How a Marine Veteran Built a Payroll Company Focused on Compliance and Customer Service, with Charles Read

How can small business owners navigate the complexities of payroll and avoid costly IRS penalties?

 

We sit down with Charles Read, a distinguished CPA, U.S. Tax Court Practitioner, and the driving force behind GetPayroll. With a career spanning over five decades and a wealth of experience in financial leadership, Charles offers an unparalleled perspective on the intricacies of payroll management for small businesses.

 

Throughout the conversation, Charles delves into the most common mistakes that small business owners make when it comes to payroll, and provides actionable advice on how to steer clear of costly IRS penalties. From the importance of accurate record-keeping to the benefits of utilizing payroll software, Charles shares his expert strategies for ensuring compliance and minimizing risk.

 

Charles also discusses the evolving landscape of the payroll industry, offering insights into the growing role of automation and the importance of maintaining a human touch in customer service. He emphasizes the value of leadership and employee care, drawing upon his experiences as a Marine veteran.

 

In a heartfelt moment, Charles opens up about personal tragedies and how the unwavering support of his staff and a strong sense of purpose helped him weather the storms. His resilience and dedication to his craft serve as an inspiration to listeners facing their own challenges.

 

Listeners will also have the opportunity to dive deeper into the world of payroll with Charles’ book, “The Payroll Book.” As a special gift, Charles offers a complimentary copy to listeners who visit thepayrollbook.com and enter the code “podcast”.

 

Tune in to this engaging episode to gain valuable insights, expert advice, and practical strategies for mastering payroll and setting your small business up for success.

LISTEN TO THE FULL EPISODE HERE

Transcript

Intro  

Welcome to another edition of inspired stories where leaders share their experiences so we can learn from their successes, how they’ve overcome adversity, and explore current challenges they’re facing.


Anthony Codispoti (09:26.282)
Okay. Welcome to another edition of the inspired stories podcast where leaders share their experiences so we can learn from their successes and be inspired by how they’ve overcome adversity. My name is Anthony Cotaspodi and today’s guest is Charles Reed, president of GetPayroll. It’s a payroll timekeeping and HR services company. He has logged over 50 years of financial leadership across a broad range of industries. He’s a CPA.

and he has held Series 7 and 66 securities licenses. He’s a decorated Marine and Combat veteran. He’s a former member of the IRS Advisory Council. He’s one of only 86 people in the last 16 years to pass the U .S. Tax Court Non -Attorney Practitioners Exam, which enables him to represent clients in U .S. Tax Court without being an attorney. He’s the author of three e -books, including the payroll book, and we’ll hear why it’s the only book.

that demystifies payroll with concise, real -world examples. Now, stay through to the end and you’ll be able to get the book for free. But before we get into all that good stuff, today’s episode is brought to you by my company, Adback Benefits Agency, where we offer very specific and unique employee benefits that are both great for your team and fiscally optimized for your bottom line. One recent client was able to add over $900 per employee per year to their bottom line by implementing one of our proprietary programs.

Results vary for each company and some organizations may not be eligible. To find out if your company qualifies, contact us today at addbackbenefitsagency .com. Now, back to our guest today, Charles, CEO, President of GetPayroll. Charles, I appreciate you making the time to share your story today.

Charles Read (11:14.12)
Anthony, my pleasure. Thank you for having me.

Anthony Codispoti (11:17.001)
So let’s start off first with GetPayroll. It’s a payroll services company. There’s lots of those around. What makes you guys different?

Charles Read (11:19.24)
HMM!

Charles Read (11:27.496)
Well, our unique selling proposition is compliance.

Most of our competitors do a reasonably good job of producing paychecks or they wouldn’t be in business. But what they can’t do that we can is provide a level of compliance expertise and professionalism. I’m a certified public accountant. I’m a U .S. tax court practitioner. When there’s a problem and the IRS makes millions of mistakes every year, most of my competitors can’t handle the situation. They can report what they did.

But if the IRS makes a mistake, all they can do is report what they did. I actually take a 2848, a limited power of attorney from every client, which allows me to advocate with the Internal Revenue Service for them. So I can call up the IRS, I can talk to the auditor, I can talk to his boss, I can take it to appeals, I can take it up as far as we need to go, and up to and including the US tax court if need be.

to fix a problem. That’s what we can do that our competitors can’t.

