Former IRS official, tells all

Welcome back to the Clappy and Frank Show, episode 23. We're about a half a year in. The feedback is tremendous. Last week we had on our great friend Mickey. Mickey told us what not to do. But one of the most intriguing, amazing conversations that we're going to be having today is about a topic that's extremely taboo. Nobody wants to talk about the IRS. It's on your mind 247. Tax season is upon us. 2025 has to be filed. Deadlines are approaching. We have with us somebody that worked for the IRS, the scary IRS, the Internal Revenue Service, my good friend, Yall Israel Astra. Uh, it's an honor and pleasure. Thank you so much for agreeing to come on >> here for 17 years. >> 17 years. >> Wow. >> Close to 20. Close to 20. [laughter] >> Israel, tell us a little bit about yourself. >> Well, thanks for having me on. Like I like you said, I've worked close to 20 years at the IRS. I was a revenue agent for 10 years auditing people, individuals, companies, offshore accounts, special issues, and then I worked seven plus years as an appeals officer and there I was dealing with the litigation, meaning if you protest or you're you you protest, you have a tax petition, the tax court can't take every case. So it goes on the appeals officer's desk and they try to resolve it >> before it goes to court. >> Yeah. And a good percentage like 80 plus percent doesn't go to court. >> You said 80% doesn't go to court when somebody appeals the IRS bill. Last week we had somebody that sat in prison over 12 and a half years, two stints in prison, our good friend, our Chevan friend. So he was saying that when the uh prosecutors when the government the US district attorneys come after you their prosecution rate of success of getting you you know tossed in jail is over 97% success rate. So it's interesting that when the government does something they do it with such a strong hand with a mighty power of the US government that when you appeal it 80% of the people just settle and they don't even actually want to go to trial. You're saying >> no. No. Both. The government can't take every single case in front of a judge. And a lot of these cases, you could resolve it relatively easily by just sitting with an appeals officer and resolving the case. What you're saying is something completely different. Now, in terms of prosecuting and civily going after people for doing something with fraud, if the government's going to go after you, a they're going to go after you because you either have money or you're a name, you have a big name, and then their success rate is very high. >> What triggers a audit from the IRS? >> So, these are >> Do poor people get audited? >> All the time. >> Poor people really >> all the time. All the time. >> For what? Well, there's something called earn income credit, child tax credit. This is basically money the government gives you if you have kids, if you have dependent. And a lot of poor people, I say poor like this, or people that are in poverty or make less money. Sometimes they go to a tax preparer that's not really a CPA, they're just very good at giving you your earned income income credit. So, if you get a refund and you make very little money from earned income credit, child tax credit, you can be getting back seven, eight, nine, $10,000 back. And a a lot of times these preparers, they don't know what they're doing or they don't care or they're not following the due diligent laws. And so when somebody comes to them, they're going, "Oh, we can give them an $8,000 refund, earn income credit. They can claim their brothers. They can claim their aunts. they can claim their uncles and then they get a $8,000 refund and sometimes they get audited and they have to pay that money back two three years later. >> Why weren't they entitled to that $8,000 that the tax preparer thought that they were entitled to? Give me an example if you don't mind. >> The example maybe their uncles maybe their uncle aunt are could an uncle and aunt ever be a dependent of yours or it's never possible. an an uncle and aunt could claim their niece and nephew if they're supplying half of the half of their support. They're actually they live by that. >> So they they just check the box to help their client get the extra $3,000 that they weren't really entitled to. So even a poor person like wink wink poor could get audited because it doesn't make sense why they're claiming their uncle and aunt don't even live in the same house. >> And and also you have to be making money >> to get earn income credit to get tax refunds. I mean, uh, not tax refunds, child tax credit. So, a lot of times they'll go to these preparers. They'll say, "Okay, you're a barber in your house. You made $30,000. You have zero expenses and and we're going to claim your little sister or niece or nephew." And then they get back a refund when they never made $30,000. They never were a barber. [laughter] >> And they That's very common. >> There's a barber shop next door to here in this office. Typically what do you do with those kids? You just tell them give the money back or you go after them, you throw them in jail or what's usually the process? >> Usually they go after these preparers for not following the due diligent requirements which is a lot of documentation, a lot of form filing, a lot of recordkeeping. They go after the preparer themselves, but a lot of times before they go after the preparer or as they're going after the preparer, they're auditing a lot of the uh their clients. So if you file this fraudulent return with a tax prepareer then it's not your who's who's liable the person who's filing to get the money or the person who's preparing doing the tax preparing. >> It's a great question. >> It's a very good question >> because you just mentioned how they usually go after the preparing. >> I'm actually curious who's in trouble. >> They So what happens is imagine this taxpayer in my opinion I feel bad for the taxpayer. They're just doing what their friends are telling them to do. They're getting back in a period of three years, let's just say anywhere from 5,000 to 10,000. And that equals after 3 years, $30,000. So imagine after these three years, they got that all that money back. They bought a TV. [laughter] They're uh they bought a new car. They have nice clothing. They got the Jordans with all that money. And now the IRS, me as an auditor is coming after them and we usually open up all three years. Now they have to pay back all that money interest. >> Oh my god. >> And penalties. >> So >> how much is the interest? Sure. Yeah. Um >> it's not 2 3%. It's higher. It's real. It's real money. >> I don't remember. I got to be honest. [laughter] But it's uh it's probably around that. So that's on the personal end. Businesses. What are the red flags for businesses? And are they algorithm algorithmic in um notified or it's every little tax return that comes into the IRS is reviewed by a human being? >> No, the computer picks up on most. So the most perfect thing I've seen it so many times. You look at the schedule C. Schedule C is the business portion of someone who's self-employed. It shows gross receipts. It shows the expenses, car and truck, cost of goods sold, and how many times have I looked at it and you see car and truck expense $20,000 and other deductions. You'll see other deductions $10,000. So these are round numbers. It's not likely the computer will pick up on it. And even if the computer doesn't pick up on it, me as the auditor when I see that return will pick up on it. It's a common. It's called an LUQ. Large unique quantitative thing on the return. What is the the the likelihood that there's three things that equal zeros on the return and high numbers, you know? So, a lot of adjustments come from that. And if you're already being audited, let's just say you don't keep good records. You're already being audited. You already have three things on the return that equal 10,000 25,000. Now, the auditor is looking at the general ledger, which is the books that go on paper. >> PNL PNL PNL as well. And now on there we're also finding things that end with 0 0. Doesn't mean it could be likelihood that some things is legit, but you're seeing a lot of things that equal $10,000. So when you have your own business and you have your own expenses, how many things equal exactly on the dot with taxes? >> Zero is suspicious. >> Yes. >> Perfect numbers are suspicious. >> Yeah. >> What about social media posts? Someone's flashing Rolls-Royce private jets. Is that something that IRS has their uh AI or whatever searches or Google alerts? >> Uh not that I'm aware of. Not that I'm aware of. A lot of people on social media like to go in front of a nice car and pretend it's theirs. Uh that's not what they do. But what happens is if you're getting audited or investigated, they are going to look at your assets and they're going to go, "Wow, this guy Mosha Frank has a Mercedes. I wish. >> But he only makes $60,000, has five kids, you know. Maybe you make 90,000, but how does he have a Mercedes, you know? So that's when they look and they may go, you have to show me how you paid for this Mercedes. I want to say it's very interesting because I know doctors, I know lawyers, I even know a judge, police officers, there's even a few a few from Crown Heights police officers, firefighters, I know less, but there are guys I know that are on Fidney as medics. You're the only um Labavich and you grew up in Crown Heights. Labavicher um guy that I know ever in my life that worked for the IRS and I think it's very intriguing because the likelihood of I know guys that in my class are in the American army and the Israeli army. Never met another IRS guy. now with your ex IRS. But tell me a little bit about your upbringing and how in the world did you end up working for the IRS for so many years. >> So before I say that, I was six months into the IRS and there was a new hiring group and I see a guy with a beard. I was a little bit upset because