The Liquidity Event Podcast: Episode 31
Episode 31: Sick Sad IRS
On this extra special episode, our hosts are talking about the sad state of the IRS. The entity that collects revenue for our great country is underfunded, understaffed, and out of time. It’s tax season and the IRS still hasn’t processed millions of returns from last year. That’s a big yikes. AJ is out this week so we’ve got the one and only John Owens to go deep on what’s wrong with the tax system. Don’t worry if you think taxes sound boring, these two make taxes a blast. This one is taxing.
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Speaker 1:
This podcast is for informational purposes only and should not be considered tax or investment advice.
Speaker 1:
Welcome to The Liquidity Event, a show about all things personal finance with a laser focus on equity compensation, hosted by AJ and Shane of Brooklyn FI. Each episode will take you through the week's news on FinTech, IPOs, facts, founder wins and fails, Crypto, and whatever else these nerds think is interesting. Learn more and subscribe today at brooklynfi.com.
Shane:
Welcome, welcome, welcome to The Liquidity Event. We're your hosts, Shane.
John Owens:
And I'm John, pinch hitting for AJ today.
Shane:
We've got a guest host in the seat today. Mr. John Owens is back. Last time we had him, I was somewhere in the desert-
John Owens:
The holidays, over Christmas time.
Shane:
-finding myself. Yeah.
John Owens:
Did you find yourself?
Shane:
Somewhere in the crevice between Christmas and New Years. I did not find myself, unfortunately.
Shane:
Today, we have a special episode. We are going to be talking about the state of tax season, the state of taxation in America, what taxpayers need to know about what's going on with the IRS, with their personal taxes, issues and road bumps, and all fun things regarding the IRS and taxation today. We're also going to be talking about our backgrounds in taxation, the IRS's budget, and how that impacts everyone listening to this, what it's like to work at the IRS. That one's going to be fun.
John Owens:
Not speaking from personal experience.
Shane:
No. What we can do to fix the IRS's issues, what issues BKFI specifically is experiencing with its clients and their tax returns, expectations for the rest of the year, and all this to say that there's just more evidence that boomers continue to rule the world.
Shane:
So today, we're recording on February 23rd, 2022. We just went through 2-22-2022.
John Owens:
Two, two, two Tuesday.
Shane:
Yeah, which is what-
John Owens:
Taco Tuesday, for that matter.
Shane:
Did you get a margarita yesterday?
John Owens:
No, I didn't get a taco either. I wrote the date down like four times.
Shane:
2-2-22, was an anagram, a pictogram, a palindrome, and an onomatopoeia?
John Owens:
I guess. I'm not sure about the onomatopoeia, but it's been a while since I've taken an English class.
Shane:
Right on. How you been, John? What's going on with you, buddy? What have you been up to?
John Owens:
Yeah, not too much. This is a big year. I turn 30 this year, and so I've been working on my 30 bucket list. What is the shit I need to do before I turn 30? That's within my control. Not necessarily getting my life in order, but-
Shane:
Like the stock market.
John Owens:
Correct. Like the stock market that's in my control, exactly. And so I'm planning a trip to Alaska. I'm trying to do that. So if any listeners have any tips, hit me up. But I'm trying to go to Alaska.
Shane:
Yeah, wow, the frontier state, the last frontier state.
John Owens:
The last frontier, yeah.
Shane:
Yeah.
John Owens:
Plus, I figure being closer to Russia's eastern flank is better than being closer to their western flank at the moment.
Shane:
Too soon. Too soon. They literally invaded Ukraine today.
John Owens:
Okay. Sorry.
Shane:
Well, maybe you can invade on the backside.
John Owens:
Maybe I'll be able to see Russia from my Airbnb, we'll see.
Shane:
Are you going to see some grizzly bears? Are you going to pull a grizzly man?
John Owens:
I don't know. The problem with Alaska, the hard part of visiting Alaska is that it's so big, so you just spend so much time just literally getting around Alaska, so I'm trying to figure that out. But we'd love to see some grizzly bears. We'd love to see some glaciers, some mountains, some water, I don't know, maybe some salmon. I don't know.
Shane:
I hear it's got the highest percentage of pilots per capita due to the spread out nature.