Anthony Codispoti (12:37.513)
And that’s a big deal. I’ve used, I won’t mention their name, but one of the big payroll providers in the past. And there got to be some question that came up. I got a form from the Columbus city, city of Columbus, and I don’t know what to do. I go to my payroll provider and I spent months trying to call and email to get somebody who would even point me in the right direction. So I think I can see how having that.

compliance support on the back end could be incredibly helpful.

Charles Read (13:10.632)
And that’s one of the things that we do. If you call and you talk to one of our people in operations and you’re not happy with what they tell you, you just ask for Charles. And if I’m in the office, I’ll pick up the phone. If I’m not, I’ll call you back. So you can talk to the boss. I once just as a lark called ADP and asked for the president and the switchboard operator said,

Anthony Codispoti (13:37.545)
Hehehehe

Charles Read (13:40.552)
The president of what? And I said, the president of ADP. And after some back and forth, she told me that he didn’t have a phone. And I said, okay, you’re telling me that the president of a multi -billion dollar international company does not have a phone on his desk for him to use. She said, well, he probably does, but we don’t have access to it. By this point, I’m just cracking up.

Anthony Codispoti (13:42.153)
Hahaha.

Charles Read (14:09.128)
So I hung up and went on my way. But if you want to call the president of ADP, you can’t get a hold of him. You want to talk to the president and get payroll, just ask for Charles.

Anthony Codispoti (14:19.593)
You call ADP, you can’t even get a hold of the same customer service representative that you talked to the last time.

Charles Read (14:25.416)
No, you, you, you, and you probably will never get the same person you’ve talked to ever again.

Anthony Codispoti (14:32.617)
So who is GetPayroll a good fit for? What’s kind of the ideal company size or industry? What’s the profile that fits?

Charles Read (14:42.152)
Well, we handle all kinds of industries. I mean, we’ve handled, I had a profit for a client, restaurants, lawyers, doctors, manufacturers, retailers, you name it. We market basically to smaller businesses, the under 50 employee market. We have some bigger clients and can handle them quite readily, but our competition tends to be porous and we’ll do anything they can and they go after the bigger businesses.

So our attitude is we’ll take the 95 % of American businesses that are under 20 employees and our competition can have the other 5%.

Anthony Codispoti (15:22.697)
What was the path that led you to get payroll? You’ve got a pretty storied background. I’m curious how you specifically landed here.

Charles Read (15:26.28)
All right. Well, it’ll take a couple of minutes. I’m a Midwestern boy. I grew up in Iowa. Graduated from high school at 16. Went to work. Wasn’t happy. Wasn’t ready for college. At 17, I joined the United States Marine Corps. Spent four years. Two years overseas, including a combat tour in Vietnam. I came back, was stationed in Kansas City. Met and married my wife. My wife is…

My wife was 10 years older than I was and had five kids when I married her. I claim insanity, but we were married for 45 years before she passed, so it worked for us. Got out of the military, realized that my military experience was not valued by business then, as is true now. Most businesses don’t understand what military experience brings to the table because they haven’t been there. So went to college, got my degrees.

BBA, MBA, passed my CPA exam while I was still in graduate school. Went to work for Texas Instruments. Big operation. Spent 15 years in corporate, large companies, small companies, family businesses, public owned companies. Realized I was never going to get to the top in a major business because I didn’t have the political skills. Unwilling to stab people in the back and toss them off the ladder. So if I was going to run a business and I grew up in a family business, I was going to have to start my own.

So roughly a third of a century ago, my wife and I started this business. Effectively, I hung out my own shingle as a CPA and had a payroll sideline. We continued to grow the business for a number of years. I finally here about 10 years ago sold off the accounting portion to my partner who I’d taken on and kept the payroll side because he didn’t want any part of it. And I liked the payroll.

So we’ve been growing the payroll as a separate business ever since.

Anthony Codispoti (17:27.945)
That’s a great story. First of all, I appreciate your service in the military. I’m curious to hear what are some skills that you picked up in the military that you’re able to still apply in your business today. Because I hear you saying people don’t appreciate the value of that kind of experience. But how has it helped you in a practical way?

Charles Read (17:51.464)
Well, first of all, the discipline you pick up in the military is just excellent, both external and internal. You will learn it. And you also learn leadership. One of the lessons from Marine Corps leadership is mission men self. You accomplish the mission, whatever it takes. You just get the job done. Then you take care of your men. That can be your employees, that can be your customers, but you take care of them. And

Only then do you take care of yourself. So if money’s short and you can’t pay everybody, you pay your employees, you don’t pay yourself. It’s the kind of thing that leadership does. They take care of your people because I couldn’t do this business by myself. I rely on my people, so I take care of them. They’re important to me. But more important than that,

is we have to get the mission done. Our mission is to provide perfect payroll on time every time. And we work very, very hard at doing so.