I wanted to be the only Kabad guy at the time and I became good friends with him. He now lives in Israel. His name is Mendy. Uh so I wasn't the only one. And I have a my friend's father also worked for the IRS in a different department. So what was the question? H >> your a little bit of your upbringing and how you landed at the IRS. >> So I grew up with nine siblings, Crown Heights, Montgomery Street. I went to Kabat schools. And uh after I after I uh finished high school, I was like, I got to go to college. I didn't know what I wanted to do. But I was like, if I go for social work and I don't want to be a therapist, screwed. If I go for something that's very niche, I'm screwed. So, I was like, accounting, I can always transfer that. After I went to school for accounting, a few years later, I applied for the IRS. I completely forgot I applied for the IRS. They called me and they go, "Is this Yra Astrav?" Like, "Yeah, this is Joy from the IRS." Like, holy crap. [laughter] >> By the way, when this joy calls people and says, "I want to bring some real joy into your life. I'm calling from the IRS. How are you doing?" >> Yeah. Yeah. >> Her name was Joy. >> Joy Dellis. She actually was my manager for years. A sweet lady. Really a sweet lady. >> She did bring She did bring him joy. [laughter] >> Sweet lady. And uh >> out of the blue, they call you up years later. >> No, it was like uh it was could have been four months later. Okay. >> I don't remember cuz I applied for >> you graduated with a degree in in in accounting. You applied. You forgot that you even applied and then you get a call one day. Okay. >> Yeah. And like would you like to come in for an interview and I was like yes and uh I had the interview and then uh I was studying for the series 6 and seven. I really hated it but I needed I needed a job. I couldn't I was working >> series 67 for what type of job? That's dealing with insurance, securities, you know, >> banking. >> Yeah. I hated it. And then I got a call on the way. I'm walking to the library to and they're like, "You got the job?" And like, "Are you do you want it?" I'm like, "Yeah." Coming from where I was at that time, getting the IRS job, the way how I felt is probably like someone winning a billion dollar account. You know, I was so happy. I quickly took the series six stuff and seven stuff, threw it in the garbage. [laughter] >> You don't need it to work for the IRS. >> No. No. And it was uh it was very good experience working for the IRS. Very good. >> What is just off starting salary IRS? 60K >> that time. It depends depends what series and grade that time it was 40 something,000 to start. >> Gotcha. I remember I was single and uh I'm at a singles party and my friend some girl asked what do you do and I said oh I work for the IRS and then my friend goes he makes 42,000 [laughter] I was like [laughter] >> date ended whatever was like what are you doing man >> didn't even have a follow-up he said it was at an event Yeah, but you get you get promoted um if you work hard and smart. Uh that you go up relatively quick compared to other >> you get commission depending on how [laughter] how hard you audit somebody. No commission. >> You get bonuses if you catch big fish. >> No. >> No, you don't get recognized. >> Do that cuz it's illegal. And if somebody offers me a a bribe, >> you was wondering how you got that Ublau watch. I was I'm I was assuming one of the people you ordered gave you as a gift. That's what it was about. >> He declared he declared it on his return. [laughter] >> It's fake. It's fake. >> Got in the street on 42nd Street. [laughter] 40 seconds. >> So, you get this job. Now, I'm guessing whatever you study in college doesn't prep you for being an IRS auditor. >> No. >> So, they tell you that you're hired for the IRS. They give you your assignment right away or like what your division is going to be. >> They put you on training. You go away for a month. Classroom training. >> Where's that? >> Every time it's somewhere else, but Covington, Kentucky. Wow. Near Cincinnati. >> Yeah. Yeah. >> Cross across the river. >> Is it like the military do big background checks? Like >> they do a background check on you, too. They came knocking on my neighbor's door, asking questions about me. >> Yeah. Yeah. Yeah. They came knocking. >> Yeah. This is right block knocked on the door. [laughter] >> They had some great war stories of you uh visiting businesses. The IRS. >> Wait a second. You got a sign. So they hired you, sent you for a month training to just a general idea of what to teach you how to use an IRA. >> They started No, no. That you learn relatively quick, but month train 1040 schedule C training. That's simple uh self-employment. >> People that work for themselves, small business owners, >> small business owners >> have to do a what is it called? A 10, >> they do a schedule C usually. >> What's a schedule C? It's a it's a >> it's on the tax return, right? >> That's self-employment. So imagine you're a barber. You make, you don't get a W2. You make 38,000, right? >> You put it on schedule C, gross receipts, line one. Then you put your expenses on there as well, the materials, and minus all the expenses. >> We're talking about a guy that has a barber shop in his basement. He didn't file. He didn't open up a corporation. He didn't open up a an LLC. He didn't open up an S. >> You don't need to open that up. >> You don't have to. So, if you if you're saying a lot of people just they do uh three haircuts a day at $34. They t calculate it. They have to tell the IRS how much money they made, what was an expense, and then just have to send in a yearly thing on how much money they made. >> Hold on. Speaking of the barber, I don't think it's one. >> He doesn't need a barber. [laughter] >> How long you don't need a barber for? >> I need a barber for the beard. >> Oh, you have to you have to pay tax on how much it would have costed you to have a barber. [laughter] IRS still needs to get their cut. You know, they're cut their will cut. [laughter] I heard in Israel there was a story because I heard their IRS is has doesn't have a good name either. They went into a shawarma store and they were counting all of the cut up parts of the pita bread to see how much they sold how much they sold and to confirm it with the amount that they're saying they sold. >> But it does have a military tough look. You know, >> if this guy knocked on my door from the IRS, [laughter] I would run from my one. Usually people were very uh were uh were not >> when you go to show up to business >> people were what? People were not afraid of me. >> When you show up, you show up with guns like here in IRS. >> That's a special agent. >> So you don't you didn't never show up at all with guns drawn. Let me check your books. So you just knock on the door un unannounced. >> Send a letter. You send a letter. >> You send a letter. Oh, so they know you're coming. >> Yeah. >> You're not unannounced with guns drawn. >> When they get the letter, they hard the schwarma rapper. [laughter] They hard the pizzas >> and they know when you're coming. It's scheduled. Usually they get a if it if it's an audit, they get a letter, they have to call the revenue agents at at a certain time. Maybe the re if the person doesn't call the revenue agent. >> Uh maybe they'll try a few more things. Then the revenue agent may go to their house or place of business to knock on their door saying you didn't respond to our letter. Here's they give them some documentation and call. >> You used to do that. I used to show people's houses. >> Yeah. >> Were you afraid? >> No. >> Never. I mean there might have been if I felt uncomfortable I wouldn't do it but usually it's you just put something in a mailbox if they don't answer. >> So you're never afraid to walk in the business as IRS agent. >> You ever thought your safety was >> compromised? >> No. Never. >> I felt uncomfortable but never uh >> I mean no one no one's like oh the IRS oh we'd love to have you here. >> Usually when you go >> they want you some coffee. You probably >> usually when they're being audited people are so excited to talk about their business. >> Interesting. They're so excited and I'm asking open-ended questions. Think about it this way. Most people like to talk about themselves. Right or wrong? >> Me do. But >> even if it's the IRS, >> Wow. >> and they're sitting there and you're asking open-ended questions. Most people want to talk about their business. They're excited. You know, a lot of people have hire representatives and tell them to shut their mouth. You know, >> I think people get in trouble for talking too much to the IRS visit. >> Sometimes you don't want to give off too much information. In anything, any business, you just want to talk about the facts. You don't want things to go get off course, you know. >> And if you come to business and they don't want to talk to you, what do you do? What was like the procedures? >> Usually they talk or they have a representative. >> Then you you can summon bank accounts. Uh >> you come to place and they just say, "I'm pleading the fifth. I don't talk to you." Like you have those responses >> in those situations. They everything gets summoned. You summon the bank account. It's not a pleasant experience. >> Oh, so they rather talk to you. >> Yeah. >> Start the conversation. >> You rather >> you find out where they're making issues and you bill them and then if they pay then >> Well, if they're not, you you uh go a lot of times they >> summons the bank accounts. They'll create their own bank deposit analysis which is the revenue agent's going to add up all the gross receipts uh negative take out all the transfers if if if there is and then it goes oh here you have unreported income they're not responding and so they create a uh uh the IRS will sometimes do that. >> So if IRS shows up >> you suggest people to talk to the IRS or just you know hire a lawyer and just zip up. What do you recommend? You you speak to a