Using a gun and handcuffs, Robert Nordlander chased tax evaders and money launderers around the world for the Internal Revenue Service. So considering that it’s tax time now, he’s our guest on the Lean to the Left podcast, where we talk about taxes, audits, avoiding trouble with the IRS, and a lot more.

As an IRS-Criminal Investigation special agent, Nordlander was a highly trained federal agent who spent over 20 years chasing tax evaders and money launderers across the globe. His investigations ranged from simple embezzlement to cryptocurrency to using foreign trusts to hide income. He has traveled to various countries on behalf of the United States training other countries' federal investigators.

Nordlander’s specialty is following the money, whether in a divorce, partnership dispute, stealing inheritances, or in criminal court. He also helps defense attorneys in criminal tax investigations, and is an expert in how to deal with the IRS with unpaid taxes.

He is an Amazon best-selling author, having written two books, "Criminal Tax Secrets: What Every Defense Attorney Should Know" and "Unpaid Payroll Taxes: A Time Bomb You Can Defuse."

Nordlander is a licensed CPA and a Certified Fraud Examiner. He also hosts two podcasts -- Fraud Fighter Podcast (which is about the forensic accounting and anti-fraud/anti-money laundering industry) and Criminal Tax Files (which is about criminal tax investigations).

"We have a system where individuals or corporations self-assess their tax liability and then, report that information to the IRS," he points out. "The best way to get outta stay out of civil trouble is just by filing whatever's truth and honest and file it on time and accurately."

Show Notes

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Show Transcript

[00:01:30] Bob Gatty: All right. Hey, before we get into specific tax issues, I'd like to know what you think about the Republican plan to, in effect defund the Internal Revenue Service and replace the income tax with a 30% national sales tax. 

[00:01:48] Robert Nordlander: The issue is that there has to be 

[00:01:51] Mark M. Bello: it wasn't 30%. Was it? 

[00:01:53] Bob Gatty: Yes, it's 30%. 

[00:01:54] Mark M. Bello: 30. Okay. . All right. 

[00:01:56] Robert Nordlander: 30 seems a little high to me, but that's 

[00:01:58] Mark M. Bello: yeah, me too. 

[00:02:00] Bob Gatty: Actually, if you wanna quibble, it depends on how it is figured out, but the high number that the Democrats are using to blast the Republicans with is 30%

[00:02:13] Robert Nordlander: Okay. Okay. All right. All right. The issue is that there's a price to pay for a civilized society, and that's, some type of tax system. Back in the day, it was what? Stamp taxes and excise taxes, and then, Later on became an income tax. Then income taxes now and social security taxes are what really fund the government these days.

[00:02:36] So there has to be someone who has to collect the taxes. The question is who and how are we gonna do it? The Internal Revenue Service right now is the tax collector for the federal government, of course. And they're charged with assessing and, making sure that people pay their fair share or what's owed.

[00:02:55] And you can't have an organization like that without being funded. It's, just a matter of we have a voluntary compliance system, which means people self-assess their taxes by filing a tax return. Either get a refund or the owe, and someone's gotta go out there and do that work. So for the government, whether it's congress, Republicans, or Democrats to defund the IRS, who's going to cut the taxes is, the first thing.

[00:03:24] And I, I would dare say that the way the tax code is written and why Congress has done what they've done. They've got to have at least a fair minimum to operate this country by collecting the taxes. And I don't believe defunding the IRS is gonna be the answer. Because if you defund the IRS, who's gonna collect the taxes, and we work on a system of, frankly, of putting the fear of God in people to pay the taxes.

[00:03:55] Because the IRS does have a lot of power which does not need to go through the court system in order to collect the taxes. And once people understand the IRS has, is defanged. Then people are not gonna pay. It's bad enough as it is now with people, not with cheating on their taxes.

[00:04:11] It'd be much worse if folks know that the IRS is just not gonna have any power to collect those taxes. So that's, the first thing. The second thing regarding the. Republican, we call it national sales tax. I personally am a believer of the national sales tax. I think it'd be a lot easier system to do, and this is my personal opinion, of course.

[00:04:32] It, is a way. Now the question would be the, percentages the devils in the details, but every state that I know of has a sales tax system. And if the IRS could somehow, someway figure out a way or congress figure out a way where they can piggyback on the state sales tax system and have a federal sales tax system in this work, I would be actually for it.

[00:04:58] You would have less of an IRS need and then you'd have more of the counties and the state governments collecting these taxes and they're collecting the federal taxes on behalf of the US government. Get a small slice of a slice of it for their for their troubles and send them money up to the federal government.

[00:05:16] I personally think it's a better idea. Versus all this other stuff of income taxes and who gets the earn income tax credit and, all these, I think what I call social engineering when it comes to these taxes, because let's face it, Congress makes these laws, wants to benefit certain things, which is okay.

[00:05:37] You've got kids, you get certain deductions, you go education, you get certain deductions, you have a business, you get certain deductions. All that stuff can go out the window and only you would have to deal with is just a sales tax issue. I personally the, I like the idea of it.

[00:05:51] I don't, it's not gonna go very far at all. There's too much at stake. But the theory behind it I'm, actually all for. 

[00:05:59] Bob Gatty: So you like the idea of replacing the income tax with the national sales tax? Is that what I'm hearing? 

[00:06:07] Robert Nordlander: That's exactly what you're hearing. Okay. When you think about it, many state and counties already do this.

[00:06:14] You have even, I know in North Carolina you have a real estate tax, right? You have a property tax and the county will actually look at the property tax and assess it, but the county also collects on behalf of the city. So you have a city tax and the county tax, but the county's going to get a certain percentage of that money from the city for their hassle.

[00:06:39] But the city gets their money. So it's the same same valuation in real estate and there's a city county, there's a city tax and a county tax, but you got one entity collecting it. But it is dispersing it. And I think actually it's more efficient if you do the same concept with a, with the states, let's the states handle it and then turn the money over.