Anthony Codispoti (19:01.929)
It’s an admirable approach.

Charles Read (19:02.376)
Do we reach 100 % of it? Yeah. And, you know, it’s all that leadership and ability to learn how to accomplish things and get things done and work with teams and teamwork. You’re not a warrior. You’re military. You’re a soldier. You’re a Marine. You work together. You accomplish goals. All that training is just invaluable.

Anthony Codispoti (19:32.553)
What does it mean to be on the IRS advisory council? I know you had a three -year stint there. What takes place there? Is the IRS calling you up and asking you for advice on things?

Charles Read (19:45.032)
Basically, yes. We would go to DC and meet with the IRS for several days, several times a year, and they would have problems, questions, things that they weren’t comfortable with. The IRS lives in a bubble, and IRS management basically lives in DC. They’re not in business. They don’t understand business. And many times, something that seems strange to them,

It’s just ordinary business practice. So we would educate them on business. We would also explain to them how what they’re doing affects industry and business and business people and how it can be modified to achieve the goals they want, but make it easier for us to deal with them. So we go through all these things. We produce a nice thick annual report every year.

and we basically solve problems for the Internal Revenue Service.

Anthony Codispoti (20:44.164)
You find that they’re receptive to your feedback?

Charles Read (20:47.72)
Very much so. Chuck Reddick, who was the commissioner when I was on the advisory council, had been on the advisory council as an attorney years earlier. So he knew what they did, and he was very appreciative of that and what we did. And for the most part, all of the people we dealt with at the IRS were appreciative of the time and the energy and the effort that we volunteered. I mean, they picked up expenses, but our time was unpaid.

So we would put in many, many hours, both there in DC and back in our offices, putting things together, studying things, writing things, developing positions, working with other advisory council members to present a report back to the IRS that was useful to them. And Chuck was always very appreciative of that.

Anthony Codispoti (21:45.667)
Any good stories you can share that might be interesting for the general public to hear kind of the inner workings of?

Charles Read (21:55.752)
Well, again, we had one case where there was a specific thing in the way 1099s were being reported with dollars from particularly from gig economy. And one of our members was a senior accounting official with Uber and said, well, the reason why it’s done that way is this, this and this. And the IRS said, we never thought of that.

It makes all the sense in the world. Okay, it’s not a problem then because it was being reported as zero dollars for a specific reason. And the IRS at that point just had one of their problems. They just checked it as no problem and moved on. But we worked with them on the new W -4. We violently objected to some of what they did on that, but they went ahead with that anyway.

we got into the whole free file thing, which is, and our position was that, yeah. why are, why are taxpayers having to pay large sums of money to third parties to file taxes that they’re required to do? And that the IRS should have a free file system where reasonable returns can be done electronically, which the IRS wants, for free.

for a taxpayer. That should just be part of what the IRS picks up as a part of doing business. Now, of course, the major tax prep companies like Block and others were vehemently opposed to that and actually tried to get Congress to pass a law forbidding the IRS to set up a filing system. And we gave the IRS a lot of ammunition to go back to Congress and say, no, we should be able to do so.

And they have done so. It was in limited distribution this year for 23 taxes. They did about 150 ,000 returns and it operated inexpensively and very effectively. So I expect to see it expand.

Anthony Codispoti (24:04.898)
When was your three -year term?

Charles Read (24:09.064)
All I got off about three years ago.

Anthony Codispoti (24:10.978)
Okay. And do you still have like a, can you still pick up the phone and get into the hotline there if you’ve got a like a client question you need to get answered? Does it not work that way?

Charles Read (24:23.4)
Let me tell you a story. I had a client who had filed some 1099s and filed them incorrectly. When he put them together, they filed for the management people, but not the employees. When they built the file, they thought they had it, they sent it off wrong. Well, it came to their attention they hadn’t, so they filed all the 1099s. The IRS took the position that they were due a penalty of $100.

per return on 800 returns.

Anthony Codispoti (24:59.042)
wow.

Charles Read (25:01.032)
Yeah, so it was $80 ,000 to start and then penalties and interest over the years worked it up to $95 ,000. Well, I took on the case for the client and started to appeal it and worked it through multiple levels of appeals. Finally got up to the level that is above a regional set of appeals offices. And this guy would not return my phone calls. I called him every two weeks for a year. And so finally I called the

Deputy Chief of Appeals in DC and said, Shelly, I can’t get this guy who works for you, because I had the table of organization on my desk, to return my phone calls. And he said, I’ll have him call you. He called me that afternoon. We talked about, yes, the short answer is yes. One of the members of the advisory council that I served with became,

Anthony Codispoti (25:47.585)
So the short answer is yes. Yes.