professional before you you speak you >> if if you own a business and someone like you showed up to audit them. >> Yeah. >> Would you tell them would you tell yourself to talk to the IRS? >> I heard the question. >> Okay. >> So, not everyone has money to pay for a representative, right? Then the smartest thing to do would be to call people. I don't know if you go to synagogue, go speak to the main rabbi. I'm being audited. Could Can I need some guidance? uh if you if you can't pay for a representative, so you don't put your foot in your mouth and it's a very scary process. You want support going through something like this. If someone were be were to go through anything scary in life, a divorce, a bankruptcy, you don't want to sit by yourself and think figure it out on your own. You want to talk to people. There are plenty of people out there that will it would be their pleasure to guide you or help you if >> or call you. They could also call you if they have an audit, right? Who called me? >> You deal with audits? >> Yeah, currently. >> Oh, now yeah. Or call someone like me. >> Now your business is when somebody gets audited, you walk them through the process that when an IRS knocks on for the appointment, you're sitting there representing them. >> Like, oh, John, how's it going? We haven't seen each other. You have those relationships, right? >> I keep the I have a lot of relationships at the IRS that I still keep and a lot of connections there. But yes, I help people that are being audited. I also help people that are going through the appeals process. And I also help people that have a big bill from the IRS and their account is being levied and it's a very scary thing. >> You can negotiate, right? You can negotiate with them. >> There's ways of putting in offers to the IRS called offer and compromise certain installment agreements that could work in the uh tax where the taxpayer can pay much less. >> How common is it for former IRS people to open their own business? Is it a common or uncommon practice? Well, let's ask the question this way. How common it is for people to open their own business, period. [laughter] It's a very small percentage. Uh I know I have a few former co-work in particular, she has her own tax resolution business, >> but it's not so common. No. >> What's the craziest story you had or I'm sure you have a lot of them. Did it for 17 years. What was the craziest story you walked in some business? Can you tell us share some funny stories? >> I have so many stories that like I don't know where to start. tell us a crazy story that like you like you walked around shaking or laughing for days like somebody made an expense sheet that like made no how you caught them like lying or something crazy. >> So uh so the way how it works when if you have a business and you're getting audited the revenue agent does something called a tour of business. So they'll walk in the business and they basically want to see when a customer comes to when the customer leaves how does that transaction enter the books. So I did a bad >> So you come in as a as a spy kind of. >> No, no. They know I'm coming there. >> Are you allowed to go to the store without the let them know you're there and stay? >> No. No. >> Wouldn't it be better that you walk in on a Monday afternoon pretending you're a customer and see what really goes on? You're not allowed to do that. >> Uh I'm not so sure. >> But you didn't do that. >> No. No. >> It was always scheduled. >> Maybe I if the someone didn't respond to a letter. Uh that's to me that to me that sounds like a little bit like harassment. >> Okay. >> Uh no. I never did that. >> Okay. So, you show up to a bedga. >> No. What's the story? >> They're saying a story. >> I said I showed up to a bed. >> Where was it? In Brooklyn. >> I don't remember. >> Okay. >> And I'm like, can I see your books and records? Like, how does Basically, I ask him the question, how do you keep how do you know how much money you make at the end of the day? By the way, every business has something that's telling them how how much money they're making each day or month or week. And the guy's like, I don't know. And I'm like I point to the cash register. He's not there. And I go, "How do you know that that guy is not stealing your money?" And he goes, "Oh." And then he was showed me the uh that usually people that have cash registers in like bedas or near gas stations, they write at the end of the day how much money came in cash, how much money came in credit card. >> They keep records. >> They keep records. But that's not the funniest story. It's just that was like a uh one of them. I've been through a lot. >> Can you tell us some good ones? >> I can tell you some sad ones. >> I love the sad >> ones. >> The sad the cases I did not like working the most at the IRS was the offshore activity ones. Now imagine someone's grandfather has an account, a Lud account in Israel. Doesn't even have to be Jewish. It can be an account on uh an account offshore and they're older already. They don't remember or they don't know. Technically, you're supposed to report all offshore activity. >> Just to be clear, if I have an account in Dominican Republic with $2 million US, >> I'm supposed to let the IRS occasionally know that I have $2 million sitting in Dominican every year. >> Yeah. >> And and also and let them know what's going on over there. Is it sitting there just collecting interest or not collecting or if I'm investing in it? They should know what's going on. They should know that where your the foreign assets that you >> so an American all 300 >> tax is it tax foreign >> it has to be I'm not 100% sure I don't remember fully but it is no it has to be reported >> basically if every one of the 340 million American citizens when they file their tax returns every year they have to let them the government know the IRS know how much money they have in foreign accounts >> correct >> I don't have this problem that I I don't have any money in any I barely have any money in American accounts so but I'm just saying but just interesting my my audience should know that this has to be reported yearly >> this has to reported >> and if let's say for 20 years you never reported it and now you want to like snitch on yourself to >> what happened was a lot of these accounts they called whistleblowers they let the the United States know that there's a bunch of US citizens that have money in X Y and Z account so the IRS came and said we're giving you a certain time to if you disclose that you uh make this that you have this money we will penalize you much less and it's called voluntary disclosure not everybody uh took advantage the voluntary disclosure because they didn't know. Imagine you have a grandfather that has an account in a different country. They passed away. You don't know about it or and now the living children now get a letter from the IRS saying there's there's this account offshore and the penalties were a lot. >> Like how much? A $10 million account they could get penalized how much? >> Big number big money. >> Hundreds of thousands. I don't remember exactly. Even though they never, it wasn't their fault. It was their grandfather's fault. >> They did it. No. Yeah. >> So, you said the sets or this is a set. >> Poor families. >> Poor families with $10 million accounts. Sometimes it's not 10 million. Sometimes it's uh it's a million or a hundred thousand or whatever. It's still a uh >> And they became the liable became they're on the hook. >> They're on the hook. Yeah. So, what do you advise somebody that's grandfather dies, leaves them $2 million in the Cayman Islands, and they want to do a voluntary disclosure? They should >> right now voluntary disclosure is over. But you always when it comes to taxes and you talking that that big money, you want to be talking to CPAs, accountants that know what they're doing. >> It's not going away and you got to work on it. >> Yeah. >> Which industries get the most audited? >> I don't know. A lot of small businesses get audited. >> A lot. >> Do you guys in the IRS office, every time you get someone, you all like high-fiving each other? Oh, he just got this guy. You try to rip off 10. Like, what's the environment in the office? They're all high-fiving each other. >> No. No. Most people are >> What's the energy in the room there? >> They're doing their job. You know, they want to close the cases. You know, >> they want to finish them. >> They want to close the cases. >> When you say, "Oh, I just got this guy. He's whipped us off $20 million." They they don't look at it that way. They're looking they look at it as almost like someone at the IRS has inventory. They have a bunch of cases. >> They want to close their cases because they want their manager off their back. >> What are some of what are some of the biggest because I want to educate the audience. What are the biggest mistakes that small business owners are making? Easy, simple mistakes that if they're watching the show right now, they could start making little habits to change some mistakes they're going to make to help them with the IRS. Maybe five even. As many as you could think of. >> Keep your records. bad, inadequate recordkeeping, literally hire a bookkeeping company if you can't do it yourself. But being able to understand how to read a general ledger, a P&L, these things are not small things. Uh, you have to be able to look at the P&L, the general ledger, and understand it without getting your accountant to explain it to you. And a lot of times people are like, "Here's the shoe box. Let my accountant deal with it." You got to understand what's on your return. >> So, you should probably know if you're making money, it's a good idea. >> Yeah. Even if you're not making money, it's a good idea. No, >> I'm saying it's good to know if your business makes money. >> Yeah. Yeah. You're saying even a small business owner should hire a bookkeeper, had a profit on Wall Street, have all their invoices, everything