You have probably seen Patrick Cox, CEO of Tax Masters, on your screen many times. Whether in Tax Masters commercials, on the Tonight Show with Jay Leno, or speaking about current tax topics in the media, we wanted to give you another side of Patrick Cox.
We recently asked Patrick Cox to talk a bit about Tax Masters services, what the company promises and delivers, and to shed some light on the new industry-leading business model and 18-month refund policy.
Patrick Cox, CEO of Tax Masters, on the company he built…
Taxpayers Fear the IRS–Nina Olson Interview on ABC News
As usual, ABC News missed the mark in their interview of Nina Olson, the National Taxpayer Advocate with the IRS. ABC had the opportunity to speak to the National Taxpayer Advocate about tax problems and chose to air more information about the symptom of tax disease (tax debt) than about the problem itself (IRS compliance). The simple fact remains that most tax problems begin and end with tax compliance issues, like failing to file tax returns, failing to make quarterly estimated tax payments on time, or failing to make payroll tax payments when they are due. The vast majority of people who come to Tax Masters with tax problems have tax compliance issues. They may want to settle their tax debt, and invariably everyone with a tax debt wants to find some way out of their situation, but that settlement is not possible until the taxpayer files all their delinquent tax returns and makes any currently due quarterly or payroll tax payments.
While ABC News focused on the debt issue, they did not include any content from the Nina Olson interview addressing how to regain compliance and the importance of doing so.
At Tax Masters, we have been asking for years, the right questions. This is direct content from Patrick Cox, Tax Masters’ CEO and founder. ”Are you being audited? Have you not filed tax returns for years? Has the IRS come to your home or place of business? The IRS will relentlessly pursue you for unpaid taxes. TaxMasters can get between you and the IRS. We’ll make sure they treat you fairly and treat you with respect.”
ABC News chose to focus on “pennies on the dollar” tax settlements and, in doing so, failed the American taxpayer dramatically. The focus needs to be on compliance. If, after a taxpayer is back in compliance with the IRS and still owes a tax debt, he or she can often afford an IRS payment plan. If the taxpayer cannot afford to pay the IRS, cannot afford a payment plan, and has no assets, there are other collections alternatives like partial payment installment agreements, currently uncollectible status, and the holy grail of tax relief, the offer in compromise.
ABC News failed to focus on the core issue of tax woes. Instead of discussing the issue, tax compiance, they chose to concentrate on the symptom, which is tax debt. Shame on you, ABC. You should have listened.
Transcript of ABC News Interview of Nina Olson
ABC News: Can I trust the IRS to work with me on my tax problem?
Nina Olson, National Taxpayer Advocate: Taxpayers fear the IRS and there’s a reason for that. The IRS is the most powerful creditor in the United States. We have awesome collection powers. And so there’s a basis for that fear. But that fear can be exploited so that taxpayers aren’t even willing or aren’t comfortable doing something that could protect themselves; just picking up the phone and talking to the IRS and walking through the problem, or even reaching out to my organization, the Taxpayer Advocate Service if they’re really having an economic hardship. We can help you and we can get collection activity stopped while we try to solve the problem.
ABC News: Is it possible to settle my IRS debt “pennies on the dollar?”
Nina Olson, National Taxpayer Advocate: Actually it can happen that because of your ability to pay. You know, if you have such reduced ability to pay, you may end up paying what could be pennies on the dollar of what you owe to the IRS. But it’s not an easy thing and you have to show the government, you have to show the IRS, that they are not going to be able to get any more money out of you than pennies on the dollar. And if that’s the truth, then you can settle with the IRS for that amount. But to say that you’d be able to do that routinely is just not true.
ABC News: How does the IRS determine whether I qualify to settle my debt for less than I owe?
Nina Olson, National Taxpayer Advocate: What the IRS does is it looks not only at your income and your expenses, but it looks at all your assets. You know, what is your net equity in assets? And so we’re getting a whole complete financial picture as well as mitigating circumstances like illnesses or job loss. But, you’re really looking at the financial picture and then deciding what is that person’s ability to pay?
ABC News: If I want to hire someone to help me with getting a collection hold, who should it be?
Nina Olson, National Taxpayer Advocate: Someone at the company who is qualified to practice before the IRS. It has to be an attorney, a CPA, or what’s called an Enrolled Agent, someone who’s taken a test to practice before the IRS. That person has to call on your behalf and they have to let the IRS know that they are there, that they have been hired to represent you. And then they can talk to the IRS about getting a collection hold. Now you too, a taxpayer, can call the IRS and ask for a collection hold and, you know until they can work out some collection alternatives like an installment agreement or an offer in compromise. A lot of this the taxpayer can do him or herself. But a lot of taxpayers are frightened of doing that themselves.
ABC News Interview of Nina Olson, National Taxpayer Advocate
ABC News Tax Masters – Taxpayers Fear the IRS – Nina Olson, National Taxpayer Advocate
Tax Masters Patrick Cox on the Tonight Show with Jay Leno
Monday night, April 11, seven days before American taxpayers are required to file a federal tax return or mail in an extension, Tax Masters Patrick Cox appeared on the Tonight Show with Jay Leno in a segment called “Go to the Expert.”
The sketch shows Tonight Show host Jay Leno proposing outlandish deductions taxpayers have tried to take over the years and asking the audience to vote by applause on whether the deduction is allowed, or not allowed. Leno then defers to Patrick Cox, the tax expert, to declare the expense deductible or not and then to explain his reasoning.
The sketch is segmented into two videos below. As always, your comments are welcome. And don’t forget to file your tax return or send in an extension this year by April 18.