[00:06:59] But let them, I know there's maybe a constitutional issue about telling states what to do on behalf of the federal government but let the states get a part of the part of that sales tax. Let them go enforce. I think it'd be a lot easier. 

[00:07:13] Mark M. Bello: I, I actually agree. I actually agree with you. I it, also creates a system where everybody pays taxes.

[00:07:22] The biggest criticism right now of our current system is that this group of people doesn't pay taxes. This group of people does. A person who makes a small income is paying 20, 30%, but a billionaire pays nothing. It would take all of that away. I, don't know, how do you, how you calculate what a national sales tax would look like, but I certainly like the concept.

[00:07:48] Robert Nordlander: It makes that a lot easier too. All these accounting I know TurboTax and all these people will be upset H&R Block, they would all be upset because they're, outta business, right? But then you can focus more on. Listen, there is a sales tax already system already in place.

[00:08:05] Add whatever federal tax on top of that, whatever the rate is, and then go with it. You could literally have 50 IRS employees, one IRS employee responsible for each state for collecting the taxes, right? And make sure the state, is in compliance in that type of system. You would already have that, the way you could be lean on the tax collection and then let the states deal with the with the fallout if there's issues.

[00:08:33] Mark M. Bello: I suppose there's a suggestion that, that it would have economic consequences where if you're trying to sell something and you're adding a a, buck or two in taxes to the sale, that will somehow depress sales for lack of a better way. Somebody would choose not to buy because it's cost more money.

[00:08:56] Robert Nordlander: But that's, is that really a shell game? They're already taking the taxes out anyways. No, I hear you. I hear you. Yeah. If you, I'm already having my taxes, let's say 10%, 20% already taken out to begin with. I'm just now getting less money to pay for it. I think people will be, honestly, would be more cognizant of the tax code if they knew, oh, great.

[00:09:18] My sales tax went up another, 1%, 2% What in the world Congress is doing with my money? 

[00:09:23] Mark M. Bello: That and everybody and, everybody who buys pays that. That's what I like about it. 

[00:09:27] Robert Nordlander: That's what I like about it too, honestly. And when you think about a progressive tax code, just something to think about.

[00:09:33] Let's assume that, bread costs, let's say a dollar, right? I know it doesn't cost a dollar. Let's assume it costs a dollar. So it has to be cost a dollar outta someone's out of someone's pocket. If someone's in the 10% tax bracket, they have to make a hundred. They have to make a dollar 10 to pay the $10 to pay the 10 cents tax.

[00:09:51] So they get a dollar. So they can buy the bread. . Now, if someone's in the 20% tax bracket or 30% tax bracket or 50% tax bracket, whatever that is, they have to make a dollar 50 to buy a dollar bread. Is it really fair for someone who has to make more money in order to pay for the same product that somebody else does?

[00:10:15] That's it's a philosophical social discussion. But when you have a progressive tax bracket, people who make more money have to pay more taxes. So ultimately the cost of that bread that they're buying is higher than anybody else. 

[00:10:32] Mark M. Bello: Although, the criticism of the current code politically is that the larger income people are paying less taxes, not more 

[00:10:40] Robert Nordlander: I would dare say I don't think that's really honestly true in some ways, if you wanna take the social security tax out of it, I don't think that, I don't think it's really true.

[00:10:48] I've been doing tax returns for over 20 something years. I've seen every strata of social economic system out there. The people making 50, $60,000 a year are not paying any federal income tax whatsoever. They're not paying it because they don't owe it. Anything above and beyond that they owe. Now, social security tax is a different animal altogether because you do get the money in theory later on down the line.

[00:11:16] Even though we have a system where we pay now than there's no money, there's no pot of money sitting out there waiting for you. It's just an i o u. But you take Social Security tax out of the equation. I don't, no. The federal income tax code, people are paying in a higher share of it. There's a progressive tax code that we have.

[00:11:36] So personally like the national sales tax issue, I just like it because I think it's fair. And even if we go back to the, and some people don't, like this from a religious, standpoint, when you go back to the very earliest tax systems and the old Testament of a 10%, what they call tithe, everybody paid the fair share.

[00:11:56] Whether it's the richest guy in the in the country or the poorest person, they still had to pay their percentage and that was it. And they also had their old, their own how to pay for, the poor people and that type of stuff. But the point being is that everybody had to pay something into the system.

[00:12:17] Mark M. Bello: How do you feel about the flat tax as opposed to a progressive tax? 

[00:12:22] Robert Nordlander: I like the flat tax, make things simple. 

[00:12:27] Mark M. Bello: You prefer sales tax, the flat tax or sales tax. 

[00:12:30] Robert Nordlander: I think a sales tax is a flat tax. 

[00:12:32] Mark M. Bello: That's true right here. 

[00:12:34] Robert Nordlander: Here's the question of about how at what point of collection are you doing?

[00:12:36] Are you doing it on a income level or on a consumption level? And sales tax have been a consumption level. Which personally, if I wanted to, if I earned a hundred dollars and I decided to save it and invest it, and I don't wanna spend it, that's that's my prerogative. I wanna spend $110 and go buy a car or whatever else I wanna buy, then I'll, pay the national sales tax or whatever else it is.

[00:13:02] I'm okay with that. 

[00:13:03] Mark M. Bello: So, you prefer the sales to the flat income tax? 

[00:13:06] Robert Nordlander: I would, but my second one would be a flat tax. Yeah, I hear you. It's lot easier that way. 

[00:13:11] Mark M. Bello: Agree. Want I wanna discuss your, forensics career. 

[00:13:16] Robert Nordlander: Sure. 

[00:13:17] Mark M. Bello: From the, from a political standpoint, you've got a, you've got Trump's accountant going to jail, but Trump is free.

[00:13:27] The accountant. Who does this? Taxe goes to prison. The person who files and signs the return doesn't As a fraud fighter, do you see culpability for him and his children or others in his organization? 

[00:13:40] Robert Nordlander: Let me do one little caveat. I'm only reading the headlines and reading a couple of the paragraphs.

[00:13:46] I am not sitting in the courtroom and really delving into this, into the situation. But knowing, 

[00:13:51] Mark M. Bello: but nor am I . 