should be in order, >> especially if they're not bookkeeping style like like me. Like I I as poor or rich as I ever was, I always >> found a bookkeeper to run cuz it's just I'm the worst at it. But it's not just hiring a bookkeeper. It's hiring a bookkeeper or an accountant that can teach you how to read the statements and teach you how to read the general ledger, the P&L, the balance sheet, you know, >> what was the most arrogant >> a bookkeeper knowing how to learn how to read your profit on lo sheet. Yeah. Keeping receipts, not just dumping things into shoe boxes. Correct. What what three >> other mistakes that small business owners are making? or things they could do to make life easier for themselves. >> What What was the most arrogant thing someone told you while that you're doing audit? >> Well, I had a uh a lawyer who was representing their client and I asked a question and the lawyer started screaming at me saying how smart his son is. [laughter] My son is smarter than you and that it didn't do well for him. >> I I don't remember. I [laughter] don't remember. Uh to to be honest, I a lot of times I understood representatives, taxpayers, it's very scary. Imagine you prepared the tax return and here comes someone from the IRS and this same tax preparer or representative tells their client, "I'm going to be able to get you out of this." [laughter] And then they're not able to get it for whatever reason. Maybe they misunderstood >> and now they're going to be getting they have to go they have to go to their client and say I couldn't do I couldn't I couldn't succeed. I had a CPA doing my wife and I's accounting every year >> and one year in middle of the year my wife's company that she worked for they changed their payroll company. So when they sent her the the taxpayer what's it called? The W2. >> Yeah. >> So she got the W2 I got my W2. We did all the expenses. Any other businesses we did we gave it to him. He filed. He took his fee. We sent it in. We got a state and federal returns and then a few months later we get a few thousand bill from the IRS because the payroll company that changed in the middle of the year didn't send us that W2 and the IRS right away picked up on it based on the social or whatever and they sent us let's say a $7,000 $8,000 bill plus and I remember it being high tax penalty and like 89 10% whatever and this is a very competent CPA and he was not in he like he's like yeah I didn't have that paper I said what should I do he says YOU SHOULD PAY THE BILL QUICKLY like just pay the bill and move on. Like the IRS is asking for money. Just shove it shove it at them. So that guy got arrogant, but really he should have just sat down, figured it out, and came to a number. You're not going to win. I'm saying. >> Yeah. >> Have you ever seen someone completely ruin their life from taxes problems? >> Uh so one of the reasons why I do what I do, why I left the IRS is because I see what it does to the average person. you're getting audited, you now owe a lot of money. And sometimes these things are open, could be open for two, three years if you don't have adequate good representation. And I've seen good representation and I've seen not so good represent people not representing their clients properly. And I see what it does to a lot of people, what it does to their lives. Can imagine it ruins their marriage. You can imagine if you're a parent, the anxiety that the kids are living with. So, it's it's a very stressful. I believe most people that get audited, whether they're aware or not aware or they're with the IRS, they're being affected negatively. And that's why I do what I do. That's why I left the IRS because I believe I can do it much quicker than the average representative and get better results. And the main thing is the client, the taxpayer to get on with their life. >> Is IRS political? >> Not within the uh not with the regular people working there. The people that are in Washington DC, you can make a case they are. >> And how does that play out? >> Well, the pe I wouldn't use the word political. They have agendas. They'll come out of nowhere and say, "All right, we're now going to be auditing companies that are in their final year." You're able to put final year on your uh if you're a business. >> What does that mean, final year? >> If you know it's your final year, you you have to disclose that it's your final year. >> Oh, I don't know. There's a lot of tax companies going out of business after 53 years. Let's say Macy's decides to close, >> they have to write down that it's their final year >> within the B within the Yeah, there's certain tax. Yeah, >> private. I don't want anybody to know. certain things that have have to happen with their assets that certain things get taxed on their balance sheet >> and uh but I'm just giving that as an example. So they'll say we're auditing these returns. So out of nowhere you have a big case load and the people that are work that are from the top now say we have to work these cases and it goes down to the manager and then it goes down to the employees and now we're told after we were told them uh 3 months before to work partnership returns and to work shareholders. Now we have to add this as well. So there's a lot of bureaucracy. So I call I call it more more bureaucracy than I would call political. >> Most people are not >> political in that aspect. >> How aggressive are they would you say from when you started until you left? >> What do you mean by aggressive? >> Like chasing, hunting, witch hunting? >> Well CI, which is criminal investigations, which I didn't work for, is aggressive. uh they're aggressive in the sense if you're audited to follow the laws or to follow the procedures in that if you're getting audited, you're getting a bank deposit analysis. If you have a business, you're going to be looking at your bank account. So, if you say aggressive in that aspect, it's aggressive. And if you're putting in an appeal or going in a tax petition, they're aggressive in this in keeping the tax law or the uh the tax law, the court law. I'm getting confused right now. There's tax law, case law, you know, and then there's uh the tax law. >> Didn't Trump fire a bunch of IRS agents? >> Was it recent? A year ago? >> That was about a little over a year ago. Not too many got fired. A lot retired. >> Oh, you like he encouraged retirement. >> Yeah, a lot of people left. >> Does that mean it's a better time to commit fraud or >> No. >> What does it mean practically? >> Well, software take over a lot. >> It's never a good time to commit fraud because if you commit fraud and you get caught, it's not pleasant. uh even in that even if you don't get caught, even if you're audited for for potential fraud and you did nothing wrong, it's not pleasant. Let me just say this because I know that question was a joke in a way, but when it comes to taxes and it comes to money and it comes to business, it's really not worth it. Do things kosher, do things legal. I want to say a story. I had a friend that came to me when I first was working at the IRS. He's like, "Israel, if I just add these expenses on my return, I'll get back more money. What do you think?" You know, and I said, "What I think is you'll put in more expenses, you'll get a bigger refund 3 years from now after you bought the TV or after you pay for your kids tuition, you'll get audited. And not just will you pay the money that you have to pay back, you'll also pay interest and penalties. let alone the stress of not being honest and the stress of being audited and what that does to somebody. It's literally it's like having a clean room. You have a clean room, you're more at peace. You want to be ethical. >> What happens internally if an agent messes up? Like is there what the repercussions? >> Depends what you mean by messing up. If let's say you audit somebody and you at when you finish doing the audit, you sign off on it and say he owed let's say $12,000 >> and we did this in this balance sheet and he paid $11,000. The at some point the case is closed, right? >> Mhm. >> Now that guy now goes to sleep at night. He's starting fresh. The IRS cleared him. He gets like a letter that he's pardoned like jury duty. You get a letter of release. You're done. You come back to your office. You file the case and your supervisor in the IRS says, "By the way, you made a major mess up. This guy owes another $22,000. Could you reopen the case and say, "Hey, we want to now get 22 grand." Or because you already said, "Oh, you're off the hook and you made a mistake internally with the paperwork." >> So, it all go when it comes to something like that. Let's say I audited somebody or [clears throat] there was an appeals case and let's say I made a mistake. By the way, I've worked uh thousands of cases. I don't think I made one mistake. >> Wow. >> By the way, when I say that, there's I'm just saying >> statistically we make mistakes. We're human beings. Okay. You don't. >> But I don't. >> I'm not human, man. [laughter] Uh, but what happens is as soon the manager has to sign off on the case, the manager notices that Israel forgot something or made an error, she or he will give the case back to me or back to the agent to now go back to the taxpayer and say, "I'm sorry, I made a mistake." >> Oh, so you it's not it's not it's not forgiven because you made a mistake. you make a mistake, you have to go back to the customer and say, "We made a mistake. There's more money owed." >> Well, what happens is is first thing first, whenever I were to do an audit, I always would let them know subject to manager review. And a manager can look at it, look at a case, and just can just say, "hm, you didn't look at this issue. I feel like you should have looked at this issue. Go back to the taxpayer." Uh, and then I I'd have to listen to my supervisor. But that doesn't mean I made a mistake. It's just part of she's doing her checks and balances. And yeah, >> so far the thing that I'm the most intrigued about, which