John Owens:
That would make sense, because nobody lives there. Yeah.
Shane:
So how long until you turn 30?
John Owens:
November, so I've got some time.
Shane:
Oh, okay, so you've got plenty of time.
John Owens:
You got plenty of time to do the shopping that you need to do, Shane.
Shane:
Okay. Right on. What are you reading, John?
John Owens:
So I'm not reading too much at the moment. It's the middle of tax season, so I don't do a good job of rolling up into a good book. But I have been listening to the Happiness Lab podcast quite a bit on my runs. I don't know if you've ever listened to that, Dr. Laurie Santos. Great podcast. Highly recommend.
Shane:
On your runs, I forgot you are training for a half marathon.
John Owens:
Half marathon next month, so we'll see. My second one.
Shane:
We've got a 5:00 AM riser in our midst here.
John Owens:
You can't talk.
Shane:
What are you drinking today, John?
John Owens:
You and AJ are up at the crack of dawn as well. My Slack messages are blowing up by 5:30 Eastern.
Shane:
That's what it takes, John. That's what it takes to be a pain in the ass on Slack.
John Owens:
What about you, Shane? What are you doing for fun?
Shane:
Over the weekend, I slipped into an Ozark binge sesh. For those of you that don't know Ozark, the financial advisor gone cartel money launderer, is a great must watch for all financial advisors and accountants in general. Jason Bateman plays a great-
John Owens:
[crosstalk 00:04:57] huge Jason Bateman fan.
Shane:
Yeah. They essentially ripped off Breaking Bad. Right? Because I never saw Breaking Bad.
John Owens:
Neither have I.
Shane:
I'm pretty sure the straight man goes bad. And Bateman's just a lot of fun.
John Owens:
I think that's the whole point. Yeah.
Shane:
Right, right. So we're in our last season, and I ripped through that last season over the weekend. And then I watched the Kanye doc as well, which is for any Yeezy fans, even light, even just tangential fans. It is very revealing. It's pretty cool.
John Owens:
His mind would be an interesting place to vacation, not a fun place to live.
Shane:
No, not a fun place to live.
Shane:
All right. Why don't we hop into this? We're going to talk about taxes today. What is your background in taxation? Tell me about your experience before we get our insight into what's going on.
John Owens:
I'm currently the director of financial planning here at Brooklyn FI, head of the planning team. So I do a lot of tax planning work, but I don't do a lot of tax prep work these days, thankfully because we've got a skilled team that does that here, that Shane heads up on the tax side of the firm. But my background is, I've worked in tax for quite a while. I worked at another financial planning firm where we did tax returns for our clients, so I headed up the tax team for there a couple seasons. I've done hundreds of returns. And yeah, it's a favorite area of mine because it mixes both the analytical part of financial planning and public policy, and how the hell all this shit works. Literally, how we fund our government and the decisions that Congress makes. And it's kind of fascinating. So I'd say I'm a bit of a tax geek.
Shane:
Yeah, you definitely are. I love getting into tax conversations with you for the same reasons that you just mentioned. My man's drinking a beer. I forgot. What kind of beer are we drinking today?
John Owens:
I have a New Trail Gear Head Hazy IPA here, which is not my normal go to, but it was a gift as part of ... Somebody stopped by, left off a case, so I'm trying it out.
Shane:
Runners get to drink beer. Right? That's the whole payoff.
John Owens:
That's why I run, yeah. I run so I don't keel over at the standup [crosstalk 00:07:03]-
Shane:
You're an addict.
John Owens:
-right before 30. What about your background, Shane? You got a hell of a lot more experience than I do when it comes to taxes and a lot more years. [crosstalk 00:07:12].
Shane:
Well, I would hope so, as a tax focused CPA. Yeah, I spent my first ... Let's see. How old am I? 34. I got started at 23 in tax at PWC, and I've been pretty much focused on that since then. So I think this is my 12th tax season, 11th tax season now. I was trying to do the math on that. If you do a few hundred returns per season, I think I'm over 5000 returns at this point.
John Owens:
Nice.
Shane:
Yeah.
John Owens:
Wear it like a badge of honor.