[00:13:53] Robert Nordlander: Yeah. But knowing what I know about the court system and how it's operated in doing forensic investigations into organizations like this, it's not uncommon. Number one is the C F O or whoever's writing out the checks, doing the fraud.

[00:14:09] They're, the ones going to prison. Now the question's going to be, is the return preparer? Does the return prepare, know about the fraud? And how much culpability do they have in that situation? . It looks like to me, I say looks cause I'm not behind the scenes that they, being the prosecutors, whether it's federal, state, do not believe that the return preparers knew of the fraud going on.

[00:14:36] If they knew of the fraud, they different story altogether. But telling a return preparer, here's my expenses, here's my income, and they just fill out the form. There's no willfulness on their part of, committing some type of tax crime. Same thing with the owners. If the owners, let's say the owners as Trump or anybody else in general, they also wouldn't be held culpable if somebody else was embezzling either.

[00:15:01] Now you may say there should be some due diligence. You should ask more questions. And that's that would be for any business, whether it's Trump or not. It looks like to me like the system worked if the accountant was falsifying invoices. doing things he shouldn't be doing.

[00:15:18] Lying those type of overt willfulness acts of tax evasion, then they should be punished for it.

[00:15:25] Bob Gatty: Okay. We talked through the issue of the national sales tax and a flat tax. Is, that your solution do you think to get everybody to pay their fair share of taxes? 

[00:15:42] Robert Nordlander: When we define fair share, how we defining fair and that's the question and promote. Point of view, my version of fair is everybody pays a certain percentage and that's it.

[00:15:54] That's my version of fair. Some people's versions of fair is if you're rich, how you, however you define rich, you should be paying more taxes and percentage wise than somebody else. If you'd really wanna be fair, you take the total amount of taxes that should be collected divided equally along everybody.

[00:16:14] That would be fair. But I don't think everybody would like that. Because the people's income probably can't afford it. So we go with, the percentage method, which is like the based upon the Old Testament system of our percentage method of the income tax. That's how I would look at it.

[00:16:30] But it depends when you say the word fair, people have a different version of what fair is. My version is a flat tax in a sense or a flat sales tax. 

[00:16:41] Bob Gatty: Everybody paying the fair percent the same percentage? Is that what you're saying? 

[00:16:45] Robert Nordlander: Correct. Okay. And I'll tell you what, this also would do.

[00:16:49] People get upset that, and I see this in, nationwide publications. Oh, the poor people are getting audited more than the rich people. , okay? You hear that quite often. Why is it? First of all, they have to understand it's because the poor people are getting tax credits, which means by being poor, the IRS is giving them money, not that they earned the money and or do a refund.

[00:17:15] They're getting money for being poor. Now, that's something that we decided to do as a society. Okay, fine. But the amount of fraud that goes on in order to get those people into that category of quote unquote working poor is just unbelievable. You take that tax credit away, okay? You don't have fraud down to the lower levels because people who are making 40, $60,000 a year are not paying the federal income tax to begin with, and the only reason why people who are getting audited, they're making less than that, is because of the false tax credits that they're receiving.

[00:17:54] Okay. That's how it works. So a lot of this fraud that goes on, frankly, is from those lower levels, because it's free money.

[00:18:04] Mark M. Bello: When you talk about taxes, whether you're talking about the poor or the rich I've been around a long time and I've been rich and poor , and I've benefited from, I've benefited from being rich and I've benefited from being poor.

[00:18:21] And now I'm a senior on social security and I benefit from that, although you could argue that I paid into the system and I deserve it, right? It was quote my money, unquote. But, am I dreaming or are there any sensible suggestions that you would have? Whether, it's supporting the poor or supporting the wealthy politics enter into the tax code all the time.

[00:18:48] This politician supporting rich constituents wants this tax benefit to the code because he got a great contribution from somebody wealthy, or that politician wants a handout for the poor for this reason or that reason. What if we took political giveaways out of the tax code? What would it look like?

[00:19:15] The flat tax? 

[00:19:16] Robert Nordlander: Probably, I guess the question would be is the devil's in the details. What do you mean by political giveaways? I don't know exactly. Give me an example of a political giveaway. 

[00:19:24] Mark M. Bello: A tax credit for buying an electric car. 

[00:19:27] Robert Nordlander: Okay. That would be a I don't know if that's considered a political giveaway or incentive.

[00:19:33] I would agree there should be no tax credits for, getting a for getting an electric car. 

[00:19:39] Mark M. Bello: Just a te a tax credit for childcare. All that's, both sides of that issue. 

[00:19:46] Robert Nordlander: Sure, Me personally, I would say none of it, but that's just me. Just do a flat tax and be done with it.

[00:19:52] If you've got five kids, you've got five kids. If you've got five kids and three of 'em are in childcare, and you've got five kids and three women in childcare that's, your prerogative of, as an individual. You're making those decisions in some, in, in a lot of ways. But unfortunately, 

[00:20:08] Mark M. Bello: my question, my question though is politically, do you see any of that being possible?

[00:20:13] There's, there always seems to be some political reason or a handout on, either the top level of income or the lowest level of income. 

[00:20:23] Robert Nordlander: As long as Congress is going to play games like this, you're going to have a code like this, and it that's what makes it so frustrating for most people, is that.

[00:20:34] Oh, I don't qualify this year. Cause I make too much money. Yes. I don't oh, I bought this car, do I get this? And it's just ridiculous. If you had a flat tax or a sales tax and no tax credits, period. It makes life a lot easier. Yeah. For everybody. I, think but you're right, there are incentives or deincentives, depending on how you look at it, of certain activities that the Congress has decided that are beneficial for society in general.

[00:21:04] And that's how they fix it. I personally wouldn't do it that way, but I'm not in Congress. . I wish you were . I was, at one time I was a, city councilman back way, way back when on my young days. And I had this quote, and I, think I ticked a lot of people off. I said, every year we play Santa Claus and every year we have to carry bigger sled.