is so simple, but I didn't realize, is that let's say you could do a maximum amount of deductions for certain things, people write the zero amount. So if it's 10,000, they write exactly$10,000, >> which flags, because usually when you pay up your 12-month expenses on your car or truck, the bill might come out to be $9,326.14, just the way the numbers are. So you right away know the guy's just playing games and seeing what the maximum amount is and doing that. So that subjects to an audit. What other things that a small business um account does that will trigger major alarms besides the numbers all being the maximum? >> How do you lower how do you you lower your audit risk? >> Yeah. What other things are very popular that cause alarms? >> Well, we let me just go back to the round numbers. Sometimes the person's not doing anything wrong. they lost their records and they're just estimating expenses and that's what they're doing. It's not always that the person is trying to do something wrong. They just don't have their record so they put round numbers. Uh so when it comes to a lot of other things, income is a big one. You want to make sure that you account for all income. Uh you want to make sure you account for it all. Uh another thing when it comes to the balance sheet there's a lot of times there's something called loans from shareholders a lot or loans to shareholders. So a lot of times within these loans there can be a mixup that there's loans to the shareholder which is the partner or the business owner and sometimes they're taking those lo those loans and they're not paying the loans back and >> and loans are taxree so it would be right. Well, they have to pay it back, you know? >> Right. But theoretically, a loan is not >> income. Yeah. Yeah. You know, imagine you start your own business. You're putting your own money into your business. So, it's loans to shareholders. Then there's also loans from shareholders. >> I mean, how crazy are people supposed to be? Let's talk the letter of the law. A guy got for a bar mitzvah gift from his uncle. His uncle Rob Robert gave him five uh silver dollars for his bar mitzvah gift. He gave him five silver dollars. At the time, silver was a 123 an ounce. and silver hits $130. He takes the five silver coins, runs to the diamond district last week. Now it's back to like 70. But he runs and they take whatever bullion, whatever the number is. They round it off. I heard they're paying a lot less now to refineries backed up. They give him $9825 an ounce. So he gets $500. The guy takes out from the register $500. Gives him $500. He just made $500 because he got it when it was worth zero. He's supposed to fill out a form in his tax return that says, "I got $500 se on um on November 16th. I got $500 and then he's supposed to declare it and see what the tax rate is and pay the full tax. That's the letter of the law. Correct. >> So, it's not a simple it's not an easy thing for me to answer cuz I would imagine there are certain laws and rules regarding what's like the silver store. What's it called? >> Bullion. >> These places that they themselves have to fill out a form. Not >> ask for ID and fill out a form >> if it's a certain amount of money. I'm sure it's similar to casinos. You make a certain amount of you coming in. If it's more than 10,000, I don't know what the law is. They have to give you a form and then you have to file that on your tax return. So, I'm sure it's pretty similar to that as well. So, when it comes to something like that, technically technically you're supposed to report that as income, right? But if you didn't get anything from the place that gives you the money, and I'm like, I'm not familiar with the laws, but I'm pretty sure they have to fill out something if it's more than 500 or more than 5,000. I'm sure there's some listeners know this. I don't. Uh, but the IRS will know in that case. You ever go to the horse the horse betting, horse racing, if people a lot of times they the horse wins, they win a lot of money and then they give them a paper showing them the $5,000 or 10,000 that they won and now they have to report that. >> You familiar with the cash appela rules now or no? >> No. >> Okay. I know they changed it recently to lower the higher. If someone knows, please comment below. Somebody told me that if you It used to be that if you gave somebody over I think500 $600, you had to fill out a form that you gave them like it was at the 109. It was a 10. You have to fill out >> Trump change it. >> I I I recently Googled it for somebody. I think it went up to I think 2026 I think it's going to like $2,100. You have to report I think over $2,100 and it would make no difference. Whatever the minimal reporting is, no matter how it is, cash, zel, cash app, you if you the law is you have to give somebody a certain amount, then you have to f you have to have them fill out the W2 or whatever the paperwork is, you have to fill it out because it's subject that that would be the law would be subject to um reporting. >> What is it 500 now? What's the >> I think it's going up in 2026 to like $2,000 or something. >> Do religious communities tend to be more uh tax compliant or less less compliant? I wouldn't have the statistics on that, but a lot of times within the religious community, a lot of times they're flagged because they make X, Y, and Z. They have five to seven kids. And a lot of times that by itself is like, how are you living? So the computers sometimes pick that up as there has to be more income here. So that happens often that but that's nobody going after anybody. to computers. >> What are some of the task risks about cash heavy businesses like jewelry or I don't know barber shop or >> barber [clears throat] shop to jewelry. >> Yeah, the old cash, right? >> Well, these days most people are accepting credit card, >> right? >> Uh that's what I would say. >> There's a famous store that doesn't accept any a famous food establishment in Brooklyn. And I don't want to get any more specific. Till today, till today, the only thing they will take is cash. >> Okay. >> So annoying. Like you have to double park and run to an ATM machine and it's like whatever. >> And I always wonder like if they're doing it to try to save money on taxes. If I work for the IRS, that's the first store I would audit. Why would somebody only take cash? It makes no sense to me. >> Well, they don't want to pay the fees. >> What fees? >> Credit cards charge 3 4%. >> So charge a lot of stores charge the 3%. I think I'm not sure legal out of charge. >> Everybody does. It's 100% legal. Everybody charges comment below if it's legal or not. >> Everybody charges the 3% fee. >> So if you're a cash, >> but let me answer that question [laughter] cuz that's a good one. A lot of times there are people that own their business. They're 70, 80 years old. They don't want to accept the credit card machines. They're annoyed by it and they say just cash. You >> just go tap today. It's easy. Also, when it comes to industries that with cash, the IRS, the government has the the statistics on what the income should be. If, for instance, if you're a a food store, >> there the odds are you're making income of 0. When I say food store, restaurant, one of the toughest business to make money in, the statistics show you're not making too much money. Uh but there are certain businesses the gross receipts the money coming into cost of goods sold is a certain percentage. The materials cost of goods sold are the materials that are for the goods. And if the cost of goods sold is very high and the income is very low that would trigger something that would trigger an audit that would trigger a question mark. And from there they would uh they could go after them. >> CL you wanted to talk to about sponsors. Oh, of course. The most favorite favorite fa the most favorite part of our show. >> We have some breaking news today. We have two top corporate sponsors that are joining the Clappy and Frank show as advertising sponsors. >> The first one is A1 Party Rentals. It's a top top top party rental company. So if we want to look as good as >> when you put into when you put into Google corporate sponsored parties, table rentals, chairs, high-end, I mean they build a they build buildings like glass buildings for events that are taking place over a couple day period in cold climates. They build all the kosher pesak stores. They put the tents up hundreds of square feet. The building in front of 770 the whole tish rate 300 ft by 20 ft or 25 ft. Uh so A1 party rentals I'm going to link um the number below. mention us. >> They did the White House the night before the um the inaugural event. They did the the whole baseball thing and freedom, whatever it was, that major event the White House called them >> at pictures of the tractor trailers heading over to DC. It was crazy. They were the only one that had the materials the White House needed. >> A1 A1 [clears throat] party clappy and Frank, I'm sure, for amazing prices and great always give good customer service, but even better. >> And the legendary smurling Switzerland chocolates. >> Here we go. >> Chocolates. The Reb, the Reb used to eat swirling chocolate. Everybody know. Yeah. Yeah. The rebre the reb. [laughter] >> Now, the minor chocolate. What I love about the minor chocolates, everybody's eating this. It's not only minors. The adults love the minor chocolates. The minor chocolates >> small >> are great for the shalah. Also, when your three-year-old says he wants a chocolate bar, you don't want him eating an entire chocolate bar. Portion control. Portion control. >> Over here, you get the entire bar in one serving. Delicious. Delicious chocolate. Troy, I want you to taste this chocolate. And I'm going to have to you're going to have to report income on $1.79 [laughter] >> that you were gifted on the Clappy F show. >> I grew up with these chocolates. >> Oh, there you go. >> Can never get bored of these chocolates. Oh my god. >> Clappy assh. >> I'm