Tips for Proper Tax Planning with Jim Felton and Peter Stephan, the Tax Team on KRLA (Click To View Video)

James R Felton writes:
Brian Whitman: Now here’s a question, and I worry about this myself: If you have been contacted by the California Franchise Tax Board, and then in you go, and then you thought, you take care of business, you file with guidance from folks at the Tax Resolution Institute, you file those un-filed returns. Is that now going to trigger the IRS to come after you as well?

Peter Stephan: That’s and interesting question, Brian. The IRS does report to the state. So if you’re audited, they’ll report the results of an audit to the state. Or if you file with the IRS, the state will know. The state doesn’t always report the filing to the federal. However, if you have W2s, 1099s, sale of a residence, sale of stock, anything that would have been reported to the IRS, and you’ve only heard from the state, it’s just a matter of time that you’re going to hear from the IRS.
Remember that we talked about this in a show a couple of weeks ago. They’re not going to lose your transcripts, they’re not going to lose the records of the 1099s and W2s, and other…

Brian: So that’s no strategy, right? If your strategy, as you listen this afternoon, is maybe they’ll lose my information, bad strategy, right?

Peter: Bad strategy.

Brian: Don’t put your eggs in that basket, right, Jim?

Jim Felton: Correct. It never works to forget that the IRS may not exist. They exist.

Brian: What’s the difference, guys, between tax evasion and…

Peter: And tax avoidance?

Brian: Yes, really, Peter. What is the difference?

Peter: Well, we’re all entitled to structure our affairs to pay the least amount of tax, that’s avoidance, if you will. But evasion is the conscious effort to manipulate your situation in an illegal way to evade paying taxes. One is criminal, and one is proper tax planning. That’s the difference.

Brian: Because we hear these stories. And, of course, here we are, a month out. You’ve to file in just about a month’s time, to the day. And we all hear about Wesley Snipes and all these famous cases of these people. And then people go to jail, and you’re sitting there, maybe you haven’t filed for a few years, and you see Wesley Snipes in jail, and it scares the you-know-what out of you.

Jim: But it should, because people should file their taxes. What we do, as professionals, is give advice as to how to minimize tax, how to minimize payment to creditors, how to do it legally. But if you forget about it, or you ignore it, then the taxing authorities are going to come after you. So again, face the problem early, get professional help from people like the Tax Resolution Institute, or my firm, Greenburg and Bass. We can help you look at your financial picture and figure out how to deal with it, as opposed to ignore it.

Brian: Let’s talk about that. And I think that’s a great point you made, Jim. Let’s talk about the affordability of this type of help, and the services that you guys provide. Peter Stephan of the Tax Resolution Institute, you have people come to you whose wages are garnished, and these people don’t have a lot of cash. How do you navigate around that? Because, obviously, you’re providing a service, and, obviously, you’re paid for your service. I know people go in there, there’s a no pressure consultation, and it doesn’t cost any money for that, to find out where you stand. But you guys, by the nature of what you’re doing, you’re dealing with people who have financial problems.

Jim: That’s fair, correct.

Peter: We do have to get a reasonable down payment, or retainer, if you will, to start work, because we have very competent, and therefore, at whatever level, expensive professionals.

Brian: Right.

Peter: Lawyers, and CPAs, and so on, handling your tax resolution matters. But we’re always there to work with our clients; although, we like to get the full retainer up front, as most people do. I know with Jim, doing a chapter seven bankruptcy is required to get a full retainer, because he doesn’t want to become part of the bankruptcy.

Brian: Yes, and that’s a great point. But Jim, really the question becomes for the person listening: How much is it going to cost you if you do nothing? What’s the price you pay if you don’t do something?

Jim: The price you pay is having your creditor take away the control that you have over your assets. In a chapter seven, there are assets that you can exempt. There’s $23,000 worth of assets that you can exempt in a chapter seven in California. So it’s not that they’re going to take everything, but if you do nothing, they will take everything. They’ll go to your bank, they’ll garnish your wages, they’ll take action that you can’t control; and a chapter seven, or a chapter 13, or a chapter 11, you retain control. And you may, in fact you probably will have to pay back, in a chapter 11 or a chapter 13, some of what the business owes, or what the individual owes, but you have control over it. Someone’s not going to take it without your consent.