[00:21:27] If you're going to play Santa Claus, the sled has to bigger and bigger every year. This is ridiculous. , why are we giving money away to this arts program and this nonprofit and this everything else? People got their hands out, all this car type of garbage. We shouldn't be in the business of redistributing money.

[00:21:44] We should be in the business of collecting the income taxes or collecting the taxes period from, the property taxes, from sales tax issues, in providing service of fire the streets and the garbage and that type of thing. We should not be in the business of redistributing this money to other quote unquote good agencies that help our society.

[00:22:05] I'm a capitalist at heart. If it works you, win. If it doesn't work, you lose. Ultimately society will determine if the museum, or the art museum or anything else should be out there or the light or how big you know this I'll give you an example. These fine art agencies that they had or anti poor stuff, or maybe not anti poor or, just they wanna lose swimming pool somewhere else help fund this.

[00:22:36] No, it's not my job to fund that stuff. Have the other, have a other, have a higher Walt Disney World. Is this fine without me. 

[00:22:45] Mark M. Bello: On the other side of that deductions? You some, wealthy billionaire deducts his Maserati because he drives it for business. And I'm, just using, I, I know it's a facetious example, but there is some expanded political thought regarding what is a business deduction and what is not.

[00:23:11] Yes. 

[00:23:13] Robert Nordlander: The IRS and by default, Congress has determined that a deduction has to be reasonable, okay, and necessary. Now, you define what's reasonable, necessary. In one way, somebody might define reasonable, necessary and ordinary another way, but every business is different. If I'm in the business of renting out my Maserati because I, want to rent out my Maserati, the people who like to drive around Maseratis, let 'em do it if it's reasonable, necessary.

[00:23:44] Same thing I'm, a barber. What's reasonable, necessary is different than what's a car dealership or a doctor. But they're allowed to deduct these reasonable, necessary expenses, and they should be. Personally, I don't care if a rich person depreciates his Maserati or not.

[00:24:03] You bought the car. You want to use it for business. You wanna depreciate it based upon the laws. Go right ahead. I don't I have a Toyota Camry that's probably worth $5,000 . It's probably not worth depreciating at all, which is fine. But I don't begrudge someone who's made a lot of money, more than likely, almost always, legitimately, by providing some type of service.

[00:24:26] Bill Gates is worth a billion dollars or billions of dollars because he provided Microsoft and, these people that are quote unquote rich, typically have done something for society that people enjoy their product or services. And Capitalism 1 0 1 says they're worth a lot more because they provided more services for us.

[00:24:46] I like it that way. I like having my Xbox or whatever else it is apple phone. I'm okay with it I like it. And if they get certain deductions, they get certain deductions, but they shouldn't get any more deductions legally than, the plumber down the street either. That's the that's, the issue.

[00:25:06] Mark M. Bello: It certainly is. 

[00:25:09] Robert Nordlander: But they're in a different industry too 

[00:25:11] Bob Gatty: mark let's Skip down to your next question about you got it. The nitty gritty of taxes, 

[00:25:18] Mark M. Bello: the nitty gritty of taxes. Yeah. , most of us are in the process of preparing our tax returns between now and April, let's say. How do we avoid getting in trouble with the IRS and avoid being chased by the nasty IRS agent out there?

[00:25:35] Bob Gatty: Like him 

[00:25:37] Mark M. Bello: what are your recommendations? 

[00:25:39] Bob Gatty: Like, these guys like norlander that's, illegal 

[00:25:42] Robert Nordlander: chasing . 

[00:25:43] Bob Gatty: They, I don't think I, if I saw that guy coming, man, I'd run, geez. Oh, flip. 

[00:25:48] Mark M. Bello: He's, he scares the hell out of me. I'll tell you that. I'll tell you. I know 

[00:25:54] Robert Nordlander: there is a, proverb in the Bible says, the wicked flee where no man pursues,

[00:25:59] Bob Gatty: All I know is I don't want him looking over my taxes when I deduct the 500 bucks that I spend on promoting my podcast for, which I get no money. 

[00:26:11] Robert Nordlander: No I, completely understand that. The, issue is that there's, two things that we're, talking about and I wanna make sure that we don't confuse the two.

[00:26:17] Number one is there is a civil function of the IRS and that function is to assess the taxes and collect the taxes. And we have a system where individuals or corporations self-assess their tax liability and then, report that information to the IRS.. The best way to get outta stay outta civil trouble is just by filing whatever's truth and honest and file it on time and accurately.

[00:26:43] That's really know, there's always gonna be some mistakes here where maybe you forget something that it happens and then you'll get it one of those nasty letters from the IRS. Excuse me, you just hold some stock and you didn't record it. Okay, fine. Then you have the other issue of the bucket of people who intentionally don't want to pay what is due.

[00:27:07] Now, the law does not separate between $1 of evading a taxes or a billion dollars. There's no dollar amount in the statute. It just says if you evade taxes, you are guilty and you can be sentenced up to five years in prison. So there's no dollar amount associated with that. . But from a practical standpoint, the IRS does have to make a decision.

[00:27:30] Federal prosecutors do have to make a decision about who should be prosecuted and who should not be prosecuted. And most of the time it's based upon the tax loss, how much damage was done to society and in general, based upon this person's actions. They owed a hundred thousand dollars in tax. They didn't pay for it, not because they couldn't pay for it, but because they intentionally lied, hide, deceit, all that type of stuff, what we call willfulness.

[00:27:59] They should go, to prison. And there's a system to do that. So for the most people who actually are filing the tax returns and being reasonablewith their income, I'll say reasonable, they're not gonna have any problems. Most folks out there are W2 earners, and it's hard to cheat on your taxes when you're a W2 earner.

[00:28:18] The taxes already been taken out for the most part outta your paychecks. . If you have a standard deduction that's higher now than it was a couple years ago, there's not really much you can do to cheat on your taxes on that situation. Most of the cheating goes either from the tax credit standpoint where people say, I don't have enough money.

