“Tax Day” is finally here!

If you specialize in something other than tax return preparation, then today is just another day for you.

But if a significant portion of your annual income is derived from return preparation, then today is obviously a momentous day.

You’ve endured the long days and even longer weekends. The cranky clients, the slow-payers, the procrastinators.

Today is when everything gets tidied and up with a pretty little bow on top and sent off to our Uncle Sam, for tomorrow we party!

Or, at least that’s the fantasy world that the general public believes we live in.

You and I know that’s not really the case.

You have a pile of extensions. You have bookkeeping to catch up on. And every month we have FTD deadlines and other various filing deadlines, through every month of the year.

Which brings me to my main point for you today: If you’re in private practice or at a small firm, and are looking to absolutely maximize annual revenue, then the best thing you can do is maintain the intensity and productivity of tax preparation season all year round.

If you’ve ever worked at a really large firm, or a specialized, niche type of firm, then you know this is how they operate. Tax prep season is nothing special — it’s a just a minor extra blip in the year.

I know you want to relax, soak up some sun, maybe throw back some margaritas. And a little bit of that is good. But now is not the time to rest on your laurels.

As you probably know already, I spent the past 8 years as a one-trick pony, doing mostly IRS Collections representation. No bookkeeping, very little tax preparation, no Examination representation. Even more, I specialized in a narrow arena of Collections representation: 2290 and 941 liabilities for mom and pop trucking companies in five western states.

I did this work year-round, including for over 3 years at reduced yet steady volume while traveling 100% of the time.

More important than the niche specialization was the fact that I had no seasonal mentality about my business.

There are “riches in niches”, but the year-round consistency was a far more important factor for me having my dream lifestyle and a great tax practice.

So even though “Tax Day” is here, I want to encourage you to keep on truckin’. Be that one person in your local market that keeps charging hard through the spring and summer. Take advantage of the fact that your competitors will be coasting for the next eight months, and crush them.

I’m obviously biased, because doing tax resolution work was my ticket to the good life, but if you choose to, you can simply roll from tax preparation season to tax resolution season, and then later into tax planning season. If you want a 1040-focused practice, this is my Three Season Tax Practice model in operation. Three seasons that just repeat forever and ever.

If tax resolution season is on your mind, then I invite you to attend a 2 CPE hour webinar I’m presenting tomorrow, the 2016 Tax Resolution Update. Not as much changes every year in the Collections world as does in the return preparation side, but there are still changes you should be aware of, and this update class will cover those changes.

Above all else, remember this one key point: Successful people do what unsuccessful people are unwilling to do.

Your unsuccessful colleagues will choose to shift into neutral and coast for the rest of this year. You can choose to keep your engine revved and plow on, and punish your competitors for their complacency.



Ready to add a lucrative new service to your tax practice?

Enroll in our FREE Tax Resolution Essentials course today for sales, marketing, and IRS case work training. This course, a $297 value, is yours at no charge when you take a 2-month FREE trial of the Tax Marketing Digital Pass (yep, that's free, too, a $118 value).

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IRS Releases 2015 Collections Data

Today brings one of my absolute favorite days of the year: The release of the annual IRS Data Book for the preceding fiscal year.

As always, I jump directly to the most precious tidbit in the entire data book: Table 16. If you’re not familiar, this is the table that summarizes IRS Collections enforcement activities for the year.

This year’s table illustrates two key things that are important for you to know from a tax resolution marketing standpoint.

First, the number of open Collections cases continues to increase. FY15 saw a net increase of 961,000 open Collections cases in inventory. As of the end of the fiscal year in September, there were 13.3 million active Collections cases. That means increased tax resolution opportunities for you.

Second, the number of new tax lien filings continues to decrease, a trend we’ve seen continuously for a number of years. In FY15, the IRS filed over 30,000 *fewer* new NTFLs than in FY14. This trend has progressively made tax lien marketing more difficult, in terms of the “low hanging fruit” and decreasing response rates. This means that, while tax lien marketing is getting progressively more difficult every year, you should be getting higher quality clients from the tax lien marketing you are doing. Be more selective, as the IRS obviously is when it comes to filing the liens. Also, you really should be shifting more of your marketing budget to digital marketing.

It should also be noted that levy activity dropped by about a quarter, despite the fact that monies collected actually went up by about $1.3 billion.

Another thing that’s obvious from this year’s report is that the IRS crackdown on unfiled returns is paying off. FY15 ended with almost half a million fewer open delinquent return investigations than in ’14, and the number of new investigations was also substantially lower. I think this tells us that the IRS is relying more on computerized data matching to help close out delinquent return investigations, and those systems are working.

The Offer in Compromise program never has been and never will be your primary tax resolution tool, but practitioners are inevitably curious about it, so I’ll make a brief mention about it here. The number of offers received and accepted didn’t really change (it hardly ever does year to year). However, the amount of revenue collected by the government through the OIC program went up about 14%.

If you’re a curious goose like I am, you can read through the data book here.

With the number of open Collections cases going up and up and up, it makes more and more sense for you to add tax resolution to your practice if you haven’t already. To get a leg up on the business and marketing aspects of this lucrative service, check out the A to Z Tax Resolution Business Blueprint.



Ready to add a lucrative new service to your tax practice?