Shane:
It's not a badge of honor. I had an attorney ask me for a second opinion. One of his other CPAs had said, "Hey, what do you think we should do here?" And typically, a CPA provides links to articles and resources and whatnot. And all I said was, "Look, I've done 5000 returns. You don't have to do that shit. Keep moving." And he's like, "That's it?" I'm like, "That's it, man." And he's like, "All right. Candid response."
Shane:
I think I put my 10,000 hours in, in tax land, so I'm happy to move on to financial planning. But I am still the director of tax at Brooklyn FI, but I do have my roots in the tax space. And I also am very curious about the economics and the how we fund our government element, and the social science behind taxation of government, unlike companies, where there is competition and revenue. There is a profit at the end of the day. Governments, unfortunately, the revenue that they generate is in the form of taxation. And they often run at net losses like VC backed firms. But eventually a VC backed firm has to turn a corner. I think the only time that the US government has turned a corner in terms of profitability, was under Clinton? Is that right?
John Owens:
I mean we had a surplus. We had a budget surplus, but we didn't wipe out the deficit. We didn't wipe out the national debt I should say.
Shane:
Oh no, that's never going to happen.
John Owens:
And so I think a lot of people get confused by that. Like oh, we've all this money we've just accumulated. Like no, no, no. You had a bunch of credit card debt, you just didn't accumulate more for a couple years in the mid 90s. Like big whoopty fucking do.
Shane:
Yeah I had pulled up the stats on 2020's revenue versus expenses for the government in an effort to figure out-
John Owens:
Not a pretty year to look at.
Shane:
Yeah, it's messy. It's essentially for every one dollar of revenue there's two dollars of expenses in 2020. I guess 2020 was a rough year though for income.
John Owens:
I mean, yeah. I mean the government spent a shit ton of money to prop up the economy.
Shane:
Right.
John Owens:
And make accountants lives busier with PPP and all the other stuff, which is probably a reason why we're going to talk about a bunch of this stuff [crosstalk 00:09:42].
Shane:
I didn't even put PPP stuff in here, or EIDL stuff, because it's not relevant to the IRS, but it was still filling accountant's heads.
Shane:
But let's take a look at this article, let's get into one article to really discuss the woes of the IRS, and how this is impacting the current year tax year. To understand what's going on with the IRS, I think a lot of tax payers and people listening to this have understood that they're not excited about working with the IRS, and filing your taxes has been a pain in the ass since they were born. And it only has gotten worse, and it's gotten specifically worse over the past 10 years.
Shane:
So we have an article here from a government agency, the Center on Budget and Policy Priorities, it's called the Need to Rebuild the IRS. And it's essentially five sections here. We've got; the IRS Resources Are Depleted, The IRS Can't Perform Basic Government Functions, The Amount of Unpaid Tax is Large and Growing, Focusing on Low-Income Filers is Unfair and Inefficient, and finally, The IRS Can Be Rebuilt. So we're going to talk about each one of these sections and talk about what they mean by this and just what our thoughts are on each of these sections.
Shane:
S, right of the rip we're going to talk about how it's been a pain to deal with the IRS, mainly because government is wasteful. Right or wrong?
John Owens:
Loaded question.
Shane:
Loaded question.
John Owens:
I mean the tough part about it is, you do call up the IRS sometimes and you 'll get some very skillful, smart, helpful people, it's just do they have the resources and are you putting the resources there. And this article kind of shows us that in 2010 they had 50,000 employees, and in 2021 they have 35,000. Like how do you lose a third of your workforce when you are already ... It's not like the IRS was like the super popular place in 2010. Like, wow, they're known for their customer service. They get a bunch of J.D. Power awards. Like no, they weren't And then they've only-
Shane:
[crosstalk 00:11:42] to the IRS.
John Owens:
Yeah. And then they just lose staff and lose revenue and lose support. Doesn't really make it's own sense.
Shane:
Yeah. I mean we got some numbers here, funding is down 19% below where it was in 2010. Wow.
John Owens:
I mean, everything else is cheaper than it was in 2010 too, right?
Shane:
Yeah.
John Owens:
The whole inflation thing we've got going on.