[00:28:36] I'm working poor. Or, I went to school and you didn't go to school. The education credits. That's where a lot of some of the fraud goes. Or it's small businesses, self-employed individuals who either are not reporting other income or deducting things that frankly are just false. Those type of people need to be investigated and prosecuted, those who willfully do things.

[00:29:01] So dealing with me as a criminal investigator, it was just people who deserved to go to prison. Those are the ones who actually wanted to go because they were so blatant in their activity that hadn't stop 'em. But the individual who transposed the number puts down 96 versus 69. forgets something small here and there, a little bit interest income that's that, just, it is what it is.

[00:29:26] There's no criminal intent there. 

[00:29:29] Mark M. Bello: There's also, is there not a level of you get audited, you've done something wrong. Even if you've done it deliberately, there's a level at which if you cooperate and you create a schedule or a, repayment schedule or what have you, they'll, they'd rather get the tax dollars than, put you in prison.

[00:29:52] Is that so or not? So 

[00:29:54] Robert Nordlander: That is true. That is absolutely true. That if there is a mistake, that you didn't intentionally do anything wrong, you just screwed it all up. There's there's an element where the IRS wants to figure out how much you owe and then develop some type of payment plan or payment system to where they get their money back, plus probably penalties and interest, all that type of thing.

[00:30:15] Then there's the element of you did something wrong and you intentionally did something wrong, but you got caught. Now, is it still a crime? Yes. But for the most part, the IRS was to get you back into how much do you really owe? Let's get a payment plan. Let's penalize you and put some interest to it, and then let's get you back into the fold.

[00:30:36] Mark M. Bello: That's their preference, isn't it? Versus 

[00:30:38] Robert Nordlander: that would be their preference. Yes. Because frankly, you can't put every tax cheat in prison, number one. But number two is the ultimate goal is to get the money. So that's you, would be Right.

[00:30:48] Now, when it comes to bigger amounts, now that becomes the question of what do we do with this guy who just didn't, doesn't just owe the IRS 5,000, he owes the IRS 500,000. We, as a society have determined that type of person needs to be made an example out of, and that's what the IRS looks for, is for those individuals who have higher amounts, let's say six figures and tax due and owing that they can put literally, in a sense, constitutionally applicable, put their head on a stick in front of the the courthouse and say, don't be this guy

[00:31:30] Because they wanna make national news out of it. They wanna do a press release saying, this guy did all this bad stuff. the government a half million dollars on taxes. He's gonna go to prison for three or four years and he's gonna owe the money anyways. Don't be this person. There is an element of fear that the IRS wants to put into the average taxpayer, so they have confidence that the system works.

[00:31:53] Bob Gatty: So if we're audited, how does that get turned into a criminal investigation? 

[00:31:58] Robert Nordlander: If you are audited, like I said, there is an element, what they call willfulness. Alright? And the auditors are trained and most of the times the issue is not the audit, but the collection of the tax. You can be audited and say, Hey, you didn't, you deducted something You shouldn't have deducted.

[00:32:19] You owe now let's say a hundred thousand dollars in tax. Oh, okay. So the IRS says you owe a hundred thousand dollars and then they'll start doing the collection activity, send you the, nasty letters they threaten to levy the levy your assets. They, liens on your property. They threaten to steal your children.

[00:32:37] They did all this stuff right to get you to get into something type of payment plan. Where most of the fraud occurs when it comes from a civil to a criminal, is not in the audit stage. It's in the collection stage. Cuz once the IRS says you owed the a hundred thousand dollars and they tried to collect it, that's where the rubber meets road.

[00:32:56] That's where people start saying, oh, don't pay me, pay my wife the money. Oh let me put this asset in my girlfriend's name cuz I don't want the IRS to seize it and sell it. That's where a lot of those crimes happen. From a civil to a criminal issue. It's not really the audit, it's the collection of the payment, because that's easier to prove willfulness.

[00:33:21] It's hard to prove willfulness. It's not impossible, but it's harder to prove willfulness if there's an audit, and let's say you depreciate something over five years and it should have been seven. Eh, so what it's, a small issue. The irs, there's a little task computation and say, oh, you now owe us money.

[00:33:39] That's hard to prove willfulness, but if someone's always not reporting the income, putting the money in someone else's name that type of thing that becomes more willful as well as over a year, over years. The IRS criminal investigations don't do typically one year tax cases.

[00:34:00] They'll do a four year, five year tax case. And the reason being is because at the end of the day, your audience is 10 people or 12 people in a jury box who may or may not have college educations that have to sit there and say, guilty or not guilty. And they're gonna look at the, facts as a whole and think whether or not this person should go to prison for the tax evasion..

[00:34:22] They're not gonna put someone in tax prison because they made a mistake. Nobody wants to be in that situation. So when the IRS criminal side looks at tax cases, they're looking through the view, the lens of a normal citizen who is out there in the streets, who's sitting in a jury box, needs to understand that this defendant did it year one, year two, year three, year four, you're five.

[00:34:49] And when they got caught, they hid the money here. And they put the money here. They did this here, and it wasn't $10, it was 10,000, 10 million, whatever else it is. The jury's gonna look at that and going, yes, I'm pissed off at that person. I'm gonna find them guilty. And that's the type of cases they're looking for.

[00:35:05] They're not looking for the honest mistakes or even the low dollar value amounts. 

[00:35:11] Mark M. Bello: Does, the IRS have different classifications of taxes that they that are more likely, for lack of a better way to say it, to trigger an auditor or criminal investigation? For instance, if a payroll tax, for instance, is considered a trust account as I understand it, tax?

[00:35:33] Yes. Yes. It goes into a trust fund. So a small business gets, into some financial trouble. They have a bank loan that they have to pay. And they're, balancing. A low cash flow, and they say the bank's gonna foreclose on the loan if we don't pay them. On the other hand, I owe my payroll taxes. I choose to pay the bank loan and delay the payroll taxes, and they get into a situation where they delay the payroll taxes a bit longer than the IRS would like them to.

[00:36:13] Is, that an example of a tax that the IRS cracks down on, or is are there priority taxes versus non-priority tax? How does that work? 

