CPAacademy.org Check-In | Episode 10: Larry Lawler

Beryl

Larry. Welcome to this episode of the CPAacademy Check-In. We're so happy to have you here today.

Larry

Oh, thank you. Thank you. Happy to be here.

Beryl

Before we get started and get to know you and what you're doing at ASTPS a little bit better, I'm going to go ahead and tell our audience about you. Larry Lawler has worked and consulted on literally thousands of IRS tax resolution cases in his career. He's a frequent public speaker, a writer on professional topics, and a regular trainer of tax professionals nationwide. He's been a New York CPA since 1973 and is the managing partner of Lawler and Witkowski CPAs PC, the firm he established in 1973. So with that out of the way, why don't we just dive in with a basic question, which is what first interested you in tax representation work?

Larry

Well, you know what? While you're here, just so you understand, I probably am closely akin also to a lot of your listeners because I know you have a lot of EA's who listen as well. And I've also been an EA since 1973 because back in those days, we had to wait forever to find out if we passed the CPA exam or not. So I became an EA as well. I like to wear both hats.

Beryl

Excellent.

Larry

Your first question was what got us interested in it?

Beryl

What got you interested in doing tax representation work?

Larry

Truthfully, it was finding out more or less by accident that were pretty good at working things out with the IRS in our firm. We would get a client referred to us who someone else had been unsuccessful with. We ended up getting the case resolved and so on, and we said there might really be something to this. Started doing a little research to see if we could figure out how to learn it better and become smarter in the area of resolution. Well, the problem was there was nowhere to go. Everywhere we looked, we couldn't find any real training on tax problem resolution. We met a couple of other practitioners who were pretty good at it and doing the work, but not many. So we said, well, that sounds to me like there's a gap in the marketplace, if you will. Why don't we try and fill it?

And so we started learning everything we possibly could, studying the code, studying the Internal Revenue Manual, any professional papers we could find, and got to the point where, okay, we kind of understand this. Let's see if anybody's interested in a seminar. And lo and behold, as I was ready to run my first seminar, almost there, I saw an ad in a professional journal for a seminar on tax problem resolution. And I said, oh, gee, somebody else is going to do that. I went to that seminar, found out that the speakers, truthfully were like five years behind in what they were talking about. Almost everything had changed from what they were saying. And the fellow running the seminar came up to me and he said, how come all my people are gathering around you at breaks? I said, Well, I'm trying to ask a question to gently steer your speaker to the right thing, because he's talking about the old way, the way it used to be.

And he says, well, do you think you could do it better? The next year I was his main speaker. A year later than that, he had me take over the company as far as all of the seminars and things like that go, until things happened in such a way that I just decided to part on my own for various reasons that aren't important, but decided, okay. I've learned a lot of this stuff and I like teaching it. I used to actually teach in college part time, and I always liked that. So it was kind of fun in doing it. And I like the idea of the success in resolving a problem. Accounting and tax work, it goes on year after year. You do a lot of the same thing, but in this you can resolve a problem. It's over and done, and it's gone. And I kind of like that aspect of it too.

So the success in resolving a taxpayer issue and seeing how gratifying it was to the individual with a tax problem who might have been wrestling with it for years, and all of a sudden we can get them completely free of the problem, all under control, end their sleepless nights and all that thing. So besides the fact that you can make very significant fees doing it, and that certainly is part of it's also a case of we just enjoyed the work and the results and the feeling you got from dealing with people about it.

Beryl

I love that. It's the mix of chasing that passion and what you love and seeing an opportunity in the marketplace, which is great. Now, you mentioned doing a little bit of teaching, and you really have become kind of this mentor in marketplace. What do you enjoy the most about mentoring others and doing tax resolution work?

Larry

Well, there's always been this thing of it's fun to share what you know with other people, certainly. And I've got to confess to being somewhat addicted to that. I truly do enjoy sharing what I know, but I also found that over the years that the best way to learn anything is to teach it. If you've got to teach something, you make sure that you have a firm grasp and understanding of it. So to me, it was also a tool for me to become more competent by getting myself into a position where I had to teach it to someone else. So that's probably the thing I like most about it, is what it does to make me get better at what I'm doing and of course, enjoy that fun of teaching others and working with others that way. And in the years, over the years, I had some great students in college that really got into the work, made it a lot of fun to do it.

So I just got to say, I plain enjoyed it. My wife says I'm probably a tax nerd.

Beryl

Hey, that's really special. I really love that. And as a former teacher myself, I appreciate all those words that you just shared. So, shifting gears a little bit, when you find that clients or potential clients are looking to work with CPAs to resolve their tax issues, what are you finding that they need? Or in other words, how many CPAs are going to have a magic wand to just resolve these tax issues? What are clients looking for?