Shane:
Yeah. I mean, the inflation is ... I think this is adjusted for inflation. But the number's still down, essentially, 20%. And then on top of that, just having less money's going to make it more difficult to be good at your job. On top of that, if you've been given more responsibilities, I mean everyone listening to this has received additional responsibilities without a pay raise, except for John Owens, we always give him a raise whenever we get more responsibility. And we have a 7% increase in the returns that are filed, so that's just 7% more returns that need to be filed. All the correspondence that go out with them, the processing of them, the people that call in that get their questions answered, etcetera.
Shane:
We also have the IRS being responsible for more things when it comes to the government implementation of policies that Congress passes on to them, including FATCA, the Foreign Reporting Act from back in 2010. I think it was '10, maybe it was '12. [crosstalk 00:12:59].
John Owens:
Don't forget Obamacare rolled out during this time, which was a huge thing on the IRS from reporting perspective. We used to have the penalty if you didn't have health insurance, that was layered on top of this.
Shane:
Yeah. I got a question today from a client that said, "Hey, I didn';t have health insurance for two months out of 2021. How's that going to impact my tax return?" And it was like, Well actually, that was something that was implemented under Obama, and then it was erased in 2017's tax overhaul, which is a massive tax overhaul that the IRS also had to implement in 2017. It was the biggest overhaul in 35 years.
Shane:
And then we also have the advanced Child Tax Credit, which is new this year, which is checks that the IRS is writing to tax payers. And also, let's not forget, Trump bucks, aka stimulus bills, aka earned economic impact payments.
John Owens:
Stimies.
Shane:
There were three of those that went out that definitely floated everyone that didn't have a job during stimulus, during COVID, right. That $600 really kept us floating.
Shane:
Yeah. So essentially, the IRS is just responsible for way more responsibilities and they have less money to do it with, and they have less people to enforce that. I mean, I think one of the most interesting things about that is that there's all different types of people that work at the IRS, but specifically people that enforce the code, aka auditors, there's just less auditors. There's 40% fewer auditors than there were in 2010, putting us at levels equal to 1954.
Shane:
Why do we care about auditors, specifically?
John Owens:
They're the people that are going to bring in the revenue. They're the people that are going to find the shit that the 1% did wrong, and catch them. That's important. It's like saying ... They're your enforcers for the IRS.
Shane:
Yeah. And a lot of people listening to this might be saying, "Well I've only got a W-2, and I got a 1099, maybe if I have investment income and I'm lucky enough to have investment income showing up on my tax return. To have something squirreled away that generates income. So how hard is that ... Why do we need auditors for just W-2's and 1099's? A computer can do that." Well not everyone has that. Usually business owners and entrepreneurs, and they self-report their income. And if there's anything that we know about hum an behavior, it's that if we have to harm ourselves by paying money into the IRS, and that's voluntary, do you think that we're going to get 100% compliance, like Germans and jaywalking? I do not think so.
Shane:
So when you have less auditors, you have a lot less people ... You have what's called a tax gap, and that's a jargon word for the amount of money that should be collected, but isn't actually collected because of under reporting by people that don't know what they're doing on accident, or are lying to the IRS on purpose. And that takes us to section three here of; The Amount of Unpaid Tax is Already Large and is Growing. The tax gap is another word for how much we were supposed to collect in taxes, based on income that happened in the United States, but was not collected for various reasons.
Shane:
80% of that is mostly due to under reporting, which is people not reporting what they should have, whether intentionally or accidentally. That number, 80%, or the amount of the under reporting is 580 billion dollars a year.
John Owens:
That's crazy.
Shane:
A year. So I wanted to compare that to our overall revenue is three and half trillion dollars for the US, those are big numbers. So let me do the math for you. That's 15% of our revenue that should have been collected is not. Okay. Every year, due to there IRS's under-funding. How many companies do you think collect less than 15%, or 15% less, than they should have and do a good job at it.
John Owens:
Yeah. None that aren't being taken over by some activist investor, that's for damn sure.
