Thank you, Consumer Protection Agency

[DiosaBellissima]

The short of it: the government is throwing the baby out with the bathwater.

The long: Come the end of July, our family business that has served the community for almost 30 years may be illegal, thanks to the newest set of regulations coming down from the Consumer Protection Agency.

Some background: we run a tax representation business, which means we help people with back tax problems. Levies and liens for balance dues, unfiled returns, representation on fraudulent account actions-- we help with all of that. Naturally, we charge a fee to do this, but we pride ourselves on being honest and fair with our clients. It’s for that reason that in the industry, we have a stellar rating and excellent name-- with countless happy client referrals. I can’t tell you how many times people have sent me flowers or gift baskets to say thank you-- heck, not too long ago, a sweet old man sent me a beautiful orchid and a hand written note that- among other things- said, “Diosa, thank you for literally saving my life. I mean that. I was on the brink of suicide because I thought there was no one to help me, but you did.”

For years, the government let shitty scam factories like Roni Deutch, JK Harris, and Tax Masters do whatever they wanted without much by way of regulation. Companies like that made my job harder, because they’d promise people the stars-- all in the name of getting cash in hand. Once they got the money, of course, they’d administratively stall, file frivolous settlements that were bound to fail, and just generally jerk people around. As the years went on, people got increasingly upset and over the last year or so, the government has stepped in and either filed suit against a few companies or upped regulations for the rest of us. Regulations, may I add, that legitimate tax reps like us have no issue with- after all, those cheats were making the actually legitimate representatives look bad by even being in our industry.

A week ago, 40 tax representation groups got together in Washington DC to discuss impending changes in regulation, namely the Consumer Protection Agency moving to enforce a part of Frank Dodd that says that no corporation or law firm that provides tax controversy work to individuals will be allowed to charge or bill for services until the service is complete.

I know what you’re thinking: “Diosa, what’s the BFD? Just bill your clients after the fact!” Here’s the issue: we represent a good number of our clients for a decade (the IRS collection statute on taxes— hell, in California, the FTB statute is over 20 years). No business should be expected to work for a decade without payment and no business will- this will effectively shut down every legitimate tax representative in the country, in a time when the last thing we need to do is to hurt small businesses even further.

While us business owners are understandably upset, the real folks who should be livid are tax payers. The tax agencies can- and do- issue unlawful levies, something I see literally every week. If this change is made, tax payers will be on their own in trying to fix this stuff, with no professional representation to help them. Which is bullshit for everybody involved.

I think you guys can tell how upset I am, just by the lack of “douche canoes” in this particular Pit thread of mine ;).

[mhendo]

@DiosaBellissima

A week ago, 40 tax representation groups got together in Washington DC to discuss impending changes in regulation, namely the Consumer Protection Agency moving to enforce a part of Frank Dodd that says that no corporation or law firm that provides tax controversy work to individuals will be allowed to charge or bill for services until the service is complete.

Before deciding whether or not to sign on to your rant, i’d like to see some evidence about exactly what these alleged “impending changes in regulation” will actually do, as well as what part of Dodd-Frank (it would probably be good if you knew the name of the laws that affect your industry) the regulations apply to.

I’ve just done some searches using the information you’ve given in your OP, and i can’t find anything like what you’ve described. I’m not saying it’s not there, but i’ll need more details before deciding whether the regulations are good or not. The very limited detail that you’ve given makes it sound like someone has over-simplified the changes in order to gather opposition to regulation.

Also, i think you’re referring to the Consumer Financial Protection Bureau. There is no such thing as the Consumer Protection Agency.

[The_Vorlon]

DiosaBellissima, did you ever stop to consider that this is not an unintended consequence, but a desired outlook? If no one is looking out for the little guy, the government can resume playing Bambi vs. Godzilla on the hapless minions.

[Rhythmdvl]

@The_Vorlon

DiosaBellissima, did you ever stop to consider that this is not an unintended consequence, but a desired outlook? If no one is looking out for the little guy, the government can resume playing **Bambi vs. Godzilla **on the hapless minions.

Link, for those who haven’t yet been exposed to the awesomeness.

[doreen]

@DiosaBellissima

I know what you’re thinking: “Diosa, what’s the BFD? Just bill your clients after the fact!” Here’s the issue: we represent a good number of our clients for a decade (the IRS collection statute on taxes— hell, in California, the FTB statute is over 20 years). No business should be expected to work for a decade without payment and no business will- this will effectively shut down every legitimate tax representative in the country, in a time when the last thing we need to do is to hurt small businesses even further.

