If people do it on their own, they forget to send all of it in. So this firm would send them that like the day before it was due. So they were not doing their due diligence. This went on and on. And it finally got to the point they called me because they had been levied for over a million dollars for the business. And they had been levied for their personal. And so they asked me, can you guarantee you'll get this levied left? And I said, I can't guarantee they can take my borrow license. Anybody that guarantees you anything you should run for the hills. And so I said, I'm not going to lose my borrow license. I can tell you we've had a good track record. But a lot of times it depends on the revenue officer. So seven o'clock the next morning, because in St. Genevieve, we opened the office at seven a.m. And so they hardest at seven a.m. by the end of the day. Both levies had been lifted within a month. We had installment agreements in case which is very quick. But revenue officers want to move quick. So we got to get a lot of our money up front. They paid me more than 30,000 that they paid like 25, 30 cents on the dollar. Maybe a little more. But with the vast majority, they never had to pay back. And they were ecstatic with the result that they got from our firm. So yeah, they changed their approach. They got somebody who wasn't there just to take their money. They got somebody who was interested in giving them back their peace of mind, making sure they could continue with the business. The business had been around for a lot of years. And so they wanted to keep it going. And so that's what we're here for. We're here to help people. We stand between people in the IRS. We're here to protect their interest. And you know, that's what we do every single day. Lance, I can do the math on that one. You save them more than what they paid you from the rough numbers that I heard there. Our return on their investment was at least seven to one if not more. Yeah. You know, I have a question. You talked about partial compliance. We kind of open with that. And oftentimes partial compliance will delay a resolution rather than help it. Should people do partial compliance or not do that? What should their action actually be? That's most helpful. Well, there, there may be times when they will do partial compliance. For example, if you're working on a whole lot of past due tax liability, and they have something recent, the revenue officer may say, well, let's clean this up from the first of the year before we talk about a settlement. And maybe it's not a whole lot of money. I mean, we're talking relatively speaking a few thousand dollars as opposed to hundreds of thousands of dollars. So in that situation, because normally we say don't make voluntary payments, you're not getting anywhere. They just think you have money to pay. You're more likely to get levied. But when you're dealing with a revenue officer and they say, okay, do this, then we're willing to look at and give you a deal on the back taxes. Then in those instances, we will certainly tell them to engage in partial compliance matters because it shows what you have to show to the IRS. Is that you're going to clean up the most recent year. And you're going to be a hundred percent compliant moving Harvard. And that gets the ball rolling on an agreement on the back taxes. And you mentioned that volunteer compliance might be a mistake or volunteer payments. I'm sorry, it might make us, it might be a mistake. What mistakes other than that do people make when they are trying to keep the IRS at bay, instead of addressing the full scope of the problem right away? Well, there's two problems. One, they try to do this on their own. And it's confusing, it's complicated. They tell me they sent everything to the revenue officer. The next thing you know, they got levied. And guess what? They didn't give them everything because there's so much information. It's so, you know, relegated to this specific realm that it's just confuses people. So trying to do it on their own, they make the problem worse because the IRS is not going to call them. To say, oh, we're going to levy if you don't give us this, this and this. No, they're just going to levy. The other pre-problem people making this is probably the biggest. And this is for self-employed individuals. They think they can do this on their own. So they call the IRS. They set up an agreement. And it's always for every last penny because the IRS never tells them it's based on their ability to pay. 85 to 90% of our clients never pay back the full amount. But they take advantage of lay people when they do it on their own. So they set up this agreement. They pay every last penny. They're paying on the agreement. But then there's no money to make the estimated tax payments. So the liability just gets worse and worse. So here's some free advice for anybody out there who's self-employed. If you think that you can do this on your own, which you can't, but if you're determined to do that, start making your estimated tax payments first before you negotiate a settlement on the back taxes, because that will keep you compliant moving forward, which is a condition of any agreement. And secondly, guess what? We can get you a better deal on the back taxes because those estimated tax payments are an allowable expense in determining your ability to pay on the back taxes. So let's say you're paying $2,000 a month on estimated tax payments. That's $2,000 less a month. The IRS is going to be able to get out of you on a monthly basis through an installment agreement on the back taxes. So what I'm hearing you say is it basically resets the case by getting fully compliant for several estimated payments in a row. It shows intention of completing your compliance for the year. And then you have a better chance to negotiate. Am I simplifying that too much or did I miss anything? Absolutely with revenue officers. Now, not so much with ACS, but a lot of these businesses, if they have payroll tax problems, they're going to get a revenue officer because payroll tax issues are their biggest priority. So absolutely when you got a revenue officer involved. For someone listening who recognizes themselves in the middle of this pattern, what should they understand before taking their next step? So their next step is hiring an attorney, but their next step is getting the right person on their team to help them with this. Well, their next step is you've got to get compliant. You've got to start making those estimated tax payments on time. You've got to get the filings on time. You wouldn't believe how many people contact us. And they haven't filed their 941s or their 1040s for 10 years, 15 years, 20 years. You've got to file. It's a crime not to file your tax returns. So you're absolutely positively got to get those returns filed and you got to start paying your taxes on time. And get the right person on your team. Thank you so much for today. I appreciate it, Lance. And to our listeners, thank you for listening to Resilience and Resolve with Lance Drury. Partial compliance can feel like progress, but over time, it often keeps IRS problems stuck in place. If you've been dealing with unresolved tax issues for years and want to create a clear path forward, we encourage you to visit LanceDruuryLaw.com. Be sure to like, leave a review, and subscribe to the show. We'll see you next week.