[00:36:24] Robert Nordlander: No it's, a good question. There is a high percentage of what's collected in, the US government is from payroll taxes. Whether it's federal income taxes and social security, I think it's 80% of all the revenue that comes into the US government is from either federal income taxes or social security income tax or social security taxes.

[00:36:44] That is a huge, amount of money. Congress has established laws that states that employers are required to withhold federal income taxes and social security taxes outta people's paychecks. The Congress has also established a law that says that when an employer is required to do they're holding this money in trust, which means, like what you said, they're holding it on behalf of the government and are required to turn that over to the government at particular times, whether it's quarterly, weekly whatever, Based upon the amount, the IRS and the especially Congress considers that as staffed of their money. When the money's not turned over at the proper time or collected. So that's how they look at it. And because there's a huge percentage of the revenue that comes into the US government, it's from these types of taxes, they will crack down on that one a little harder than just regular income taxes, and the reason being is because of this. It doesn't, number one they, consider it theft because you took it outta people's paychecks and didn't turn it over. Number two is the amount of money grows extremely high, very fast. If you've got one or two employees, it's not that much money.

[00:38:08] You end up getting a hundred employees, 200 employees, 50 employees. Boy, you start multiplying $10,000 per person times 50. You getting a lot of money really quick on a yearly basis. . And so that half million dollars becomes a million next year, 1.5, the year after that. It just explodes.

[00:38:32] Mark M. Bello: And, they add penalties, don't they? 

[00:38:34] Robert Nordlander: And they add penalties, True to that. But, from a criminal standpoint we, didn't look at the penalty side of it. We didn't look at the base amount of the money that was withheld. The employment taxes. So employment taxes are considered a higher priority than just a regular income tax in general.

[00:38:51] Just for, various reasons. Number one is it's a high percentage of income or requirement for the government to operate. And then number two is, if you don't get a hold of this pretty quick, it's just going to explode and it gets big really quick. And that's kind where the money's at, honestly is the payroll tax problems.

[00:39:14] Because like you said it, it's held in trust. It's the government's money's not being turned over. It's one thing to owe money so that they can take somebody's money and not turn it over . And employment taxes is considered taking the government's money and not turning it over.

[00:39:30] Mark M. Bello: Not just the governments, your employees. Your employees money. 

[00:39:33] Bob Gatty: You're stealing from your employees, really. 

[00:39:35] Mark M. Bello: Yeah, absolutely.

[00:39:36] Robert Nordlander: Ultimately it's the government's money, but it's on behalf of that employee. The social security, you're right, is the government's money, but it's held in, supposedly in trust on behalf of that employee.

[00:39:47] And at the end of the day, the IRS has to give credit, or Social Security Administration has to give credit to that employee because they earned the money. It just happened the employer just stole it or didn't turn it over. So the government doesn't even get the money. And then the government at the end of the day has to pay that money out later on.

[00:40:10] So it's a double whammy. 

[00:40:12] Bob Gatty: Yeah. So if I go to my tax accountant and I provide that individual with my information, and the tax accountant files the returns based on that information, some of which was false, could that tax accountant get in trouble? 

[00:40:33] Robert Nordlander: When you say trouble, you mean civilly or criminally?

[00:40:37] Bob Gatty: Criminally. 

[00:40:38] Robert Nordlander: Criminally. The answer is no, because there's no willful act to file a false tax return. If they're being lied to and they just fill out the form not knowing they've been lied to, yeah, then there's no willfulness on their part to commit a crime. 

[00:40:53] Bob Gatty: Ok. What about civil? 

[00:40:56] Robert Nordlander: Civilly they may be able to be in trouble because they didn't ask the right questions.

[00:41:01] I'll give an example. We were talking about the earning income tax credit and those tax credits for the working poor. The government as required the return preparer to ask certain questions and they get certain documentation in order to prove they qualify for this. If that return prepared did not do that, then they can be held civilly reliable for certain penalties because they didn't ask the right questions.

[00:41:26] Bob Gatty: Oh, I see. 

[00:41:27] Robert Nordlander: So in that situation, they would be because their due diligence was not there. But if the return on the flip side, let's say the return preparer asked the right questions and they're given false documents. That can't be, they can't be in trouble for that because they were bamboozled like the government was bamboozled.

[00:41:46] Mark M. Bello: From a legal standpoint, Bob, they have to be complicit. 

[00:41:49] Robert Nordlander: That's right. There has to be some type of willfulness intent to defraud somebody. Okay. . 

[00:41:54] Mark M. Bello: Going back to the trust funds that we talked about with payroll tax and, any other, tax bill that you have. I, know there's a lot of businesses out there that, that advertise.

[00:42:07] We can, if you owe a lot of money to the IRS, we can do this or we can do that, or we can lower the, amount you have to pay. Is that a typical thing? Can you negotiate with the IRS if you have a big tax bill and if you Yes. And if you can. Is there a tax that you owe that you can't negotiate, is like the trust funds we talked about?

[00:42:30] Robert Nordlander: Oh, good question. All right. Here's, a situation. The IRS is been authorized by Congress to collect and assess the taxes. There are certain situations where people just can't pay. , whether it's through bankruptcy or something else, for some reason, these people just can't pay.

[00:42:53] Congress has given the IRS the authority to negotiate tax debts, but then the IRS can make up their own rules about how they're gonna negotiate this. So Congress says you are allowed. And there's a statute out there. It says IRS will be allowed to negotiate tax debts. The US Treasury will determine how they negotiate it.

[00:43:18] So it is based upon the IRS and the Secretary of the Treasury to figure out what qualifies as being negotiable and how they're gonna do that. So the IRS makes their own rules up. in that situation, the IRS does. So there's, there are various ways to negotiate tax debts. The tip, the most common one is the pennies on the dollar.

[00:43:36] You're sitting there late night tv and you got somebody playing on a golf course saying, I for a thousand dollars, I got a million dollars negotiating outta the way and then you got these predatory, I call 'em, predatory tax resolution firms that prey on these individuals, but they know what the IRS rules are, and the IRS has certain rules and they have it in their manual about what qualifies for negotiation and how to do this.