I can’t find anything close to this either, but do you really represent a good number of your clients on a single issue for a decade ? Because even if there is a rule that you can’t bill until the service is complete, it seems that when the issue from the 2001 tax return is resolved , then the service is complete and if an issue pops up on the 2004 return, that would be a separate service. Sure, they could come to you with ten years of back tax problems, but surely it doesn’t take you another ten years to settle them?

[waterj2]

But if they don’t have the ability to pay that 2001 tax bill, the government can take various measures to get the money. And may attempt illegal measures. The IRS has ten years from when the return is filed to actually collect payment, and there are rules about what they can do in that time. A person who expects to be unable to pay off the entire bill within the ten year time-frame will probably see the benefit of having representation for the duration to deal with the liens and levies the IRS may file against them.

[Gatopescado]

Nobody wants to know what I think about this.

[mhendo]

I’m not sure what to think yet, because i don’t have enough information about what this alleged proposed change in regulations will actually do.

[BottledBlondJeanie]

Diosa, I feel for you. I don’t know the specifics of Dodd Frank re your tax issues. But, my dealings with it have been confusing and painful. There are few lawyers that can explain the ramifications of portions of it. Dopers, give her a break re explaining it-especially if there’s no enforcement yet.

Any of your organizations band together to seek rule clarification yet? Not sure if that’s what was going on at the meeting you mentioned.

[Little_Nemo]

I’d ask the OP, what would be a good alternative? You’ve acknowledged that there are some scammers who’ll collect fees upfront with no intent to provide any effective services in the future. So how do you stop those scammers without hurting the legitimate businesses like yours?

Is there something objective you could point to and say “Look, this is something a legitimate tax representative does and we’re doing it. So we should get paid for the legitimate work we’re doing. Go after the scammers who aren’t doing this.”

[digs]

@Gatopescado

Nobody wants to know what I think about this.

Agreed. In fact, this is brilliant. I might just start posting this in lieu of my usual witty-yet-insightful replies.

[digs]

Nobody wants to know what I think about this.

[amarinth]

@DiosaBellissima

A week ago, 40 tax representation groups got together in Washington DC to discuss impending changes in regulation, namely the Consumer Protection Agency moving to enforce a part of Frank Dodd that says that no corporation or law firm that provides tax controversy work to individuals will be allowed to charge or bill for services until the service is complete.

I know what you’re thinking: “Diosa, what’s the BFD? Just bill your clients after the fact!” Here’s the issue: we represent a good number of our clients for a decade (the IRS collection statute on taxes— hell, in California, the FTB statute is over 20 years).

While I understand that it could take a decade to get someone’s entire tax situation completely sorted out. Are there no legitimate milestones during that 10 year period that could be considered complete for a specific portion of their problems? Also, do the majority of your clients take that long or is only some on the high end of the spectrum?

[Really_Not_All_That_Bright]

@DiosaBellissima

I know what you’re thinking: “Diosa, what’s the BFD? Just bill your clients after the fact!” Here’s the issue: we represent a good number of our clients for a decade (the IRS collection statute on taxes— hell, in California, the FTB statute is over 20 years). No business should be expected to work for a decade without payment and no business will- this will effectively shut down every legitimate tax representative in the country, in a time when the last thing we need to do is to hurt small businesses even further.

Your business might not, but there are a million attorneys out there working on a contingency fee basis who won’t get paid for work they do today for 10 years.

[mhendo]

@BottledBlondJeanie

Dopers, give her a break re explaining it-especially if there’s no enforcement yet.

Nope, it doesn’t work like that.

She doesn’t have to explain it herself, but i’d like a chance to read about it for myself, and to look at what it actually does, before deciding whether her rant has any merit. A link is all i need.

As i said, i did some Googling yesterday using some of the terms in the OP, and i went to the CFPB website, but couldn’t find anything about this.

[Jenaroph]

@amarinth

While I understand that it could take a decade to get someone’s entire tax situation completely sorted out. Are there no legitimate milestones during that 10 year period that could be considered complete for a specific portion of their problems? Also, do the majority of your clients take that long or is only some on the high end of the spectrum?

This is kind of how I’m reading the problem. If there’s a way to define and compartmentalize your services, then perhaps you won’t have to change what you’re doing too much and still be paid properly.

It sucks to be handed new red tape out of nowhere. I hope this isn’t as bad as it sounds.

[BigAppleBucky]

Afterall, they (and lawyers) bill by the hour and deal in “tax controversies” every day. I’d think H&R Block would be the same way.

