In this week's episode, Travis is interviewed by Jake Kelley from the "Build with BBB Podcast" produced by the BBB Serving Central Oklahoma and they discuss Tax Pitfalls and Cautionary Tales.
In this week's episode, Travis is interviewed by Jake Kelley from the "Build with BBB Podcast" produced by the BBB Serving Central Oklahoma and they discuss Tax Pitfalls and Cautionary Tales.
Jake: Hello, and welcome again to the “Build with BBB Podcast.”. I'm Jake Kelly, the Video Production and Communications Coordinator here at Better Business Bureau Serving Central Oklahoma. And we are here again with Travis Watkins, talking more about taxes. Last episode, we got a little bit into the nuts and bolts and some of the more straightforward information. But Travis, I know that you are passionate about this, and you care for people. And there's a human side to all of this, for sure. So, talk to me a little bit about some, if there's some, some anecdotes or personal stories or anything that you've experienced while running your business that have really meant something to you.
Travis: Sure. Well, first of all, I'd like to thank you all for doing these informative things. It shows that the BBB cares about businesses and this is such a big part of every business. It really shows that you all have business owners at heart here, and I really appreciate that. And, and love to be a part of something that also helps out the business community in that manner. But yeah, tax issues; especially when you get in trouble with the IRS or you're facing trouble with the IRS is such an emotional thing. We talked rather, we tried to stay away from too much sterile tax stuff in the first episode, but this should kind of bring things full circle. I think for people, because we see this every day it, it starts off as usually starts off with, with some hiccup in, usually in payroll taxes for businesses. That is kind of the big one. And it spirals quickly out of control. I should say that payroll tax with the IRS is kind of its crown jewel of everything that it does. Yeah. And you know, if you have employees, if you want to be sustainable, you've got to have the people and you've got to pay them and you've also, unfortunately got to pay the IRS. And when you don't, it becomes their top priority among revenue officers and the enforcement arm of the IRS, even though they're running sometimes, especially recently on, on lower staffs and things like that. It's still their top priority as it relates to enforcement things. So, with that backdrop, I've got a couple of stories and I'll keep 'em brief. But the first one is very illustrative of how things work, how things kind of go down on a payroll case. And this particular business was a consulting business. That was failing. They were not doing well. They were, I always say, robbing “Peter to pay Paul.” They were paying their employees. They were trying to make payroll, but they weren't necessarily making the payroll tax payments along the way. When that happens, the IRS usually sends out a revenue officer, a bulldog. And they did in this case as well. And their first order of business is to assess a what's called the “Trust Fund Recovery Penalty” from a business owner. And what that is, we talked last episode about kind of what's the employer's portion, what's the employee's portion when you're not withholding the employees portion. They take that very seriously and they saddle the business owner with that part. So if the business were to, you know, get hit by a comet or something, if it burned to the ground, they want to still be able to have that portion of what the employer should have been paying and should have been withholding. They still want that, and they're going to get it from the employer individually by this Trust Fund Recovery Penalty. So that's the backdrop of what was going on there. The business ultimately closed. It did not stay sustainable. The IRS went after the business owner. The good news is that we have all these weapons at our disposal. When it's just a viable business, that's still going you're, probably going to be looking at trying to get into a payment plan with the IRS, and they just were not sustainable. So there was no payment plan to be had. What we could do though, is help the employer out in that circumstance to settle his debt, which we did. This was a $400,000 debt. We settled it for a hundred bucks.
Jake: And reiterate the difference, that was $400,000. And they settled for $100. Not only is that such a huge difference in cost, what that meant to that business owner who had lost their business. So already there is a loss there.
Travis: Insult to injury.
Jake: Yeah. So I mean, I can't imagine the relief.
Travis: Yeah. It's a life changer. It gives you an opportunity to get back in the game again, to get them off your throat, so to speak. It was a life changing experience for sure.
Jake: I mean, in a lot of cases that is the difference between being able to move on from a life of despair almost, you know, because that is so much money to somebody who just lost a business.
Travis: Right. And there's no credit repercussions necessarily for many of that. You don't get saddled with what’s not taxable what they've forgiven. And that's another question a lot of people have. It’s just a straight up, you know, what gets forgiven, and you get to move on and start over.
Jake: That's incredible.