Shane:
Yeah. Yeah. That's a problem. That goes to our next point here, which is focusing on low-income filers. This is where the auditors seem to be focusing is on low-income filers, and that's inefficient and it doesn't generate the revenue. So if you are working in a sales department at a company, would you prefer to, if it's the same amount of effort, would you focus on ... I'm sorry, not the same amount of effort. But id there was a lot bigger bang for you buck on higher-income contracts, let's say big juicy contracts that you can land on big businesses that are willing to buy your products, versus small mom and pop businesses that have a smaller budget and the cost-benefit is much higher on the companies. Wouldn't you focus on them? Right?
John Owens:
You'd think.
Shane:
You would think. You would think. Unfortunately-
John Owens:
I think the thing here, Shane, that's interesting about this is that they used to ... in 2010 they audited the top 1% at about a 5% audit rate. The folks who received the earned income tax credit, which is who we're talking about here, some of the lowest earners, but earned income tax credit means I have earned income. I'm working and I get a tax credit because I'm working in a lower-wage job and typically because I have dependents. Okay. Two and a half percent for earned income tax credit folks, 5% for higher. Now it's one and a half percent for both. And so there's been a change in reduction, but it's been much more drastic for the top 1% of tax payers.
John Owens:
Classic example of like this doesn't make a ton of sense. Don't get me wrong, I don't like tax cheats regardless of what their income is.. Okay? We need to enforce this, it needs to be accurate and all that. That's really important. I think that's something that us as tax professionals take very seriously. But for crying out loud, like where's the bang for your buck?
Shane:
Yeah. I mean, audit rates for millionaires is down 71%, which to me is just ... That's just such a reflection of the last 10 years in America and the growing wealth gap and the politics that have driven policies what we see in America. Just driving me nuts.
Shane:
But the other thing that is ... This especially hits home for me because I've worked in earned income tax credit focused tax firm before, where you've got people that have made maybe $20,000 and they've got three kids and come tax time, they line up around the block. And they're mostly, in my experience, people of color. And they come in and they might get tax refunds for $10,000. The IRS actually pays out of pocket to help them and their families survive because they have earned $20,000, but they're not making ends meet to feed their family, so they need help from the government. And these are the people that get audited at the same rate as multi-millionaires, or people that are making millions of dollars in income alone, let alone who knows what their actual net worth is, on top of the income that they've just made that year.
Shane:
And frankly, people that have the ability to earn a million dollars in a year, probably have very high net worths to begin with as well, so they can hire the people to help them with audits, should they happen. Whereas, if the IRS sends you a letter that says, "Hey, we need your social security card for this kid that you put on your earned income tax credit tax return." And you can't' get to a copy machine, or the letter goes to a house that you used to live at and you didn't set up mail forwarding because the budget for local communities and resources in your post office, and it's hard to navigate all that system. It's just, frankly, harder for people to respond to the notices as well.
Shane:
I think we understand the problems going on here. And before I start crying on the podcast, I'm going to move on to our next article here, which is ... What's it like working at the IRS, John? There's a Reddit thread here.
John Owens:
Yeah. I mean it sounds like a pretty nice job. 40 hours a week, You're probably going to take a big pay cut if you're leaving the world of public accounting, but you're going to get some nice government benefits. You're not going to be stressed out nearly as much as you are in those other roles. And so, actually doesn't sound like that bad. Just going to hope on my LinkedIn here a second, Shane. I will be back.
John Owens:
But yeah, I mean I think .... And if you want to watch a movie about it, what it's like to work at the IRS, I highly recommend watching Stranger than Fiction, which is one of my tax season favorites. That's Will Ferrell is working at the IRS in that movie. Great movie.
Shane:
Will Ferrell is an IRS agent that talks to himself. Underrated. Underrated movie, for sure.
Shane:
What is another IRS ... Oh yeah, in movies we've got Stranger than Fiction. In literature, we've got David Foster Wallace's, The Pale King. Are the only two IRS media items that I'm familiar with that are actually enjoyable related to IRS work. But we have this article here that's ... Around this time I'm watching ... I watch tax pros on Reddit, and I watch people like, the complaints on the boards just go wild this time of the year because this is typically, if you work in public accounting, you are paid to work 70 hours a week for a few months. And then the summer is supposed to be chill, and the off-season's supposed to be pretty low-key. But they typically end up working between 2,000 and it depends on where you work, but up to 3,000 hours per year. And this is the worst time of the year to be an accountant.
