Profit Strategies and Tax Mastery with Morgan Anderson and Ademola Odewade | Diary of a CFO

Okay, thanks. I just appreciate you being there for me. I've had clients like that who have sat there for years not taking action. But they know I'm there. As soon as something happens with the tax agencies, I'm on the ball. And they know they'll need to get moving. Not saying that this is how you want to live your life. I'm telling you folks, don't do that if you can help it. Because once you start getting caught up with missing filings or missing annual reports, the penalties and interest will bury you. So, yeah, be proactive. You know, the cost of compliance is always way, way less than the cost of non-compliance. Absolutely. In the U.S. right now, let's just take income tax for all of the citizens here who have to file annually. If you file a tax return with a balance due, you can get penalized up to 25% of the unpaid tax for various types of penalties. And that is all then compounded on an annual basis at 7%. So if somebody has a tax debt going back five years, you know, do the math. It could start at $10,000, but by the time five years has gone by, that $10,000 has turned into $22,000. That is extreme. Eauseating. Are you able to share a case, you know, wherein a client came in feeling hopeless, but walked out, transformed? Oh my gosh. It's almost every single client, honestly. Because when somebody comes to us, they have this oppressive tax situation. And what is oppressive to one person is a different figure than what somebody else will feel that burden with. I have individuals who reach out to me and say, oh, my gosh, I owe all this money to the IRS here in the U.S. And I can't sleep at night. I need help. And I say OK well let talk about how much money do you owe And they say oh it so much I owe the IRS And that somebody that I will say first and foremost you don need me You shouldn pay somebody to get involved with that because that is an amount that you can handle yourself. They're not going to threaten tax liens. They're not going to threaten bank account garnishments or asset seizure. You can handle it yourself here's how you do it it's just a drop in the pond yeah but to some people that's a lot of money right yeah you know that's uh like what we call materiality in accounting you know what is material to me might not be material to you you know yeah on the other hand i had i had a conglomeration of family-owned llcs that owed over 30 million dollars in unpaid payroll tax and half the time i couldn't get them on the phone because they didn't worry about it to me if i owed 30 million dollars i would be getting ready to meet my maker because i don't think i could deal with that there's always a solution but yeah to some people it just their their point of of breaking is is highly varied so yeah you know we all have like different uh what i say boiling points, different breaking points. It's just like physics. You know, we are made of different materials. Some people made of aluminum, some people copper, some people iron. You just need to discover who we really are. And, you know, everybody have their sweet animals, you know, just like yourself and myself, you know, I'm a lion, you're a lioness. I'm a lion. Absolutely. But I know some people who are fish just flopping around, you know. You know, fish. I remember growing up, if my mom wants to make an expression about a person's foolishness, she would say, that person has got a fish brain. My grandmother used to say something similar about bird brains. Whoa. Yeah. You know, fish brains. Can you just imagine? You know but let talk about your expert moves you know and knowing what to do so that you don get to panic Because there something I know about making tough decisions If you get into a panic mode, you will nine times out of 10 make a wrong move. Right. So when should someone consider handling tax debt by themselves versus hiring a specialist like yourself? You know, there are varying degrees, and I'm sure with different tax agencies around the globe, there are thresholds for dealing with EAT. In the U.S., if somebody owes income tax less than $25,000, they can typically handle the situation themselves. For business owners with payroll or sales tax obligations that are over $10,000, they want an expert because sales tax and payroll taxes here in the U.S., there are processes where you, as a business owner, collect that money from your employee or from the general public. You hold that money in trust to then turn over to the federal and state government. And when that doesn't happen, the IRS and the state can pierce any corporate veil and hold individuals personally responsible because they had a duty to oversee that process and it broke down. So for that reason, if a business owner owes over $10,000 in payroll or sales tax, they want an expert to get involved to maneuver through the process with as little negative impact as possible. Anybody who owes income tax over $25,000, you want an expert involved because they start talking about tax liens being filed on your assets. They start threatening bank account garnishments wage garnishments asset seizures So you really do want somebody who is knowledgeable and navigating through that labyrinth to provide as much protection and to say okay I handled thousands of cases like this. Every solution to a tax debt above those thresholds is based on the taxpayer's financial condition. That's what allows you to qualify them for various options to solve the debt. And you want somebody who knows what they're doing handling it at that point. Exactly. Yeah. So what's one tax trap that small business owners or freelancers should avoid at all costs? It's called the dirty dozen. And these tax scams that are happening within the nation. During COVID in the U.S., there was the ERC credits and the PPP loans. And these were government programs where employers who maintained employees throughout COVID received an employee retention credit. And they could secure loans through the government that could be written off if they met certain qualifications. The problem was when the government came out with these programs, they didn't have you explain beyond just surface level how you qualified to claim them. So all of a sudden, these mills popped up that would help you claim these credits or apply for these loans, and they would not tell you that you had to prequalify yourself. They just did the paperwork and charged you an arm and a leg to do so. And when we got copies of the paperwork to apply for these ERC credits, the employee retention credits, I was working with some people at the time and we all looked at each other and said, oh, this is going to be a disaster. because you just there was a line item literally added to the quarterly reports that said I qualify to claim this much credit for this quarter with no justification explanation needed and it