as newly minted gym rats. Portion control. You don't eat the whole bar. >> Portion control. >> It's only 130 calories. >> Perfect for >> Oh, these go perfect in shakmanes. So a lot of people that give their friends a shakman it's like a negleis or a shabas or a head or whatever >> but you still need to do the mitzvah. So you do is you buy a minor, two of them, you tape it to the box together with a hamage and you have the two mitzvah of these minors come in so handy, sneak them into your jackets while you're [laughter] easy enough. It's very good. The minor chocolates, they're known the smurlings. Is this one kosh? >> I think they're always >> all year round. >> Whatever's left over from you. >> Yes. >> And the rebabing chocolate. So, you don't get it better than that. Then we got >> Butcher, >> the CH Butcher restaurant on Troy and their deli on Albany Avenue in Brooklyn. Now, they all have a full line of meat product takeouts where all quality frozen foods are sold. Here we have the Laim. >> Last week, we tipped the parking lot agent, the empanady. He was so happy. >> He loved it. He loved it. >> He was happier than he got cash. I was like I was like I felt I felt bad no cash on me, you you know, I want to make sure I'm all legal, so I never carry cash. And we were felt bad, you know. I said, "Oh, here's a little impanada from the show." He's like, "What? Beef? Really? Is there beef in here?" He's like, "Yeah, there's beef in [laughter] here." Rascins classic tuna. Their classic tuna I buy for Shabas because Sunday morning we have it with bagels. My wife goes shopping at Rascins every Friday. We have the alapino schmaltz herring today. >> Jalapo. >> Jalapo. We have the Danish style herring and cream sauce. And we brought the schmaltzy salmon. The schmaltzy salmon with the onions. M and then the only place in the world that makes a herring kickle exclusively to eat with herring is rasins. This was not gifted. I paid for everything. I don't want to get audited. [laughter] >> I got a lot of comments last week the >> comments like this. >> What said I would get a lot of auditing comments like this. >> You said you're not a big herring guy, but I want you to give you Israel. I want you to taste the tuna. M I can see the scallions. M >> Israel, I know you you you married Syrian. Have your taste buds changed since you married into the >> Oh, definitely delicious food. >> Yeah. >> Delicious food. >> Kubet, what what's the Syrians eat? >> K. They eat a lot of lamb. >> A lot of lamb. >> Yeah. Yeah. >> What's the biggest difference between Syrians and Kabad people? Top three. >> You went top three. top three different like major like eye openers like huh >> truly you're the second person in your family to marry Syrian your sister Shashana also married David cameo David cameo when he coming on the show tell us about the rich Syrians [laughter] >> I think they're it's different different like kabad is more lively >> Syrians are more analytical >> you know but uh >> oh my god >> we're analytical What? You have a dial in your mind? >> That's all right. >> But they're all good. They're good people. I mean, good people are everywhere. It's like, >> do you have to drive Mercedes to be a luxury car to be Syrian or is it mandatory or >> Well, >> they let you in chill without it. What's the deal? >> No, don't let you went to show without a fancy car. >> I have a Nissan Central. >> You have A NISSAN CENTRAL. >> OH MY GOD. [laughter] >> YOU ALWAYS HAD IT. >> WHEELS TO LEASE. MY FRIEND SAUL IS FROM WHEELS TO LEASE. CORPORATE SPONSOR. >> NISSAN SENTRA. WHAT DID he write? Nissan Sentra. >> We just got off the phone on the way to the show with Saul. He said, "Last week, I said for 200 bucks you could get into a Nissan Sentra >> a month." >> A month. Now he tells me, Izzy, you could tell your customers at wheels to lease a Nissan Sentra under 200 a month. >> Wow. >> Under 200 a month. >> When are they going to pay you to drive a Nissan? That's That's >> The pricing is so crazy. It's the only thing affordable. IT'S THE ONLY THING THAT WENT down in price when Donnie got out of office. [laughter] The Nissan Sentra. The roads the roads are not shoveled. BUT IF YOU HAVE A PLACE TO PUT A CAR, you could have a Sentra. >> You recommend Nissan Sentra in the snow. [laughter] >> I don't know. I'm used to going in Escalades lately. But um Nissan Central. And I asked him what other good deals. He says that the Honda >> Odyssey >> Odyssey is the cheapest he's seen in years. And this is what he told me. Don't wait till Pesak comes and your car is so dirty and you want to get rid of it. Instead of cleaning your car for Pesak, get a new car for Pesak. And by the way, when you call Wheels to Lease, you call Soul or Izzy, the car is in your driveway within a few hours. There's no waiting around. >> Some people tell me that they only want a car just for the summer. Do you think they should rent or they just have a car all year round? I >> think for 200 bucks a month, just keep it around whenever you have an extra car, >> right? Where you going to park it? >> Wheels to the only way. It's the only way to go is wheels to lease. Anyhow, so you're saying keep a clean good keep a clean book. Let me ask you a question, Izzy. When the IRS comes after you at the end of the day, are they looking to throw you in jail or they're just looking for you to pay your bill and move on with life? No, they're not looking to throw you in jail. Only if you don't report income, a lot of income. Um because uh jail is criminal investigation. They usually only go after people in terms of jail wise that didn't report. I don't know what the amount is, but >> it's in the millions >> probably. >> A guy making $200,000 a year. He sends in his tax return every year. He's off by a few thousand. He gets audited. You're saying get a preparer, sit down at the table, pay a few thousand bucks, move on with life. They're not arresting you. They're not putting you in jail. Just Just >> It depends. >> Do Chuva. You're saying you could >> Are there times where you cross a certain line even if it's a small amount and that's where they go criminal on you or >> No, it has to be a lot and it has to you have to show intent to >> to not report. >> Nobody ever has intent but not pay tax. >> So you have to prove you didn't have the intent and a lot of times you can prove it. >> Yeah. >> What are common mistakes people make about deducting for charitable donations? that it's sometimes it's not a charitable organization that they're donating the money to. >> It's not a 501c3. Is that that what it's called? It's a >> and they give money to an organization that is not a charitable organization and they can't deduct that. Sometimes people go, I gave I gave my uh >> my friend to go who's who's struggling financially, I gave them money. You can't deduct that. has to be a charitable organization. >> You should give the money to a 501c3 to then give it to that guy. >> That would be a better idea. No, >> if you can. Yeah. >> Have you seen uh non forprofits abusing their status? >> I've seen that. But I didn't do non forprofits, but I've seen it. I've seen uh I've seen that. Yeah. >> What are common mistakes um landlords make with taxes? Can you be specific? >> They they pay they have three tenants in their house, a basement, a first floor, a second floor, and they just live on the top floor. They charge all their tenants two grand a month. They're bringing in six grand a month. So, what does that tend to be? Like 80 grand a year in taxes. What's the proper way for them to report the 80 grand? And what's the not proper way for them to report the 80 grand? >> So, I have [snorts] a challenge. I started eating this stuff and now the food's in my mouth. [laughter] >> Okay. So, when it comes to rental properties, that could be very, very gray. and you're saying a little area a lot of times with rental properties it can get very complex the tax law and that that there you would want to get real advice on what you should do and how to report. So when it comes to like a simple landlord, maybe they they don't or simple property owner, maybe they're not depreciated depreciating their property properly. And uh I've seen cases where they charge less if you're not charging you you can't you you have to charge fair market value. If rent goes for $3,000 in Crown Heights for a onebedroom and you're charging $1,500 cuz it's your cousin or nephew, you can't then deduct a loss. >> You're not allowed to deduct a loss. It has to be fair market value. There's a lot of laws regarding rental property if if no one's living in it. And it's very important to know what you're doing. Here again, we want to go know what you're doing. Hire an accountant. Speak to the speak to people in sh so to speak that know this stuff if you can't afford an accountant to make sure you're doing things correctly. >> If someone's been messing around for the past, let's say 5 years and they hear this show and they want to do chuva, how do they go about it? What's the steps they take? >> Chuva. What do you mean by chuva? >> They want to start. >> So I come across people like that all the time. And a lot of times it's very similar to somebody that wants to eat healthy. They say they want to eat healthy and a month later, a year later, it's the same complaint. And usually what happens is by the time they want to make so-called chuva, that's when the IRS is after them or that's when they have to file bankruptcy, that's when their business collapses because they weren't on top of their books and records. So, first thing first, get your books in order and get everything in order. Hire, if you can't do it, hire the right bookkeeper/acountant. Don't be cheap. Don't be cheap. And from there, have the accountant, if you have issues, if you have issues with the IRS, come to me. I'm going to do a whole investigation. I'm going to look at your history. I'm going to see where you owe money, where you potentially your accounts could be