Larry

Oh, that's a simple answer. Zero. There are no magic wands. I always liken it to skinny powder that little shaker you would have on the table next to the salt and pepper, and you can sprinkle some on your food and eat anything you want without gaining weight. Well, magic wands and skinny pepper, neither one of those exists. So the truth of the matter is that CPA and anyone who wants to do resolution work, EA's attorneys, they've got to learn the work. And it's funny because there's such a small percentage of them that want to jump into doing work that involves taking on someone else's tax problem and dealing with the IRS, which many professionals, despite the fact that they're very good professionals are somewhat reluctant to take on the biggest collection agency in the world, if you will. You find a small percentage of them are willing to do that to begin with.

And I think the nature of CPAs EA's are that they prevent problems from happening. They work on keeping the client from getting into trouble. Well, very often we deal with a client who's already got themselves into trouble, and what we're trying to do is resolve that problem. So it's a little bit of a different approach. And we find that there may be 40,000 EA's out there, for example, but there's only 10% of those who really want to do representation work, and that's growing. We find that the number of licensed professionals who want to grow or want to do resolution work is growing. And it has been so that's kind of a good thing, especially for the taxpayers, because they need that assistance, and we can do a lot better job for them than the taxpayers can get done on their own, usually.

Beryl

So no magic wands. 

Larry

I wish I could say there was one and I had it, but hey, that's okay.

Beryl

But for those that are really interested and invested in doing this work, can you explain the significance of IRS transcripts in the resolution process and how practitioners can effectively analyze them?

Larry

Without a doubt. First of all, to understand what they are, probably the best concept I can give you. Is it's kind of like discovery in a court case? If you're going into a court case that you're the attorney representing a taxpayer. By the way, a little aside on that. This area of practice is a little more like being an attorney than it is like being a CPA or an enrolled agent because you become the advocate for your client. So instead of taking that off that independent CPA hat and putting on your advocate hat, you got to be willing to do that if you're going to get into this area of practice. But the whole idea of getting transcripts is it's kind of like the attorney in a court case who gets to do discovery. He gets to see what the other side is planning on presenting, if you will.

So this is where the IRS is on the other side, and we're always on the side with the taxpayer. So we get to pull transcripts from the IRS and read them to see what they have on record about this taxpayer. And it's often very revealing. So there is a proper procedure for doing it. The best way to do it these days is electronically, where you file a power of attorney electronically using iDMe. If you send them in by mail, you can still do that, but if you send them in by mail, or if you send them in by fax, they take a whole lot longer to get processed and posted. But you can do that. But those transcripts give us a lot of information about the taxpayers history and the actions that the IRS has already taken. So we know where we stand a whole lot better.

And the best way to do it is to do it online. Like I said, using an iDMe account is the newest way to do it. And you can get things posted now, usually in less than two weeks. So it's working fairly well. They're getting it running better and better every day. It seems great, but it's really an information tool that helps you represent your client and know what he might need.

Beryl

Right. So alongside of that, I am guessing there are some common challenges that practitioners may face when obtaining that authority to access those transcripts. Can you share in your experience what some of those challenges might be?

Larry

Well, some of the challenges are, first of all, they've got to learn how to understand the nature of a power of attorney so that they can properly explain that to their client. Because sometimes when you say to a client, I need you to sign a power of attorney, they're a little reluctant. Let's face it, with all the scam things going on in the world these days, the minute you say to somebody, I want you to sign a power of attorney, they're kind of going to back up a little bit and say, oh boy, I'm not so sure I want to do something like that. So I always explain it to them that, look, the only thing this power of attorney does is it's actually giving the IRS permission to talk to someone you designate about your taxes. That's the right way to explain it to them because that's what it really does.

So one of the challenges is having people really understand what you're asking them to sign and then getting it posted. You do the electronic method, so that's not really much of a challenge once you set it up. Although I've heard from practitioners that setting up their iDMe account the first time through until they got it in place maybe was a bit of a challenge, but I think it's smoothed out quite a bit right now. So I think that most practitioners could set that up without a big issue. But the whole idea is getting the taxpayer to understand what it is you're going to do for them and why you need things like a power of attorney, which allows you then to go pull transcripts. I mean, let's face it, once we get that power of attorney, if we have E-services, we sign up for that as well, which is another thing that's a challenge in a sense.

Sign up for E-services so that you can go right into the IRS computer system and pull transcripts and get them much more readily. I mean, in years it passed. We used to wait two, three weeks to get transcripts delivered once the power was posted. Now once we get the power posted, we can go in and pull transcripts ourselves right away, right off the IRS website. So it's one of those things you go through some of those initial challenges like explaining the power of attorney and getting it posted through electronically, then getting Eservices set up so that you can pull transcripts. There are some of your basic challenges, but they're not really a big issue.

Beryl

Super and I know you have a product for our CPAacademy members that makes that process a little bit easier as well. So we will be sure to share that with this episode. You also have a popular webinar on CPAacademy all about understanding Schedule C audits. That's one that ASTPS offers to our members. And so with the IRS placing renewed emphasis on audits, can you share some key procedures that practitioners need to be aware of when preparing for an audit.