Travis: So that's our illustration for payroll tax laws, because as I've mentioned in previous podcasts, that's the big one to look out for. The next one is informal and formal audits. And this happens a lot more than you might think. We're all kind of familiar from the formal audit, you know, where an agent comes out and starts asking for this and that. The greater majority of these are informal. They just send you some correspondence and that starts the clock going as well. I've got a story here that I will try to keep brief and it can get a little bit heavy, but we'll try to keep it on the optimistic side. But I have a story where there was an accidental business owner years and years ago who was a blue collar worker that worked in steel mills. He was a W2 employee. He managed to scrounge up a nest egg there and use that to buy some rental properties. So he became, you know, from steelworker to landlord. And as we've talked about, there's so many taxes, so much compliance, all these things that he didn't know about when he started off into this thing. It was just to collect rent, fix toilets, sinks, you know, if somebody's moving out, let's get somebody else in. All those things that you've have to worry about and when he was hit with an audit, and that's a scary thing. It's like a cop pulling up behind you, you know, even if you haven't done anything wrong. It still sends that trigger up your spine. You know, “what have I done?” And in this case, before everything got really kicked off and going, he panicked and ended up going to the bank and withdrawing all the money in the bank. I guess in his mind, he was better off or his family was better off with him gone than him facing a major audit and he ended his life unfortunately. That story, you know, is tragic. It's an extreme story. It's also the story of my grandfather, Ed. And you know, I wasn't born yet when any of those things happened. But I have to think…Had I been around during that time. This type of help was not really available back then. And it's just somebody to be there because it's such an emotional thing. It's such a devastating thing to just be able to say, you know, it's going to be okay! We just have to get the documents together and you haven't probably done anything wrong. It's just a matter of sorting this out and coming up with a deal with the IRS.
Jake: Well first of all, that's an incredibly tragic story. Yeah. You know, the grief from that can travel through generations, for sure. And that's a real thing. But especially for somebody who is an accidental business owner, like you said, who may not know what they're doing wrong. And then somebody comes after them. It’s devastating.
Travis: Yeah. For sure.
Jake: And you're right. And even if it's not this tragic of a situation, if it's something where the previous story, if somebody loses that much money and they don't have somebody to help them through it, that still can tragically affect somebody's life. Even if it's not as bad as, as this particular story.
Travis: Yeah, one hundred percent. I found out about this after I had already kind of started off into tax resolution and it verified for me that I'm doing what I need to be doing. Because like you said, generational despair, depression, those types of things are very real deals. And I bring that to the fight with the IRS every day. One of the things I wanted to mention too, I mean, on the emotional level, I would say 99% of our clients, the prospects that come in to talk to us, they share one thing in common and that's sleeplessness. They have a really hard time going to sleep at night because it's weighing on you. And you may be going through it without telling anybody. A lot of us men, you know, don't like to open up and share about that kind of stuff. Especially if you feel like you've done something wrong or you're dumb, you know? Yeah. I mean, come on. The tax code changes once a day. It has for the last decade. The IRS doesn't even know what's in there most of the time, so it's not your fault.
Jake: Yeah. And you know, that sleeplessness and that stress, that's not something that ends when you clock out. No. You know that stays with you all day.
Travis: It has a cumulative effect.
Jake: Yeah, for sure. So first of all, thank you for sharing that story and really both of these stories, but I think it really gives you know, it gives a human element, it humanizes all this and in everything that you do in a field that I think is often seen as having a lack of that. So, I really appreciate you sharing that story with us and in our audience and in your audience. And yeah, that's incredible.
Travis: Yeah. Well, I'm just blessed to be able to be in a place where we can help people on such an emotional level.
Jake: Yeah. And you know, there's, there's no easy way to come off of a story that is that heavy. You ending a podcast, it's going be abrupt either way.
Travis: I think there's a glimmer of hope here. Absolutely. I mean, there's definitely some hope here. These are different times. There are professionals like myself that can help now, you know? And there's more information out there for one thing. But you know, I think the thing that is most hopeful is knowing that there are people, there are professionals that are out there. If it's not me, find one. Because you've got to for the good of yourself and your family. It's affecting them, whether you enunciated or not. And taking responsibility for it, we got a lot of people, like a lot of guys that come in and their wife to be won't marry them until they get the thing fixed. And there's no better deal in the world than, we had one just this week where a guy, he had a six figure tax problem and his wife to be thought she was going to get saddled with that. We fixed it up. She's pleased. And you know, when mom is happy, everybody's happy.
Jake: Well, Travis, again, thank you so much. And if you don't mind, if anybody would like to hear more, or if anybody is having some issues if you could give them a shout out of how they might be able to get in touch with you?
Travis: You bet call 8-4-4-9-5-8-1-1-7-8. You can also get information on our website, which is www.traviswatkins.com. We also have our own podcast as well, Solve your IRS problem with “Travis Watkins.” And there's lots of little bite size things that you can take in on your way to work. Like you said and educate yourself and put your best foot forward on getting something solved.
Jake: Well, thank you again for coming and speaking with us and sharing those stories. We do have one more episode that you all can catch. We're going to go over some new tax law elements. So be sure to follow us and listen to that episode. And until then, thank you, Travis, for stopping by.
Travis: Thanks, Jake.