It’s tax time, but if you’re just now gathering receipts from the cardboard box under your bunk, then a quick rundown of filing tips probably won’t help a lot, at least not this year. But you might want to pay attention to a tax expert who specializes in helping truckers who’ve gotten sideways with the Internal Revenue Service. And you’ll want to pay attention, too, if you’ve always filed on time and never had a problem—until, surprise, the government says you do.
“People run into trouble with the IRS for all kinds of issues,” says David Miles, a federally authorized tax practitioner and vice president at 20/20 Tax Resolution. “Too often, people associate IRS problems with this malicious intent of trying not to pay, but sometimes it’s simple naiveté, sometimes it’s ignorance, sometimes it’s a CPA’s mistake, sometimes the IRS gave a refund and then asks for it back—but you don’t have it anymore.”
The firm boasts “a heavy presence” in trucking, along with home health care and staffing agencies. A key trait those workers share is that they don’t have a regular presence in a conventional workplace. Simply, “their professional relationships aren’t as strong as for somebody who’s at a desk every day,” Miles notes.
In addition to often not receiving a company-wide memo or missing a meeting, these workers can be hard to contact. That can be a problem when, for instance, an owner-operator can’t answer an accountant’s calls to reconcile the books—and the accountant’s office is likely closed by the time the trucker finishes the driving day. And one thing leads to another, and taxes don’t get filed on time—or worse (and not unusual for truckers) they might not get filed at all—or the bill is more than you expected and can pay.
Similarly, the same folks who tend to let tax deadlines slip by will also let those pesky warning letters from the IRS pile up. And the penalties for ignoring the tax man will pile up quickly in turn.
First and foremost, Miles encourages everyone who’s learned of a tax problem to be “proactive” and “get somebody on it right away.” This shows the IRS or the state tax agency that you’re interested in working with them, and it forestalls additional legal steps, such as liens. But in this industry, it’s not an easy thing to do, he adds.
“Anytime we can take action before these issues become public record, the better off our small businesses are going to be,” Miles says. “Small businesses are often tied to individuals, so you’re talking about having lines of credit cut off, or access to funds being limited.”
To find professionals and “fresh eyes” for your case, Miles advises truckers to speak with other truckers who’ve gotten help with similar issues. Other sources include trade associations, chambers of commerce, and the Better Business Bureau. The main thing is to do your homework and verify the expert’s credentials, either as an enrolled agent (EA), a CPA, or an attorney.
“All too often, people just aren’t as willing to talk about a tax problem. We just don’t go there,” he says. “More small businesses share this problem than anyone really knows.”
Second, especially if you decide to represent yourself in straightening out the tax problem, is “getting your head around all of the issues.”
“None of the authorities are very good about summarizing all of the problems that a taxpayer has,” Miles explains. “It’s a very disjointed system that follows statutory requirements by tax period. So they’ll send a series of letters about 2013 and a series of letters about 2014. There’s a very significant effort that has to go into understanding what the issues are, whether you disagree with anything they’re saying, or if it’s just a matter of how you will pay them back.”
Third, if you decide to challenge a claim, the burden of proof is going to be on you, Miles points out. In a simple case, a person could still handle that defense on his or her own; but the more complex the issue—and the higher the liability—the more you need to consider professional assistance.
“You have to be prepared to back up your words,” he says. “The IRS and the state are not going to change anything based on a conversation—it will not happen.”
Again, truckers are challenged when it comes to finding the time and resources to defend themselves. And, in some cases, a tax professional might advise a client to pursue a settlement. If your case is difficult to prove, working out a good collection arrangement may be the best option.
“You have to consider the likelihood of winning. You have to have a realistic conversation: Can we get this done?” Miles says. “Fighting to just fight is not an advisable strategy. But I am a staunch proponent of the idea that there is a solution for everyone.”
In terms of retaining a tax service to help with an IRS problem, Miles explains that 20/20 Tax Resolution will work with a client to outline the problem and response, and provide a bid for seeing the matter through. He cautions against signing an “open-ended” contract, which can “get out of hand”—often simply because the government representative assigned to your case “can make getting a result a nightmare for somebody.”
“A lot of people in trucking just can’t afford to have unexpected bills, and representation fees show up every month,” Miles says. “Anyone who’s been in it [tax resolution] should be able to assess the project for a client, to know where cases should go, and lay it out as a fee for a service. We try to keep it as simple as we can. Who do you owe? How much do you owe? What are we trying to achieve for you? What is the end game?
“It’s essential to be clear on what is and what isn’t covered. What are each of our responsibilities? A client shouldn’t be faced with high bills just because someone at the IRS is giving them a hard time. If we billed by the hour, it would quickly become unaffordable,” he continued.
And, once again, he emphasizes the need to act before it’s too late.
“Too often, we get asked to help people after the IRS has shown up in their bank account,” Miles says. “They’re on the road, and they go fill up their rig, and they get declined because the IRS levied their money. That is a difficult way to begin a case, because the IRS is at the 11th hour—they don’t do that at Day One. Call early, and we’ll figure it out.”