Charles Read (26:01.288)
in charge of the Office of Professional Responsibility, went to work for Chuck in DC, overseeing all tax preparers and all the circular 30 practitioners. So I know her. I know a lot of people up there. That’s sometimes, it’s who you know.

Anthony Codispoti (26:26.721)
Oftentimes is, yes. I’m curious, how did this opportunity present itself to you?

be on the Advisory Council.

Charles Read (26:33.896)
They put it out every year and asked for volunteers. And here about six, seven years ago, whatever, I volunteered, they accepted me. Again, I was the only US Tax Corps practitioner on the advisory council. There were attorneys, CPAs, EAs, but I was the only US TCP on there, which was fun. So.

Anthony Codispoti (26:58.208)
And tell me, let’s talk about why is that such a big deal? You’re one of only 86 people in the last 16 years to pass the US Tax Court non -attorney practitioners exam. Why is this such a big deal?

Charles Read (27:12.168)
When the tax court was created back in the 50s, Congressman Dingell from Michigan wanted non -attorneys to be able to practice as they had been able to practice with the Board of Adjustments. So he wrote that into the law and we are the US tax court is the only federal court where non -attorneys can practice.

Now, non -attorneys for the most part are CPAs that do this or EAs, and we have much more capability of dealing with tax law than most attorneys have. If your attorney doesn’t specialize in taxes, he’s not qualified to take on a tax case. I’m sorry. Okay. You know, he can go do it. Right.

Anthony Codispoti (28:07.2)
It’s a very specific skill set.

Charles Read (28:10.952)
But for a state licensed attorney, all he has to do is send in his $60 and he’s licensed to practice in the U .S. tax court. He may not be competent to do so, but he’s licensed to do so. Well, non -attorney practitioners have to pass an exam at the tax court. And it’s only given a once every two years in person in November at the U .S. tax court. And it covers tax court procedures.

It covers legal ethics. It covers evidence. And it covers substantive tax. So you have to prove to the tax court that you know these things and are capable of effectively practicing the tax court. No attorney has to do that, but non -practitioners do. The tax court really would prefer, and all the tax court judges are basically attorneys, would prefer that we be attorneys, but the law is set up that we don’t have to be. And in many cases,

we’re far better equipped to deal with the law aspects than most attorneys. Now, good tax attorneys, don’t misunderstand me. They know what they’re doing, absolutely. They’re also going to charge you an arm and a leg, and properly so. And for my clients, the only charge is the additional filing fees, which for a tax court petition is $60.

Anthony Codispoti (29:38.175)
Well, that’s extremely reasonable.

Charles Read (29:42.92)
And if they’re broke, we can file it pro se and without a fee.

Anthony Codispoti (29:50.847)
We are man with a heart, it seems like as well.

Charles Read (29:56.168)
Well, my clients are my men and I take care of them.

Anthony Codispoti (30:00.223)
Back to the Marines, back to your lessons from the military. So let’s talk about your book, which is called The Payroll Book. I’m looking at it here now. The only book that demystifies payroll, clear, concise, and real world examples on how to tackle payroll. Tell me about, what was the inspiration behind writing this book?

Anthony Codispoti (03:48.462)
Alright Charles, let’s talk about the book for a second. It’s called The Payroll Book. I’m looking at it here now on your site, thepayrollbook .com. It says it’s the only book that demystifies payroll. Clear, concise, and real world examples on how to tackle payroll. What was the inspiration for writing this book?

Charles Read (04:10.869)
Well, I get questions from customers, employees, potential customers, strangers at parties all the time about payroll. And there’s nothing out there in the literature that really is approachable. The only thing out there is the payroll source from the American Payroll Association, which is $600. And it is designed to train

payroll professionals to become certified payroll processors and pass the exam. It’s not a very approachable book. I have it. So I said, I’ll write something. So two years later, I had a book. It was a lot more trouble than I thought. I used Wiley as the publisher, and they brought a lot to the table, believe me. I’ve published e -books, and this is a real book. And having a professional publisher house

to help me with the editing and the design and the layout and the index was incredible. Made it a much better book. But it is an approachable book. I refer to it as 30 years of wisdom distilled down to 95 ,000 words. It goes over payroll, it goes over how to do it, how to calculate it, it goes over the payroll laws, it goes over record keeping, it goes over a number of things that are associated with it.