Enroll in our FREE Tax Resolution Essentials course today for sales, marketing, and IRS case work training. This course, a $297 value, is yours at no charge when you take a 2-month FREE trial of the Tax Marketing Digital Pass (yep, that's free, too, a $118 value).

Click here to learn more.

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Reality Check: Yes, making money *is* hard…

Every once in a while, we all need a reality check.

This morning, I awoke to the following email from a reader:

I have concern with your program. It appears that I have to send several mailing to a lot of people to get one order. What is the average cost to obtain one order, because making money is never easy.

No, making money is NOT easy. That’s why half of all small businesses fail within the first five years. It’s also the reason why the majority of tax professionals never make more than just a middle class income.

Growing a business requires investing either time, money, or both.

In tax preparation, if you’re not willing to spend the equivalent of a client’s entire first year tax prep fee to acquire the client, you’re never going to grow very fast. This is a pretty well established industry statistic: The value of a tax prep client is 1x annual client spend. This can be seen not only in the sale value of a tax prep office, but also the franchise data for the big three tax store franchisees.

Last year, after moving to a brand new city and hanging out my tax prep shingle for the first time, I spent an average of $85 to bring in each new tax prep client, with an average 3.5x ROI. My average would have been a LOT higher if I had actually spent my entire marketing budget and continued the seasonal slog, but I effectively shut down April 4.

I know that somewhere somebody just said, “Hogwash! I grow my business every year from referrals only!”

That’s awesome, but it’s not free. Building a referral-heavy professional services practice requires a tremendous amount of time. Time spent networking, attending events (which usually have at least a small monetary cost), talking to people, engaging on social media, etc. Since your time is worth money, this activity is NOT free.

Next time you think your referrals are free, add up the time you spent nurturing your clients to produce referrals, and the time committing to nurturing referrals into clients. Then multiply that time by your hourly rate. How much does it cost you to generate a referral client now?

Now, the reader that emailed me was talking about tax resolution. I’ve covered the cost of client acquisition on this blog extensively in the past, including here and here. Those posts are several years old, but the math still holds.

In tax resolution, you should be prepared to invest between $75 and $1,500 in order to acquire a client. When somebody is going to pay you an average fee of $3,500 to $5,000, why the hell would you NOT be willing to invest this kind of money to grow your practice? If you’re not willing to do that, then you simply won’t be competitive in this particular service offering, and you’re better off not making it a cornerstone of your tax firm.

To answer the inevitable question, the high end of that $75-$1500 range comes from paying sales commissions to “closers” (typically 20%-30%). While the solicitation of IRS representation services by an unlicensed person is a violation of Treasury regulations, it’s sadly not enforced (RPO and CID have bigger fish to fry). Thus, this is how the big, boiler room tax resolution companies operate, and this is literally what they pay to acquire a client.

The complete opposite end of the spectrum is based on a purely online marketing system. In between you have direct mail and alternate telemarketing strategies.

When I first sauntered off into private practice, I had zero clients and not a whole lot of money. That first week in November 2010 was rough. I immediately set aside what little money I did have (well under $10,000, which also had to cover my living expenses) to pay for Google Adwords ads and direct mail sequences to tax liens, and I also spent the vast majority of each day on the phone, doing my own telemarketing. At $175/hr, I was the most expensive telemarketer I could hire, but without the capital, I had to do it myself. It took several weeks to get that first client in the door, and it was only a $450 “quick fix” situation, but I took it anyway because I wanted to churn that cash right back into marketing.

I did this for several months, until about mid-January 2011 when I had enough cash flow to stop doing my own telemarketing and could switch to more time efficient (but capital-intensive) marketing tactics. This is simply how you grow a business without investor or debt financing.

By August 2011, I was at $35,000 per month in revenue with a few staff members and I was working from Japan.

Everybody obviously wants to jump to the “$35k per month from Japan” part, without doing the work to get there. Sorry folks, but it just doesn’t work that way. I can help you drastically shortcut the process with a tax resolution business model and systems, but YOU still have to do the work and, yes, invest some money.

H&R Block says that it will cost, at the low end, $31,505 to open a new franchise location — before the first tax prep client ever walks in the door. For tax resolution, if you have a mere few thousand dollars and a telephone, you can get started on the path to a very successful lifestyle business. If you don’t have the money to start a business, then you shouldn’t be starting a business — you should be looking for a JOB. Never forget that when I went bankrupt in the real estate crash, lost everything, and was literally homeless, I went out and got a $9/hr job at Jackson Hewitt, and continued moonlighting there in the evenings even after I got the $10/hr job as an admin assistant at a small tax resolution firm.

This is the harsh reality of growing a business of any sort, and I never sugar coat that fact. Any “guru” that DOES sugar coat this fact is a huckster, and you should run away quickly. If this isn’t something that you can swallow, then you simply need to accept the fact that your business will either grow incredibly slowly, or actually shrink if you don’t even do enough marketing to maintain relationships with existing clients.

And if none of this resonates…at all…in any way…then you should be an employee, not an owner.



Ready to add a lucrative new service to your tax practice?

Enroll in our FREE Tax Resolution Essentials course today for sales, marketing, and IRS case work training. This course, a $297 value, is yours at no charge when you take a 2-month FREE trial of the Tax Marketing Digital Pass (yep, that's free, too, a $118 value).

Click here to learn more.

Read More