levied, where maybe we can get rid of some penalties, penalty abatement. Come to me. If you're if you're having issues already with the IRS, come to somebody like me who will work the case and will work it much quicker than the average person and get the best results as possible. >> You're going to tell them the real honest truth as is. No filters. >> No, no. Everything is truth. >> You don't seem like a filter guy. >> No. No. everything. You got to deal with reality here. It's very similar. Somebody's coming to the dentist and now they have to get their tooth extracted. >> The guy the dentist is not going to try to make it sound nice. Here's what's happening. You need an implant and it's going to be hell, you know, and here are the three appointments and here's what the what it's going to feel like. So, when you're already in this situation, you need the truth, but you want to deal with it in the quickest, best efficient way as possible. Does that answer the question? >> Yeah, it sounds good. >> Yeah. Does it respond? >> What are we What are we talking about? A guy like you because you have 17 years of working for the IRS. You know all the secrets. You're going to get them out of their pain and misery really quickly and chitchat open. You're charging 500 an hour or a,000 an hour. You take on a case no matter how long. >> I charge the compet what the competitive rates are. I don't go higher than the competitive rates for tax resolution. >> What do we What What does it look like? >> It depends. >> Call him for rates. >> Call for rates. >> Call for rates. It depends. >> Does response Everyone does this. Does the IRS buy that response? If someone says, "Oh, why are you doing this?" He's like, "Oh, everyone does it." Does that fly at all in the IRS? >> Yeah, that that works very well. [laughter] >> I've gotten a lot of those. >> Don't let anybody do that. I've gotten a lot of those. Uh yeah. No, that doesn't fly. You need It's very clear in terms of what is an The law is what is an ordinary and ne what is a what an ordinary my brain? What is an or what is ordinary and necessary for the average business? What are what are they supposed to do according to the Internal Revenue Code 162? They have to keep records. It's the law. If you say, "I know a friend that doesn't keep records. Everyone doesn't." Doesn't fly. Where's your records? You know, they have it a lot with, like I said, earn income credit. My uh my friends, they claim their nieces and nephews and their brothers and sisters. Why can't I? They all do it because you're not allowed to unless you're following the law. >> If they ask you to speak in Shan Chabas, what would you tell the community about taxes? What would be your your your statement to them? I got to be honest. I hate talking about taxes [laughter] on Shabbat. I was asking I used to say Shabas. >> You switched. >> Now I say Shabbat and sometimes I say Shabbat. It's it's a mixture of it all. I have everything in me right now. >> Who do you prefer? The Kabat or the Syrians? >> I love everybody. You >> love everybody. >> Everybody. Especially if there's you know [laughter] >> there's a different >> preference. >> There isn't. Everyone has their own uniqueness. I know the Syrian community sometimes it gets a bad rap >> for what? >> Like sometimes kabad gets a bad rap. >> What if Syrians get bad rap using for? >> Um what do you think? >> I don't know. >> It's like stereotypes. >> What's the stereotype? >> Being rich, being arrogant, flexing, going to deal, buying $10 million homes, the usual stuff, >> you know. Yeah. I mean and you know people can be known >> saying Rabbi Mansur is the only rabbi in the worlds [laughter] >> but mansurans >> I don't even know the guy >> but there's a great >> my point is is that there's the Jewish people in general as I'm getting older I'm in my 40s now the black and white way of thinking is gone remember in kids misnom are bad [laughter] you know it's like no >> snag them are not bad >> when we were kids you know we would fight with them in camp when we went on the same trips. The reality is is that everybody is is good. There is like an Amnus Khai type thing and plenty of Syrian Jews out there, they would take their shirt off their back to help another Jew. And uh that doesn't matter if they're kabad or lipish or anything. And I think it's as as I'm getting older, maybe it could be I'm older, maybe it could just be with the with the times, there's a certain unity and there's good with everybody and there's rotten apples on trees everywhere that doesn't make anybody or any group bad or not bad. >> Could you claim mental health or illness with the IRS? Does that how much weight does it have or what's how does that work? Well, you could claim it if you're able to prove it in a sense of why you didn't file your tax returns and why you shouldn't uh why you shouldn't be penalized penalized uh for not filing on time and for not paying on time. So, you could if you're able to prove that there's a real mental health issue or a real health issue, but it's you got to be able to prove it in a sense. You can't say I have a health issue, but I was paying my light bill but not paying the the IRS. You would have also have to show I wasn't even paying my light bill. >> Stop. People should stop paying all their phones. >> Is ADD consider? >> I don't pay any bills. >> Is ADHD considered a mental illness with IRS? I know. >> But like I said, if they have ADHD and they're paying their light bill, but not >> paying a light bill is more is more simple click pay than filing taxes and freeing your law statement. If you're able to pay with your a ADHD, your leased vehicle payment and your insurance payment, you could pay the IRS as well. So, it's not impacting your capabilities or your capacity to function in life. So, the same should is true. The IRS will look at it in that way as well. >> So, it doesn't you're saying >> he's trying to say there's a mental health issue going on and everybody could claim in something. >> Yes. [clears throat] Do you think everyone has mental illness? What >> do you think everyone has mental illness? Everyone ch has challenges with it. Isn't the whole Tanya on that? The nepha Bahamas, the nephis, the godly soul, the anim animalistic soul. And when the animalistic soul takes control and the godly soul, >> the animalistic soul doesn't want to pay taxes. And the and the godly soul wants to pay the IRS all their money. They want to give them everything. >> He's asking uh >> here's when you join community, did they welcome what was the welcome package like? We're saying like who's this kaban guy intruding or what's it's very is it very tight-knit. >> I only had good beautiful experience. >> Wait a minute. They wanted an insider from the IRS. >> I [laughter] I only had be I only had beautiful experiences with uh not just with the SI community with with most communities. I only have you attract what's inside. If you think everybody is bad or then you're going to see it everywhere. It's uh Yeah. >> Well, powerful stuff. Powerfully good. >> What's worse? >> Yeah. >> To be ignorant for the IRS or being in malicious. Does it make a difference? >> Malicious is worse. >> Intentional avoidance. >> Oh, that's worse. Yeah. >> So, if you claim just you're messy, you know what you're doing, then? >> Yeah. It's different. intent is uh can get you in can get you in prison or if not in prison will give you a fraud penalty and a lot of penalties if you're saying that you I didn't know or I'm my accountant did it for me you can potentially depending on the situation >> uh get out of some penalties >> you want one or two bites and you're eating chocolate the whole time you're not saving any for anybody [laughter] eating the chocolates are so good you just just can't stop justing [snorts] chocolates are crazy so When you're uh let's say you're helping a friend, you're giving him some money, lending him money, giving him money. At what point do you have to start 1090, like how does that work? You just give him money. Like >> so you're talking about >> a friend calls you, oh, I need some money. I need help paying the rent, blah blah blah. So he's not he's not a non forprofit, right? >> Right. So that that we're talking about the potentially a complex tax issue. So if you're let's say a business and you're lending money let's use a business you're you as a as a person you're lending money to as a business so there are certain laws you have to called bad business bad debt business bad debt expense I believe I'm not 100% sure you have to follow certain guidelines right so if this person lends money let's say I lend you money and I need the money back and you're not paying me back. So legally, what I have to do is just like a business, I have to send you letters saying almost like collection letters, you owe me the money, please respond. If you don't do it, as time goes on, then you could potentially claim a loss if it's done in that aspect. But if I lend you money and it's just one friend to another friend and you don't pay me back, for the most part, there's nothing you can do. I think you have to really send the guy a debt collection letter like like you're running like a >> and you have to have a real loan agreement and everything. >> Oh my god, we almost forgot the uh the 500 pound elephant in the room. Everybody jokes around about this. Oh, I could swipe my credit card. It's a business expense. I could pay for dinner. It's a business. You want to buy a new MacBook? $8,000 with 50 gigabytes of RAM and terabytes and hard drive. I don't even know this stuff. Business expense. What's a real business expense? What's not a business expense? What's realistic? because everybody's talking about now like, "Oh, before I file for last year, let me see all these things are business expenses." >> So, >> could you how about this? Could you go to if you only needed a $1,100 MacBook for your business, could you go and say, "I'm going to get a $5,000 MacBook with every