And it’s not just designed if you’re using a payroll service bureau, it’s designed for somebody doing payroll. Of course, our name and number is in there. If you don’t want to do it yourself, you can give us a phone call and we’ll be glad to take care of it for you. But it has lots of stories, has pitfalls, horror stories and so on. So things you don’t want to do that people have done in the past that get them into trouble.

Anthony Codispoti (06:05.292)
So it sounds like there are some anecdotes, there’s some stories in there that people can relate to and learn from. Would you also describe it maybe as like a textbook for somebody who’s trying to understand how to do payroll? Is it that much of detail?

Charles Read (06:13.365)
Yeah, it’s a fun textbook. It is not in as much detail as the payroll source goes into, but it’s also, you know, $20, not $600. It’s designed to be a guide. It’s designed to keep you out of hot water. It’s not designed to make you a certified payroll processor. It’s designed for the businessman.

Anthony Codispoti (06:42.508)
and

We tease people in the intro, how is it that they can get this book for free?

Charles Read (06:47.797)
If they will go to the payrollbook .com, if they will go to the payrollbook .com on the web and at the discount code podcast, we will ship them a copy of the book free of charge. No shipping, no handling, no nothing. If they’re interested enough to go to the payrollbook .com, it’s theirs. As long as supplies last, completely free.

Anthony Codispoti (06:51.66)
What’s the offer there?

Anthony Codispoti (07:12.172)
Completely free. That’s a generous offer. So somebody’s listening to this, they’re like, I might do that, that sounds interesting. Give them a little teaser, some more about what might be in there, like a couple of highlights for them.

Charles Read (07:24.085)
Well, for instance, 45S, which a lot of people don’t know about. It is a tax credit. If you give your people time off, you can get a tax credit for what you pay them. Wow. Now, it has to be a certain kind of time off. It has to be FMLA -related time off. But if you’re not subject to family medical leave, and most businesses aren’t, if you give somebody time off because they’re sick, they’re taking care of a sick family member.

they just need a mental health day off, you can get up to a 25 % credit from the government for what you paid them. You just have to have a policy in place and track it. That’s all you have to do. And then on your tax return, you put in the number, get your credit.

Anthony Codispoti (08:19.691)
And is this something that is on the federal income tax return or are these in the payroll tax returns that get submitted? Where do they notate this?

Charles Read (08:26.645)
You do it in your payroll, but it goes on your income tax return.

Charles Read (08:35.669)
It is. There’s a story in there about the CPA. And he was taking all of the compensation as distributions and not paying any social security Medicare. IRS came in and said, no, we’re going to deem part of that as compensation, half of it. And now you owe tens of thousands of dollars in social security and Medicare taxes.

Anthony Codispoti (08:35.851)
Okay, that’s a good one, right? How about another one? You got another good one there?

Charles Read (09:05.269)
plus penalties and interest.

Charles Read (09:10.933)
And he didn’t, and he had to pay it because it was deemed compensation because what he was, he was not paying himself a reasonable compensation. And the IRS has the power to come in and say, no, part of that’s compensation. You owe payroll taxes on it and you can fight it in court, but you’re going to lose. So that’s not something you can do. Another one, and this is a big one for small businesses, classification.

Anthony Codispoti (09:12.843)
steep.

Charles Read (09:40.117)
Are these people employees or are they 1099ers? And I’ve seen businesses get fined tens of thousands of dollars for misclassifying the workers and then have to pay the taxes. So if you’re not sure whether that person is really a 1099er or an employee, you need to find out. And you need to be, you need to know, and you need to be able to defend it in court if necessary. It’s not a choice.

It’s in the book. You can also file a form with the IRS listing the details of this person and what they do. And I guarantee you the IRS is going to say they’re an employee.

Anthony Codispoti (10:11.689)
And so how would somebody go about finding that out?

Charles Read (10:24.597)
Okay, so you just need to know and deal with an expert, somebody who understands this and can say, yes, they’re a 1099, no, they’re not, or it’s a gray area and you take a risk. Some of them are clear cut, some are not, because it’s a preponderance of evidence and the rules change. They changed again this year in March. The Biden administration put in a new one and they said,

if what the worker does is integral to the business, they’re an employee. And I don’t know of any business that pays people whose work is not integral to the business. Exactly. So basically, the IRS said there are no independent contractors in that phrase. Now, there’s some other things.