Also, defining “service is complete” gives some leeway.

Write a letter to the IRS - send a bill since the service wrt that letter since the letter was complete.

Congratulations to DiosaBellissima for being an honest representative. I’ve seen TV ads for JK Harris which made me very uneasy. Settling for pennies on the dollars sounds totally pie in the sky.

[DiosaBellissima]

Sorry, yesterday was a bit busy (yup, working on Memorial Day. Hooray!), so I didn’t get a chance to follow up.

There really isn’t anything to show with regard to official documents, because- like BottledBlondJeanie explained- there hasn’t been any enforcement yet. Hopefully, this is all one big misunderstanding and the Consumer Financial Protection Bureau (thanks for correcting my mistake, mhendo ;)) will have a more fair application of what’s being discussed.

The email I received was circulated in a professional discussion group of folks who do what we do and stemmed from a meeting that was held a week or so ago in DC. The meeting was for a group called the National Association of Tax Resolution Companies, where they discussed how to improve regulation in our industry (without hurting the honest guys), as well as impending legislation. The matter in my OP was one of the items discussed.

I can only find things that indirectly discuss the matter, via Google. There’s this on the IRS website, which includes the following quote that alludes to what’s being discussed here:

Besides reducing the reputational damage and bad press earned from Deutch,
Harris, and Tax Masters, NATRC members also face the possible extinction of
their business model, though enforcement of advance-fee pricing has been
deferred by the FTC. “The reality is, this industry is not in a very good situation
right now,” said NATRC Executive Director Mark Guimond.

The website that comes up for the NATRC is here, where they do offer a proposed legislative solution that provides for much more regulation without crippling the industry (for instance, they suggest we have to carry a $100,000 bond, among other things).

Like all things, I think this comes down to figuring out that fine line between necessary regulation and over regulation. Instead of going to the nuclear option, I think that the middle ground proposed by the NATRC is a good place to start.

Also, BottledBlondJeanie, they have hired a lobbyist (or lobbying firm. Or however that works)- one who has worked previously on a similar matter in California. So, that’s certainly a start.

[DiosaBellissima]

To answer a few of the other questions:

Yes, it really can take a decade to resolve someone’s tax issues. Obviously, it’s most beneficial to us (we charge a flat fee- so obviously, it’s good for us to get the case resolved sooner) and the client to get the problem resolved as soon as possible, but sometimes that isn’t the best situation for the taxpayer. As waterj2 touched on, it’s a bit more complicated than it appears. I see plenty of cases where a tax payer is on their Installment Agreement, making timely payments, and gets levied anyway-- cleaning out their bank account, taking 90% of their pay check, etc. That is, effectively, an illegal levy. Never one to ascribe to malice that which is adequately explained by incompetence, I sleep better at night just assuming someone at the IRS fat fingered a key or something, causing the levy to come down.

In the cases of our clients that are riding out the 10 year collection statute because they simply can’t afford to pay more a month, I make sure to tell them that the above is probably going to happen a couple of times during that time frame. . . and it usually does.

Part of what sets our business apart is that we see our clients to the end of the problem. Whether it’s 2 years or 10, we will be with them to make sure that they aren’t levied and rendered unable to feed their kids because someone at the IRS screwed up and issued something that shouldn’t have been. Five years down the line, if a levy is issued, we will still take care of it.

amarinth, I totally see where you’re going with that and I think there’d be some merit in exploring that type of set up if push comes to shove, I think that type of set up would sort of force honest tax folks like us to be. . . well, less than honest. Declaring something the end of a problem when it really isn’t is something that the big shady firms did in order to double up fees, charge more, etc. I mean, we wouldn’t be doing it for that reason at all, but I’d hate to misrepresent a problem as resolved when it isn’t, you know?

[iamthewalrus_3]

@DiosaBellissima

Part of what sets our business apart is that we see our clients to the end of the problem. Whether it’s 2 years or 10, we will be with them to make sure that they aren’t levied and rendered unable to feed their kids because someone at the IRS screwed up and issued something that shouldn’t have been. Five years down the line, if a levy is issued, we will still take care of it.

It sounds to me like this could be handled with only a minor change in the flat fee structure of things. Something like:

$x to negotiate a payment plan with the IRS. Payable at the time the payment plan is agreed on.

$y for monitoring over the course of the payment plan, payable at the time the payment plan is complete.

Just make $y a small amount, and you won’t have to wait much.

Obviously I’m not a lawyer nor am I familiar with tax law or accounting, but partitioning the services like this is a pretty common tactic.