Shane:
So I saw this, there's posts like this like, "Has anyone ever left public accounting to go work for the IRS, and what is that like?" And this guy responds that he's got 18 years with the IRS after 10 years in public, and he just says, "Best job ever. The work-life balance is unparalleled. Many people take pay cuts up to $100,000 just to work here, but don't now anyone who has left and gone back to public or for more money." So if you're listening-
John Owens:
I mean, that's pretty telling. That's pretty telling about the quality of life there. If I go work for the IRS though, Shane, I'm going to be revenue agent. I want the vest, I want the gun, I want the badge-
Shane:
Well, criminal enforcement.
John Owens:
Yeah. Yeah, exactly. Want to be like taking down some NARCOS type thing or something like that. Come one. [crosstalk 00:22:47] work for the IRS to sit at another desk with four monitors like I do right now. I'm going to be out there.
Shane:
You would die to be able to carry a gun on the clock.
John Owens:
I'm actually more excited about the windbreaker. But yeah.
Shane:
So you would get to use your half marathon skills to run up on a narco and blast them.
John Owens:
Exactly. I had a funny IRS story. I learned about this [inaudible 00:23:09] for the CFT, but an IRS revenue agent showed up at somebody's house saying, "Hey you took as home office deduction and we have the authority to come here and make sure that you actually do have a home office." I think they probably thought this guy was up to some other things. And so the guy says to the IRS agent, "That's fine, but you don't have any reason to see anything else in my house. So I'm going to put a blindfold on you and then I'll take it off when we get to the office and you can see that. And then I'm going to put it back on and you can walk out." And the agent did it! He went into the house.
John Owens:
[Inaudible 00:23:41]. I'm out. Like this is how I disappear forever and you will never find me again. But yeah,. The guy did it. Which is like one of the craziest things I've ever heard, and you got to be ... Takes a special kind of person.
Shane:
Yeah, for sure. Knocking on someone's door, asking to go in their house, and then they put a blindfold on you. No thanks. [crosstalk 00:24:04]. Yeah.
Shane:
Smells like-
John Owens:
Smells like [crosstalk 00:24:08].
Shane:
So you know, we';ve talked about our backgrounds, we've talked about the IRS's woes. One of the woes that we skip[ped over is that four out of five phone calls don't get answered at the IRS when people call in to try to get some help.
John Owens:
You could say the same thing about my cell phone probably.
Shane:
What kind of issues is Brooklyn FI seeing, specifically regarding issues with the IRS. And really this might even be more specific to this other article about the accountant shortage and resignations, great resignation has hit the accounting industry, just like it has hit every other industry.
John Owens:
Yeah.
Shane:
And there's apparently 17% less accountants out there working, in general. Which means that the people that produce the W-2's that go to the IRS, there's 20% less of them. So that's only going to spell trouble, same with the 1099s, same with the equity plans that get put together by our clients. Those are accountants that just work in private industry that put together those tax documents that go to the IRS and then go to you.
John Owens:
And I Thin, Shane, it's like a three-pronged problem that I see here. And like one is there's just not enough talent in the accounting space. The IRS is under-funded. Okay? And then you have this pother issue of like more companies went public [inaudible 00:25:26] last year, then many other places. So you've got all these companies that are growing up, that haven't had to be public, they haven't had to do some of thew tax reporting associated with all this stuff. And there's this huge influx of them. And so when you throw all those things together it kind of means a hellish experience for employees at many of those companies, for us as some of their tax professionals, because we're finding some pretty drastic errors on documents that you would kind of take as gospel from your ... OH they send this to the IRS, it's probably fucking right. No, not necessarily.
Shane:
One of our financial planners pinged me, I hope I get to see this weekend.q She Pinged me and she said, hey can you take a look at this W-2 with me, I have a feeling it's wrong. And we went sand did some sleuthing that we do here. That's our bread and butter at Brooklyn FI. And yeah, it was wrong. It was wrong by one point seven million dollars in our client's favor. So we sent an email to payroll at, I won't name any names, and they sent us another W-2 which was also wrong. So we had to amend that one as well. And the saga continues.