[00:44:03] So if you know those rules, you can negotiate your tax debt. And there's various ways of, looking at it. There's probably six or seven different ways to negotiate a tax debt. But the pennies on the dollar is, really the main one. Most of the time people would qualify what we call installment plan.

[00:44:21] Just like you have a car, you'll, you buy a car. You owe the bank $20,000 for the loan of the car, and the bank says it's gonna be $500 a month for so many years. The IRS has got the same type of thing, or they have an installment plan. 

[00:44:34] Mark M. Bello: Trust funds too? 

[00:44:36] Robert Nordlander: Trust funds can be installment plans too as well .

[00:44:39] But the trust funds are considered if , it's a little more of a technical question, Mark. The trust fund, if an individual is a assign, is been penalized, what they call a trust fund recovery penalty. So you have a business owner who's been personally assessed this tax because the government says this is a penalty that trust fund can be negotiated.

[00:45:04] But it can't be bankruptable . It's one of those weird things. You can't just bankrupt But it can be negotiated with the IRS. But there's rules and regulations about what qualifies. And, the IRS, if you think about it, has to take in consideration. every social economic situation out there.

[00:45:24] So, someone in San Francisco had the same same benefit as someone in Idaho and someone in Miami. So they look at where you're living at, okay? They look at how many kids or how many dependents you have, what medical expenses your children have, are dependents. You may have a father that's responsible responsible for your father.

[00:45:45] And they have to take consideration who's responsible, who's making the money, how much money they're making, what their normal expenses are who's in their family household, where they're living at? They take all these things into consideration, and then you can figure out whether or not you can negotiate your tax bill somehow, some way.

[00:46:05] There's no straight answer for this is what works, but there's a formula in which they look at to determine what they'll accept. and the bottom line is that you can negotiate your tax debt for pennies of the dollar. It's true, but you have to be almost bankruptable, you almost have to be bankrupt in order to do the IRS is not just gonna forgive your tax debt because you look pretty. 

[00:46:27] Mark M. Bello: They would negotiate, the penalty before they would negotiate the tax owed, correct? 

[00:46:32] Robert Nordlander: Correct. And there's rules and regulations regarding negotiating penalties as well. But yes, but people don't understand is that this penny's on the dollar stuff, and this is the, common one is the IRS is gonna take out, is going to figure out how much your net assets are, what are you worth, and what your reasonable income going to be for the next 12 months.

[00:46:55] And it'll take all that, right? So if you have a hundred thousand dollars in equity in your house and you owe $50,000, the IRS is not gonna negotiate the $50,000. You have a hundred thousand dollars you can borrow on your house so you're outta luck.

[00:47:10] Mark M. Bello: It's almost like a chapter 13 or a chapter 11 bankruptcy evaluation, isn't it?

[00:47:14] Robert Nordlander: It's exactly what you're talking about. Yes. Yeah. It's exactly almost the same process. They will allow certain small things, but for the most part, you have to have no assets and very little income to negotiate the stuff away. 

[00:47:28] Bob Gatty: If you could talk a little bit about your criminal tax secrets book. What's a cover? Who's it meant for? 

[00:47:37] Robert Nordlander: Oh I, appreciate you letting me talk about this. The, I spent over 20 years with the IRS chasing tax I invaders and money launderers around the globe, and I put all my wit and wisdom.

[00:47:49] Hopefully wit and Wisdom into a book called Criminal Tax Secrets -What Every Defense Attorney Should Know. It is to help them understand what questions to ask, what documents to request to get their client the best deal possible. You can't change the facts of the case, but maybe the IRS messed up in their calculations or maybe they didn't ask the right questions, or maybe there's no willfulness and those, types of things.

[00:48:13] So it's really to help the defense attorneys understand behind the scenes how decisions are made into where they can get their client the best deal possible. Their client may be guilty of sin, and maybe they owe a hundred thousand dollars. Then let's figure out the best way to, to get good graces of the judge in order to sh say that we're sorry in say Mia Culpa, we're sorry. We're not gonna do it again. Maybe that's the answer to that question. Or maybe the IRS says You owe a hundred thousand dollars and you really owe only owe 80 because the IRS screwed up. The judges know you're guilty of 80 but not a hundred. So the judge can send you to 80, not a hundred.

[00:48:53] So the, book is really to help them evaluate the cases and know what documents to get and what questions to ask to make sure that they're, that all the facts are known. That's all. 

[00:49:04] Bob Gatty: Okay. Is that book Helpful, useful to the average taxpayer, or is it really only meant for lawyers? 

[00:49:12] Robert Nordlander: The audience intended is for lawyers, but anyone who's in the business, like a small business or return prepare or CPA, would find it helpful to see how the IRS goes from a civil issue to a criminal issue, and then once it becomes a criminal issue, how they make these decisions, that type of thing.

[00:49:33] But the book is really tailored toward attorneys who understand federal court and the federal court system, because I'm assuming I can't go into how to. what's pro bono means and what these other words mean. They may have to look some things up because, but it's written for an attorney, but it's, on the fifth grade level.

[00:49:53] Yeah. You just have to understand that. I'm assuming certain things that certain knowledge about what an expert is and what qualifies as evidence, that type of thing. 

[00:50:01] Bob Gatty: Okay. Where can people find your book?

[00:50:04] Robert Nordlander: Oh, Amazon. They can go to Amazon. It's, solely on Amazon right now. It's a Kindle and paperback.

[00:50:09] Okay. I would highly recommend those who are professionals, like CPAs, enrolled agents, attorneys buy a hardback copy or a paperback copy, because it's more of a reference than it is a feel good romance novel. This is not Mark Bello's fiction novels where you can read it on Kindel and enjoy it and and, say, okay.

[00:50:27] Thank you for, the next book. This one here, you may wanna take off the shelf if there's ever a question. 

[00:50:33] Mark M. Bello: Thank you for the shameless plug . 