Anthony Codispoti (11:14.537)
Why else would you be paying them?

Charles Read (11:23.029)
It’s a six -part test and so on. But it’s going to be a lot of case law developed on that particular phrasing over the next 10 years. And I don’t know what the outcome is going to be. So you’ve got to be careful.

Anthony Codispoti (11:40.521)
And how did that specific rule get changed? Was this an act of Congress that pushed it through? Is it an IRS memo? How does that work?

Charles Read (11:45.781)
It’s a Labor Department regulation under FLSA, Fair Labor Standards Act. The Trump administration had proposed a new rule changing how you define an independent contractor. And it was much more liberal to allow more independent contractors. The Biden administration canceled that when they came in prior to its implementation in March of 21. It took them several years to write

a new one they put out for comment last year, and it became effective in March of this year. So it is strictly an administration thing. It was written by the Labor Department under the Labor Secretary, who was a union organizer out of Boston. And so it’s really designed to force people into employee status. And that’s its goal, is to minimize independent contractors.

I have a couple of videos out of my YouTube channel, Get Periled, on YouTube if you’re more interested in some of the details.

Anthony Codispoti (12:58.152)
So that’s interesting, for the uninitiated, it seems strange that something that impactful could happen without having to go through, I don’t know, a more formal process of getting voted on by members of Congress or whatever the traditional avenues are for approving these types of big changes in law.

Charles Read (13:16.053)
Well, this is part of the whole problem with Chevron, which is under attack at the moment, the case Chevron versus, where the Supreme Court gave a lot of credence to the bureaucracy. And the current Supreme Court, which is a little more conservative, is chopping away at that and saying that these things don’t belong in the bureaucracy, they belong in the halls of Congress.

and Congress needs to be making these decisions. So.

But you know, a lot of Congress is too busy out trying to field campaign contributions to, and get very wealthy as opposed to doing what we send to Washington to do. I mean, you and I both know the number of congressmen become millionaires while in office is just ridiculous. So.

Anthony Codispoti (14:16.296)
So maybe it’s more efficient to have this other avenue to get things done.

Charles Read (14:17.749)
It’s easier than the congressmen don’t have to worry about it. They just delegate out the authority to a bureaucracy who is unelected and who you can’t get a hold of and you don’t have any control over. And they do whatever they feel they want to do. And they, of course, are influenced by the current administration. But as we refer to it, the swamp exists in D .C. and it is self -perpetuating.

and unelected and in many cases.

You know, okay, look at the IRS. It’s 100 ,000 civil servants that have no profit motive, don’t understand business, and for the most part, don’t care. Now, they’re good people. Don’t misunderstand me. You know, their fathers, mothers, brothers, sisters, sons, daughters, I’ve met a lot of them. Most of them are nice people, but they’re bureaucrats. They’re civil servants.

Anthony Codispoti (15:12.776)
Hmm.

Charles Read (15:22.869)
They work their 40 hours a week and go home. They take their 30 days vacation. They get that nice retirement. They don’t have the same profit motive that entrepreneurs have, that business people have. Any retirement I have, I earned. I saved. I invested. I don’t have that guaranteed income from a pension plan that’s funded by the taxpayers. And if there’s a…

The job requires, the mission requires, I work 60, 70, 80 hours that week. So be it. I was on a panel one time and somebody asked me about work -life balance for entrepreneurs and I just cracked up. I said for the beginning entrepreneur, there is no such thing as work -life balance. It’s just work. And if you don’t have a partner that understands that, you’ve got a personal problem as well. So it was a nice thing about going into business with my wife. She understood it.

Anthony Codispoti (16:26.951)
That’s great. I want to go back to an earlier point that you were making in the book about reasonable compensation. What advice do you have for people to avoid that pitfall?

Charles Read (16:33.781)
50%, whatever you take out of the business, 50 % needs to be compensation. 50 % can be distributions or dividends. That’s up to a couple hundred thousand dollars. Once you have a salary of, say, 200, 250 ,000, you can probably take the rest as distributions. But up to that point, 50 -50, we found over the last 30 years, and my partners found, and other tax practitioners have found, that a 50 -50 rule,

basically will keep you out of trouble. Now, years ago, a senator proposed an 80 -20 rule, but that was never made law. So 50 -50 seems to work.

Just rule a thumb.

Anthony Codispoti (17:20.17)
Okay, that’s a helpful rule of thumb. Yep. Charles, I understand you have some pretty strong feelings about PEOs. What are those?