John Owens:
I wish my W-2 was off by one point five million, I'll take it.
Shane:
Yeah. I hear you buddy. We'll get you there. We'll get you there.
Shane:
Then we have another client that sent us a notice that they got from the IRS, which is always like a-
John Owens:
This is great. I was loosing it this morning when I read this.
Shane:
Oh my god. Hey, IRS notice, and all it says is, "We lost your amended return." We know that you sent us a return in, we just don't have it anymore. We have no idea what happened to it.
John Owens:
The dog ate my homework.
Shane:
There's another article in here that we skipped over about how the IRS is 25 million returns behind already this tax season.
John Owens:
Do you ever feel that way, Shane? Is there like a point in March where you feel like you're 25 million returns behind?
Shane:
Yeah. People ask me at the bar and I'm like, "I think we're like 25 million behind? Something like that." But we're going to make it, we got few weeks left.
John Owens:
We'll get it done. The deadline's April 18th this year, not April 15th, so if you factor in Easter weekend, we'll be fine. I'll be okay.
Shane:
We always get it done. Tax teams at every public accounting firm everywhere I've ever, ever worked have always said, "Somehow, it gets done." [crosstalk 00:27:39]. It gets done. Which is true.
Shane:
What else have we seen? We've seen just frankly, just other types of documents that have just been way over the top incorrect. [crosstalk 00:27:49] some exercises that were wrong.
John Owens:
Also just slowness in getting notices. So like most of the time, if we file your 2021 ... Let's say we filed your 2021 return in April of 2021, normally it's like the next summer where you're getting a notice. Well, it's taking even longer for these notices to go out to folks. And so, you might be two accountants removed by the time you get your tax notice, which is something we see with clients that show up here. Like, "Oh we didn't mess up this return, somebody you worked with three and half years ago did." And it's taking some time to get that sorted out and to get caught.
Shane:
Yeah, I mean, speaking of time to get sorted out, one of our tax mangers ... We have a special hotline that we call into the IRS, and he sent me a screenshot of how long it took to get a hold of them. And it was, I'm going to round up 15 minutes, it was four hours he had to wait. Like we have to talk to the IRS, it's not like we have a choice. If they don't answer the phone, or if we don't call in, they charge penalties and interest, and those penalties can often be ... There's a percentage of the tax that is incorrect or under paid. So if someone that owes $100,000, they can end up with a $25,000 penalty, and Brooklyn FI can't afford to swallow those penalties for our clients. So it takes four hours to get through to the IRS, it's terrible.
John Owens:
Yeah.
Shane:
Let's see. We've got a minute left. You want to cover anything else, or ... We got this Trump thing. Should we do ... We've got to sprinkle in some Trump-
John Owens:
[crosstalk 00:29:16] Trump's accounting firm fired him. Shocking. The American people him fired a year ago, now his accounting firm fired him. No surprise there.
John Owens:
Yeah. I mean I think the other thing not tax related is we are seeing market volatility. We are seeing these fund trading windows going on right now, and so got some fresh content on the Brooklyn FI blog about being resilient and kind of trying to stick to the plan of maintained perspective, because who knows what lies ahead. Who knows where tax docs are going to go? Kind of timely topic for this and just kind of sprinkling it in, but something just to be mindful of. We're seeing it a lot.
Shane:
Yeah. Yeah, good point. It's not all taxes.
John Owens:
Thankfully.
Shane:
Thank god. All right, thanks everyone for listening to our tax update for 2022. You can email us at liquidityeven@brooklynfi.com. If you've got any tax or other questions, we will discuss on the air. You can also leave us a voicemail at podinbox.com/theliquidityevent. You can find the show notes at brooklynfi.com/episode31. BKFI stans can leave us a review if they want to be weird about it. Thanks everybody.
John Owens:
See ya.
Speaker 1:
Thanks for listening to The Liquidity Event. Hosted by AJ and Shane of Brooklyn FI. Head on over to brooklynfi.com where you can subscribe to the podcast or YouTube channel, or if you want to learn about their full service financial planning, tax, and invest firm specializing in tech professionals and creatives on the path to financial independence. We'll see you next time on The Liquidity Event.