[00:50:34] Robert Nordlander: Yeah, no problem. Mark

[00:50:36] Mark M. Bello: There's a guy in Michigan by the name of Levy who does tax negotiations. I, just crack up every time. He do, he runs ads on TV and he uses his last name as a business tool. It's 

[00:50:50] pretty funny. 

[00:50:52] You run a forensic accounting and tax resolution firm, correct? 

[00:50:56] Robert Nordlander: Yes, sir. 

[00:50:56] Mark M. Bello: Or are you retired? 

[00:50:58] Robert Nordlander: I retired from the IRS two years ago. After you put 20 years in, you can have some benefits and retire, so I decided didn't pay to stay, so I decided to go ahead and leave and just start a forensic accounting tax resolution practice.

[00:51:13] The skillset that I had is what can I do in the private sector? So I went ahead and left the IRS and decided to start my own firm. 

[00:51:20] Mark M. Bello: So, this guy I'm talking about who does tax resolutions? That's, exactly what you guys do. Is that correct? 

[00:51:26] Robert Nordlander: That is correct. Yep. Cause of my experience with the IRS, I thought that maybe I'd have a leg up of understanding what goes behind the scenes and many times the people I negotiate with. I know. 

[00:51:36] Mark M. Bello: So I didn't mean to pitch, I didn't mean to pitch your competitor. Sorry, . 

[00:51:40] Robert Nordlander: No It's all it's, all good. But yet to resolve because of my forensic accounting, which means accounting in court, following the money that skillset and then my skillset would, knowing the IRS I decided to open up a CPA firm that focuses on forensic accounting and which is follow the money as well as solving people's tax problems.

[00:52:03] I don't do tax returns, I don't do the bookkeeping system of it. My job is to You're in big trouble either with the federal government. Or you're trying to follow the money or you owe the IRS a lot of money, I'm hired to help solve the problem and get them back on their on their merry way. 

[00:52:23] Mark M. Bello: For both people and business?

[00:52:25] Robert Nordlander: Yes. 

[00:52:26] Bob Gatty: But you do radio and TV ads to bring in business? 

[00:52:31] Robert Nordlander: No, I do not. And the reason why is because it's, number one is I don't want those type of clients. Okay. Number two is this is a relationship business. And I would rather have an attorney call me and say, Hey, I have a client that really has a problem.

[00:52:47] And it's a lot easier to deal with than trying to figure out who qualifies for my services. Okay. Because I'm not interested in, in if someone calls me, it's fine, but that's not my, main focus is professionals who know the value of a tax good CPA, good forensic accountant, good tax resolution expert who won't help.

[00:53:09] Versus the person who's got a $10,000 problem they want make, I my fee is not gonna justify them trying to get out a $10,000 tax debt. Okay. Alright. Yeah. 

[00:53:20] Bob Gatty: So talk to us about your two podcasts that you have. 

[00:53:24] Robert Nordlander: I started two podcasts. One of 'em was called the Fraud Fighter Podcast, and that was a podcast that deals with forensic accounting.

[00:53:33] Who's writing out the checks, who's doing the work, and who's doing the training. And those are the questions that I asked. And I interview people in that sphere or that industry. And we just talk about fraud in general or maybe how to get business as a fraud investigator, that type of thing. The second podcast is called Criminal Tax Files, and it's really just goes over criminal tax from an insider's point of view about how the IRS evaluates a case goes over a case.

[00:54:07] Why they prosecute certain cases. And it's really me going over my book and explaining what goes on behind the scenes so people understand it's not just a willy-nilly thing that happens with the IRS. There is an intentional there's 18 months on average on a tax case. This is not something it's not like a parking ticket yeah An agent only maybe do two or three cases a year. So they're very intense thought out, typically, hopefully by the IRS when they actually do prosecute an individual. Okay. 

[00:54:46] Mark M. Bello: Before before we let you go, my podcast is, called Justice Counts and we typically discuss issues involving justice or injustice.

[00:54:58] On a grand scale, do you find the, tax system, the tax code a just system is, there a lot of injustice or is it typically fair to all citizens and businesses out there? In general, what's your assessment from a, from the standpoint of, it doing justice,

[00:55:21] Robert Nordlander: the tax code? The tax code is what the tax code is.

[00:55:25] It's congress making a tax code and the president enforcing it. That's really all it is. Is it a fair tax code? That's not how I would define fair. But society that evidently is defined as fair differently than how I would define fair mind define definition of fair is everybody pays the same percentage and be done with it.

[00:55:44] That's just me. There are people that abuse the tax code and when they abuse the tax code, , the government does have a a remedy for those who abuse it. It's called prosecution. Ultimately, potentially, ultimately, potentially a prison sentence as well as getting the assets taken anyways. There's no buying your way out of tax prison. How's that? If you get caught and say, oh yeah, you're right, I owe a hundred thousand dollars, here's your check. It's not gonna stop the prosecution. You can't buy your way out of it. Once you get caught, you're caught. Now the question is how, bad's the damage and what's the judge gonna do with you?

[00:56:26] But there's no closing the case because you pay the tax bill. On a criminal standpoint. 

[00:56:31] Bob Gatty: Okay, see you guys April 15th is coming up. We gotta pay our taxes. Let's not have anybody like Robert Norlander coming after us. , 

[00:56:42] Mark M. Bello: behave yourself, Gatty. 

[00:56:44] Bob Gatty: That's right.

[00:56:45] Robert Nordlander: I would dare say if there's a criminal investigation going on? Typically it's because, like I said, it's not a mistake, it's a pattern of behavior over many years with large dollar amounts. Okay. That's, what qualifies him for that. Okay. 

[00:57:00] Bob Gatty: Alright. Robert, thank you so much for joining us on our podcast.

[00:57:04] We do appreciate it. And I think it's been an informative discussion. And Mr. Bello, thank you for being with us as well. 

[00:57:13] Mark M. Bello: Thank, both of you. That was an interesting conversation, . 

[00:57:16] Robert Nordlander: Thank you Bob. I do appreciate your time. Okay. Thank you. Mark. 

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