these are motivated clients.
by michael rozbruch, cpa
the irs audit notice checklist
what if the irs actually published a list of all the names and addresses of the 13.2 million individuals and businesses that have been identified by the irs that owe back taxes? for those of us who offer irs representation services, we’d all be millionaires! it would be the “mother” of all lists as we would have a built-in lead generation source.
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needless to say, a list such as this would be invaluable to a practitioner starting (or wanting to expand) a tax resolution business. unfortunately, the irs doesn’t publish such a list. however, the next best thing does exist!
it’s called the notice of federal tax lien list. the irs issues a notice of federal tax lien when the taxpayer has ignored all previous attempts by the irs to collect the debt. the lien puts other creditors on notice that the irs has first “dibs” on the taxpayer’s property.
when the irs issues a notice of federal tax lien (nftl) against an individual (1040) taxpayer, that information is public record. the irs files these liens at the over 3,300 county recorder offices throughout the u.s. so for example if a business (corporation) has unpaid 941 payroll taxes, and the irs files an nftl against that business, the lien is also filed with the state’s secretary of state where the business was incorporated.
each county across the u.s. is different, as some will publish this info daily, others once a month. los angeles county for example, where i reside, has the largest county population in the country with over 10.2 million people. the la county recorder’s office publishes nftls on a daily basis. some counties publish their nftl data online; others you’ll have to physically walk into the county recorder’s office and copy down the information.
however, there are several list brokers and data compilers (data compilers actually own the information they compile) that “sell” this information including the taxpayer’s name, address, the amount of the lien and the type of tax owed. you can even append phone numbers and email addresses for an extra fee. you can pick up a “fresh” list of 1,000 names for around $250.
in 2018 (the latest period for which irs stats are public) the irs issued over 410,220 nftls. that’s down from the high of 1,042,000 nftls issued in 2010. however, it is highly anticipated that the number is on the rise again after a near decade of receding. the new commissioner of the irs, charles “chuck” rettig, has employed a $286 million “enforcement fund” increase in irs’s budget, the first such budget increase in nearly 10 years. this money is going toward hiring more collectors – known as revenue officers – and for technology. rettig has been giving keynote presentations to tax practitioners all over the country and the theme running throughout his speeches is the irs is back and back with a vengeance, specifically going after taxpayers who are considered “non-filers” and/or who owe the irs money for back taxes
taxpayers who have liens filed against them are extremely motivated to take care of the problem. an nftl can prevent you from buying a car or home, obtaining a loan of any kind, gaining employment or renting an apartment – and can even cause the loss of your job if you have a governmental security clearance or a series 7 or 63 license if you are a financial advisor.
let’s get back to marketing to a list of taxpayers we already know have a huge irs problem. i recommend mailing to people who have a lien in the amount of at least $10,000. for about $1.02 per name, which includes the cost of the list, a personalized merged letter, #10 windowless envelope and first-class postage, you can embark on a marketing campaign to people who have federal notices of tax liens filed against them.
i recommend mailing 1,000 names a minimum of three times over a 90-day period (you can mail them only once, but you will have very low response rates), and you can expect a 0.5% to 2% response rate. this means that you should receive five to 20 inbound calls. because this group is highly motivated to resolve the issue, you should be able to close at least 50 percent of the callers, netting you two to 10 new clients from this campaign. the campaign will cost you $2,560 (3,000 x $1.02 less $500), as you only have to pay for the list once. the minimum average case size is $5,000. therefore, this campaign should generate $10,000 to $50,000. that would equate to a 3.9:1 to 19.5:1 return on investment. not bad!
of course, you need specific back-office systems in place to achieve these results. you need a system for answering the phone with respect on how to “qualify” the prospect. you need a process for not only scheduling the appointment, but to ensure they actually show up. you’ll need a script or system on how to close the deal and get retained. you’ll need a system for what fees to charge and how to collect these fees in advance, before the case is settled.
some of the programs offered by the irs that resolve tax resolution clients’ tax liability problems include an offer in compromise, direct debt installment agreement, partial pay installment agreement, penalty abatement, currently not collectible and an innocent spouse request. you can also, if the taxpayer qualifies, request a lien withdrawal, lien release, lien subordination or lien discharge.
marketing to a notice of federal tax lien list should be part of every tax resolution practitioner’s marketing arsenal.