Charles Read (17:27.317)
PEOs, professional employee organizations. That’s the newer name for staff leasing. And you know why they changed it from staff leasing?

Charles Read (17:41.109)
because they went, a bunch of them went to jail because they were crooks. It was a way to shift taxes and not pay them. That’s what the industry was designed to do in the beginning is to avoid taxes. And a number of people took it too far and went to jail. So the industry decided, well, we can’t live with being crooks. So we’re going to change the name of the organization to professional employee organizations. And their job is…

Anthony Codispoti (17:42.534)
Bye, sir.

Anthony Codispoti (17:49.317)
okay.

Anthony Codispoti (18:12.774)
Did they change how they were handling the taxes as well?

Charles Read (18:12.949)
There were some laws that were changed that forced them to to mend some of their ways, but they’re very expensive They really don’t do most of what they say they do Okay, for instance, they’re supposed to handle the HR well if you’re a small business say you’re ten people and Sally has a personal problem with her boyfriend She doesn’t call the PEO. She comes cries on your shoulder Okay, Henry’s having a problem with his wife

He doesn’t call the PEO for advice. He goes to the boss and says, hey boss, what the hell am I supposed to do? She wants this. I run it in. The HR stuff doesn’t go away. And I promise you, if something happens and they have a lawyer that says it’s an employment problem and we’re going to sue, they’re not going to sue the PEO. They’re going to sue you. So I’m sorry. It doesn’t avoid the legal responsibilities.

The one nice thing they do, if you want a Cadillac insurance policy for your employee benefits, they will give you one at a Cadillac price. Not a problem. If you want to forward, they don’t offer them.

Anthony Codispoti (19:33.477)
So your short and to the point message is, I don’t like POs, stay clear of them. They’re not really helping.

Charles Read (19:38.645)
They’re overpriced. They don’t help. They’re overpriced. I have never seen a PEO for a client where I couldn’t go in and save them at least $1 ,000 per employee per year.

Anthony Codispoti (19:56.881)
wow, that’s significant. So why are people attracted to them? What’s the sales pitch that they’re buying into?

Charles Read (20:00.213)
Why do people buy a snake oil?

Why do people buy timeshare? They think they’re getting an all -in -one solution and they don’t have to do anything. They think they have somebody that’s going to protect them and assume the responsibility and the liability. And they don’t. And when the problems come, they leave because they realize they got sold a bill of goods. But only when the problems arise. And in the meantime, they’re overpaying for protections they don’t really get.

Anthony Codispoti (20:07.685)
What do they think that they’re getting with the PEO that they’re not?

Anthony Codispoti (20:38.853)
Charles, do you have any suggestions for people who are trying to get the IRS to abate a penalty?

Charles Read (20:42.645)
Sure. First of all, answer every correspondence you get.

Charles Read (20:50.645)
I don’t care if you get the same letter and you’ve already answered it two weeks ago, send a copy of your response. Don’t ignore them. Because there are deadlines that if you ignore, become final and it’s no longer appealable. But dealing with the IRS, it’s appeal, appeal, appeal, appeal. There’s a whole series of things you can do. And the IRS will tell you what they are for the most part, and you can read on it.

and you just keep appealing it to the higher levels. It’s a whole series of no’s followed by a single yes. You only need one person to say yes, you say thank you and walk away, don’t say anything more. Just like a salesman, they sign the contract, say thank you and leave, don’t keep talking. You may talk yourself out of a sale. So you’ve got to be persistent. Now, I recommend that you use a professional. Obviously, that’s my business.

But I have a specific example that’ll tell you why. Because it gets personal. And here a few years ago, the IRS made a mistake on my company’s payroll.

and said, I owed this money. And so I called the guy and said, hey, you’re wrong. And here’s why. And I got one of these revenue officers that was…

not very good with customer service. Let’s just put it that way. And he told me no. And I could hear my voice getting louder.

Charles Read (22:33.173)
And I’m starting to literally shout at this guy over the phone. In the back of my head, I’m going, Charles, don’t do this. This is not good. But he was up. He, he, he, whatever. Anyway, he then proceeded after the conversation to file a lien on my business, which he couldn’t do under regulations.

Yeah. And so it took me two weeks. This was COVID. It took me two weeks to get ahold of his boss. And his boss said, no, that shouldn’t have happened. We’ll release the lien and it’ll all go away and everything’s fine. And it was. But that brought home the fact that when it’s personal and it’s your wallet and your pocketbook, your emotions get in the way. I don’t get that way for clients.