The Tax Expert – Part 1
The Tax Expert – Part 2
Deductible or Not Deductible?
Scenario 1
Jay Leno: Man in Slippery Rock, Arkansas has emphysema. His doctor tells him he needs to get more exercise on a regular basis. Guy puts in a big swimming pool in his back yard. Come tax time, he writes off the pool; deducts the cost of the pool, calling it a necessary medica expense. Audience, how many think that is deductible? How many say not deductable? Let’s go to the man. Tax Master, what do you say?
Tax Master – Patrick Cox: That was deductible.
Jay Leno: All right, now why?
Tax Master – Patrick Cox: If it’s doctor’s orders, it’s legit.
Jay Leno: Really?
Tax Master – Patrick Cox: Absolutely. The chemicals, the cleaning, maintenance, everything.
Explanation
Capital expenses incurred for home improvements as a result of prescribed medical care are allowed expenses. From the IRS website:
http://www.irs.gov/publications/p502/ar02.html#en_US_publink1000178902
Medical expenses are the costs of diagnosis, cure, mitigation, treatment, or prevention of disease, and the costs for treatments affecting any part or function of the body. These expenses include payments for legal medical services rendered by physicians, surgeons, dentists, and other medical practitioners. They include the costs of equipment, supplies, and diagnostic devices needed for these purposes.
http://www.irs.gov/publications/p502/ar02.html#en_US_publink1000178851
Medical care expenses must be primarily to alleviate or prevent a physical or mental defect or illness. They do not include expenses that are merely beneficial to general health, such as vitamins or a vacation.
Scenario 2
Jay Leno: The madam of a brothel in Oklahoma, where prostitution is not legal, writes off $50,000 in sex toys, condoms, whips, chains, and everything used by her employees and her clients. She put these on her tax return. audience, how many think that is deductable? Wow, they know the law. How many say not deductable. It’s an illegal activity. Tax Master?
Tax Master – Patrick Cox: Jay, that one is deductable.
Jay Leno: Now wait, now why? She’s performing an illegal service. How can you deduct something like that?
Tax Master – Patrick Cox: As long as you report the income, the IRS can’t turn you over to the police even if your business is illegal.
Jay Leno: So what you’re saying is, they have no morals.
Tax Master – Patrick Cox: You said that, not me.
Jay Leno: Oh. Well. Put the ho in Oklahoma.
Explanation
All income is taxable income. Business-related expenses are allowed by the IRS and are enforced on a national basis. If adult-related items are deductable in Nevada as part of a legal business, they are also deductable in Oklahoma. It is not the job of the IRS to enforce local or state laws, but federal tax laws.
http://www.irs.gov/compliance/enforcement/article/0,,id=112999,00.html
When no other crimes could be pinned to Al Capone, the Internal Revenue Service obtained a conviction for tax evasion. As the astonished Capone left the courthouse he said, “This is preposterous. You can’t tax illegal income!” But the fact is income from whatever source derived (legal or illegal) is taxable income.
About Tax Masters
Houston based Tax Masters has served tens of thousands of clients and had incredible success with helping taxpayers regain compliance with the IRS, settling federal tax debt, defending clients in audit, setting up monthly IRS payment plans, and filing past-due tax returns. The company is publicly traded under the stock symbol TAXS.
About Patrick Cox
Patrick Cox is President, CEO, and Board Director of Tax Masters, Inc. (TAXS), a company dedicated to helping consumers solve their tax problems. Patrick Cox is a tax expert who founded Tax Masters in 2001, which has become one of the most effective IRS tax representation firms in the IRS tax relief industry. Before founding Tax Masters, Patrick Cox served as Vice President of Finance for Kemper Insurance Companies and owned a small CPA firm in Houston, Texas.
January typically marks the beginning of the IRS tax filing season. But after Congress took so long to agree on a tax bill in late 2010, the IRS is running a few weeks behind on being able to accept millions of tax returns. Taxpayers who itemize deductions and file their taxes electronically may have to wait until at least mid-February to file because the IRS was not able to complete programming before January, 2011.
Patrick Cox, TaxMasters’ CEO, was asked to sound off on the tax filing delays during Varney & Company on the Fox Business Network. Click the screen below to see the interview, conducted by guest hosts Charles Payne and Tracy Burns.
The basic issue is that the IRS did not, or could not, anticipate the tax bill Congress would pass and the effect final legislation would have on filing when it was finally signed into law. While some have called the delay in filing and refunds nothing more than a hiccup in the 2011 filing season, Patrick Cox pointed out that even a short delay in filing and receiving refunds “could push some people into the instant refund loan or into the refund anticipation loan, which is in advance of even filing your return. And those do carry very high interest rates. Three or four hundred percent a year is not unheard of.”
Anyone who itemizes instead of taking standard IRS deductions will be affected by this delay. Perhaps those hardest hit will be the taxpayers who depend on their tax refunds to pay off bills or holiday debts. As discussed in the interview, even school teachers are affected by these delays if they itemize their allowed $250 classroom materials deduction.
When asked about the significance of the IRS taking only a few weeks longer this year to issue refunds, Cox replied, ”If you came up to mid-April and you said [to the IRS] I tell you what, I’m going to take an extra two or three weeks to pay you, you’d pay pretty hefty penalties and interest for that privilege. So, it seems like the rules are different for us and for the government.”
About Tax Masters
Houston based Tax Masters has served tens of thousands of clients and had incredible success with settling federal tax debt, defending clients in audit, setting up monthly IRS payment plans, and filing past-due tax returns. The company is publicly traded under the stock symbol TAXS.