Larry

Oh, yeah. First of all, you want to make sure that your clients are remaining compliant in the period of time when they're going to be under audit. Sometimes people think, oh, I'm being audited and I'm not going to do anything until I find out the results of the audit. Well, that's not necessarily a good idea. You want your taxpayers to remain compliant at all times. But what's really important is for the practitioner who's representing a taxpayer to be fully aware of taxpayer rights and they have a right to fair and impartial treatment by the IRS, to rights to hearings, to be able to state their case and maybe correct IRS errors, things of that nature. In fact, as you mentioned that I'm about to launch somewhere down the road a two day seminar, two days long, all on IRS audit, having to do with field audit, office audit, correspondence audit techniques, auditor skills, employment tax audits, employee retention, credit audits.

There's just all kinds of audits coming down the road from the IRS right now. So it is an area where all the practitioners are going to be running into more activity. And that's why I'm kind of glad to see people entering this area of profession because the need is going to be there and there's not going to be enough practitioners to meet it, I don't think, even with the growth in that area. But the things that the IRS is doing right now is they are focusing on audits very heavily and they're going to look to create compliance and let's dispel one thing that is a common knowledge type thing. Nobody under $400,000 is going to be audited. I hear that commonly. And we're not going to audit any more people under $400,000 than we ever did historically. Is the way they finished that sentence from the IRS.

Well, when they say the way we did historically, that means they're going back as far as 2008. And that means that the number of audits going on today could increase by tenfold without auditing any more than they have done historically of all the people under $400,000. And if you think that the IRS having all of these new employees is going to have all those thousands of employees auditing only people over 400,000, there aren't that many people over 400,000. They've got to be auditing regular old everyday taxpayers who are making a lot less than $400,000. However, they won't go beyond the historical levels that they used to do years ago. So it's got to be very careful how the IRS has worded that very carefully. They say they won't be auditing any more people under 400,000 than they have in historical levels. So when you realize it and you understand it that way, you realize that's why they need all those auditors, because they're trying to get back up to those much higher levels.

Beryl

Interesting. So they're going to need more people to enter this field, without a doubt. And you are here to fill that need, in a sense. So can you tell us a little bit more about the founding of ASTPS and the driving force behind its establishment.

Larry

The driving force was truthfully, very selfish in the beginning, as I mentioned a little earlier, that we needed to learn how to represent. We found out that were pretty good at doing it, but we didn't nearly know enough. So we knew that we needed to learn a great deal about it. Well, the more we learned and the better we became at it, the more we also became aware of the fact that other practitioners didn't know enough about it and would have had to go through all of the same things that we did to learn it. Which was somewhat painful, to be honest with you. Reading a lot of code, reading a lot of the IRS manual, reading court cases and things of that nature, tax court memorandum decisions and summary decisions, all the various sources of information till we started getting a good picture and a good handle on things.

And so we did it basically to make our firm better at doing representation work, but in the process discovered the fact that a lot of other people would suffer trying to get through that learning curve as well. So we said, seeing as there's nowhere else to go to do it, that is a premier place to go and learn how to do resolution work. We saw the gap or the need in the market and so we decided to fill it. And partly because of my own love for the teaching and my years and somewhat years of college teaching where I enjoyed it so much and still do today. So it's what keeps us going, I guess, too.

Beryl

So you're saving these practitioners time and giving them what they need to be able to do this work effectively.

Larry

With our flagship program, which is what we call the accelerator, it takes place over a four week period, but there's 5 hours that is done virtually to begin with, all virtual. Then there's a three day event that is hybrid so they can come either virtual or in person live. And then there's five hour after the three day one. The next week there's 5 hours virtual and another 5 hours after that week. So there's four different times we get together with them and we give them opportunities to be involved, whether they're doing it virtually or in person or whatever else. But with our flagship program, we've designed it in such a way that a practitioner can be prepared within a month to start doing tax problem resolution and be a qualified professional. Sure, they still need to get experience and things like that and they're still going to have questions, but we're also here to help them with that.

So that's why we do consulting with our members all the time. I probably do, on average, myself and my partner and a couple of other people in the firm do a couple of consulting calls per day with our members just to help out people who are getting started. So we do a lot of that, and we think that it's good for the industry. It's good for all of us. The better the representatives are, the better we all look, right?

Beryl

Of course. And we here at CPAaademy, all of us appreciate the work that you all are doing and the content that you're bringing through your webinars. Several of the team members at ASTPS have done webinars on CPAacademy. We're going to make sure with this episode that those upcoming webinars are shared. You do have a product for our members that will also make their job easier. And I appreciate you giving your time today for this interview. Is there anything else that you'd like to share about the work you're doing or ASTPS before, we wrap things up today?

Larry

Well, first of all, I'd just like to say thank you for helping to spread the word a little bit about ASTPS. We certainly do appreciate that because we're a nonprofit professional association, so we don't spend a whole lot of money on marketing things and stuff like that. So having the industry become aware of us and make our industry a better industry and earn the respect that it deserves, I appreciate any opportunity to do that. So I'm more than delighted to spend the time with you and then enjoy the conversation with you.

Beryl

Great.

Speaker

Thanks so much, Larry.

Larry

Nice to see you today.