add-on with Apple Care," which I would never pay if it was out of my pocket, and say it's a business expense. If you're using it for business, >> you're using it, but you really you need a a $200 computer from >> Now, let me ask you, how smart is that? You, the business owner, that's spending instead of a $500 computer, you're spending a $5,000 computer. So, you could save a few bucks on taxes, but you're really spending $4,000 extra on the computer. >> Just the terms I hear people saying about it's a business expense. It's a It's an overused. It's an overused. >> Me and Israel are content creators. We could really say everything is we're going we're making a wedding and you document the whole wedding. It's like it's all business expense. It's all content. So where do you draw the line? >> Okay. So let's go let's go through that. >> Yeah. So we're influencers. >> It has to be an ordinary and necessary business expense for the industry that you're in. So you in your industry, let's say you're going to a wedding and you're actually going to take videos there, right? You can make the case that it's a business expense. You needed the plane ticket. You needed the Uber to get to the plane. >> No, like >> No, I'm saying that's a business expense. >> As an influencer, you're basically a news company. A news company, just like a news company flies to, I don't know, to Iran. And >> but you also have to follow certain laws, rules. You have to have good recordeping. Who did you meet with when you flew to uh you going to your friend's wedding or you actually going there for uh >> content? >> For content creation, that's where you would need a >> guy pulling out his phone documenting anybody in the world. It's always content creation. you you is it the question you would have to ask your accountant is this an ordinary and necessary expense are you is it and you can make a case yes >> if I go to steam with my kids and I document the whole thing >> no that's different you >> but it's content >> well you can't you certainly can't deduct your uh your wife's plane ticket your kids's plane ticket the hotel ticket the hotel ticket cuz you there's a certain recreation there >> again you would want speak. You would want to speak to your accountant and hopefully they they're wellversed in your industry. However, someone has a business and they're going with their wife and kids to a restaurant and they go, "Yeah, this is a business expense." No, it's not. [snorts] They're ordering all taking all their Amazon's Amazon receipts and going a business. No, it's not. Your situation is gray. It's a gray situation. It's different than what many people do where they're just going business expense, business expense, business expense >> and then they win a $10,000 even number. >> You I would look at the I remember looking at the general ledger and you see Costco, Wegman's. It could be that they're going to Wegman's to buy food for their business every day. You know, Shopright, it could be, but and also there's certain, like I said, record keeping laws. >> Office pantries is deductible. If you're feeding all your employees, is that considered a do you familiar with that? >> I I'm not 100% familiar. It's certainly deductible. I don't remember the exact laws around it, but you could look it up on Google. >> Yeah, certainly. There is deduction for that. Yes. >> Did anyone ever punch you in the face as IRS agent when you were ordering them? >> No. No. >> Do they ever smack you, kick you? >> Never. No. >> Curse you out? >> Curse me out. Yeah. >> Do they say you dirty Jew IRS? They never They never did play the the race card. >> No. Never. >> Never. >> I have had people scream at me about Barney Frank getting away with taxes. Why is he not sitting here? [laughter] And uh talking about how unfair it is or and I've had a lot of that. But usually people are for the most part civil and there are people that are very emotional and you learn to handle it. You know, like I said, it's a very scary thing to be dealing with the IRS. People don't realize how scary it is until they go through it. Your life is upside down. All your childhood traumas come up in that in that thing. And your whole life can be turned upside down. And uh you deal with a lot of people with fears with a lot of big heavy emotions. And my heart always went out for them because my god their lives are upside down >> with with audit >> with with the audit. It's open for three years. There's anxiety. the wife is unhappy or the husband's unhappy, you know, and uh >> have you seen people get divorced over these audits? >> Uh I've heard stories. I mean, they're not I don't see the divorce ceremony in the audit, but [laughter] yeah, >> from people you visited, it's suddenly the end of >> I know people in personally that come talk to me in the from the Jewish community. They come to me over the years and their lives are upside down. Their marriage is not good. Their kids, they're stressed out >> because of the audits. Yeah, it could be very scary. Can be very, very scary. >> So, I think my takeaway is Iris is pretty reasonable. They're not looking to go after everybody. If your numbers are totally off and doesn't make sense, you know, if you're a barber shop and you have and you're driving a Rolls-Royce, [laughter] it's probably not deductible, right? >> Yes. >> I mean, if you're running a private wealth management firm in the Hamptons, you're driving a Rolls-Royce, it makes more sense, right? >> Yes. So, if things are totally out of whack, they probably don't make sense and IRS will be concerned and will go after you. Takeaway is pay your taxes, make the deductions be half normal. And any time you're being audited or you have major problems with the IRS, you call my buddy Israel Ostrov. He knows the tricks. He'll calm you down. He'll say, "You know what? Instead of being having anxiety and fear, just pay me. I'll take care of it all. I'll represent you." We'll get a number. You'll write out a check or whatever it is. >> Pretend you're a veteran. >> Sad. That's it. >> You get a pension. Hold on. Israel. >> Think they pay you. They don't have to have the stress. You just take care of it and it's over. >> Israel, what's a pension thing? Two different questions at me. >> Oh, I'm sorry. You got a good pension after >> I I left. I left. It would have served me better to stay at the IRS >> for 20 or 25 years. >> The 25 until retirement age in terms of pension. My pension is not that good cuz I left early. Uh, I like I said, the reason why I left the IRS is to help people. Uh, I I just want to say that when it comes to representing people that are dealing with this, because I've seen a lot of representatives, sometimes the best representatives were the ones that had no name, no no letters to their name, and sometimes the worst were the ones that had ESQ or CPA. Uh, that doesn't mean all were bad. I'm just saying when it comes to someone representing you, do you want the case open for 3 years or do you want a representative that's proactive that understands what the IRS is looking for and that instead of this case being open for 2 3 years, it will be open a quarter of that amount of time or half, depends on the situation. And uh my takeaway to you is if you're dealing with the IRS, you want somebody that's going to give you good results and you want to get back to your life. Now, I don't know which one of you asked the question, uh if you're being audited by the IRS, what you should look for, you want you want to make sure that this thing is not open for three years. >> What does that mean open for three years? You said the case is open. Sometimes it's audited after the audit that can it can sometimes be open for a year plus and then crazy for three years. Then you file an appeal and then uh and then and then by the time it it gets to the appeals officer's desk and it gets resolved it's already three years later and let alone the headache of everything. So you when you get involved with quick >> quicker as efficient as possible and to get the best results. >> What do you miss the most about Kates living in the Syrian town for all this time? >> I live in New Jersey. >> New Jersey. >> Let's get it straight. I live with Ashkanaz Syrians all mixer. >> What do you miss the most about Crown Heights or nothing? >> I don't know. When I go to Crown Heights now, there's more establishments, you know. Uh I think what I miss most about Crown Heights are the people, the friends. I have good cousins there. I have uh aunt and uncle there. My parents are there. There are these old uh teachers. You know, when I was younger, there wasn't an appreciation for all the connections I've had. And now that I'm like in my 40s, low 40s, there is a an appreciation for all of the contacts I've had when I was younger. So whenever I go to Crown Heights, it's it's like feeding the soul of seeing all the cousins I've taken for granted, you know, cuz you're young, you take everything for granted. My parents are still alive, so it's a blessing to see them. My aunt and uncle, it's a blessing to see them and to see friends. So I miss that. One thing about Crown Heights, >> the connection, the livelihood, which can be viewed upon it, it can be viewed from the outside as chaotic, right? >> But there's a something very beautiful about it when you're not in it. When you're not in it and you're away from Crown Heights and you're not in that socalled chaos, which by the way, I don't think is chaos, there's an appreciation for it. M >> thank you very much Israel for your time. >> Thank you so much for coming. Again, we're going to have his information how to reach out to Israel for all your issues with the IRS or preemptive resolving your your taxes and your bookkeeping. You're going to reach out to Israel and he's going to take care of you. Thank you so much for coming on the show. >> Pay your taxes, keep organized, and you won't have to use Israel or you want him as a consultant. >> Thanks so much. Thank you.