Anthony Codispoti (22:58.436)
Wow.

Charles Read (23:25.941)
because I’m not personally, it’s not my wallet. And so I can be much more.

distant, trouble -headed, and if they say no, I say fine, let me talk to your supervisor, let me go file this to appeal it, let’s go to a due process hearing, or if need be, file a petition with the U .S. tax court and get a whole nother bite at the apple with a whole different appeals division and so on. Lots of things you can do, but when you’re emotionally involved, you can get really stupid like I did.

Anthony Codispoti (23:39.202)
You’re level -headed when you go into it. Yeah.

Anthony Codispoti (24:09.955)
When you’re doing it on behalf of a client, when you’re the professional that’s representing the client, you can do it more matter of factly. You logically understand what the steps are. If we run into a closed door here, we can go through this avenue over here. But right, when emotions are running high, you’re not thinking clearly. You go into fight or flight mode, and it’s fight, because those are your dollars.

Charles Read (24:26.325)
Exactly. I’m a Marine, it’s always fight.

Anthony Codispoti (24:34.147)
So what suggestions do you have for people finding a good professional to represent them in a situation like that?

Charles Read (24:39.669)
Well, besides calling me, look for a CPA that does payroll, understands payroll, if you’re in an employment tax situation. If you’re in an income tax situation, look for a CPA who understands your business, deals with the IRS on a regular basis, handles these kinds of appeals, knows what they’re doing, gets suggestions from other people you know, but look for somebody that you can deal with.

that is experienced and understands. Believe me, I am far, far, far better dealing with the IRS now than I was 30 years ago. I know a lot more. I’ve got a lot more experience. I’ve got a lot more training, a lot more understanding. I’ve got my tax court practitioner’s license. I’ve got my IRS advisory council experience. You know, all these things, other people have them too. Don’t misunderstand me. And there are other very…

talented, experienced individuals out there to do this for you. But there’s a lot of people who will take it on if you write them a check. They won’t get the results. So you need to vet them very carefully and make sure they can do this and know what they’re doing.

Anthony Codispoti (25:57.218)
Did people contact you for this kind of service if they’re not a GetPayroll customer already?

Charles Read (25:59.221)
Yeah, I do some of it on a retainer basis. Not a lot, because that’s really not my business. But I’m a sucker for a sob story.

Anthony Codispoti (26:16.609)
So, anybody listening that needs some help, just give Charles a call and pull at his heartstrings. That’s the way to get him on your side.

Charles Read (26:22.773)
That’s what my left -hand girl is really good at saying no to people. So don’t talk to her.

Anthony Codispoti (26:37.922)
Your left hand girl. That’s a phrase I haven’t heard before. You got your right hand one and this is your left hand one. That’s the person who closes the doors and says no.

Charles Read (26:41.493)
This, this, she’s, her office is to my left. So she’s my left hand girl.

Anthony Codispoti (26:52.194)
All right, that’s how it works. Charles, what advice do you have for people to avoid employment tax penalties in the first place?

Charles Read (26:57.877)
Okay, most tax penalties occur from arithmetic error. That’s the single biggest source of tax penalties, is you didn’t add, subtract, multiply, or divide properly on the form. So use a computerized form, because they’ll do the calculations for you. Make sure you put in the right numbers. Make sure your decimal points are right. I had a young man.

I got him off of, I was doing a podcast with his mother and he had a tax problem she told me about. And so I am helping him. We’ve been working on it now for about three years. He was working for his mother’s company, real estate company on the summer doing some labor. And they give him a 1099 for $759 and 60 cents. And they put that on the 1099.

Well, you’re not supposed to put pennies on the 1099. So the person at the IRS that put it in, put it in his $75 ,000. And they’ve been stealing his refunds ever since. So we have gone through several layers of appeals. Everybody agrees that it’s wrong. We’ve sent him the 1099. I mean, he was an 18 year old high school student, 17 year old high school student. Okay. He didn’t make $75 ,000 in the summer.

moving files, okay? Everybody agrees that it’s a mistake, but after three years, we still don’t have his refunds back. We’ve talked to the practitioners hotline, we’ve talked to other people. It’ll get fixed, but it takes time. So, back to the original question.

Anthony Codispoti (28:38.848)
Wow.

Charles Read (28:53.557)
Use software to make sure your numbers are right. That’s one of the important things. The other thing is you need to know what you need to do. And if you don’t know, find out. You need to know what you need to file and when you need to file it. Because not filing it and not filing it on time, both are penalty situations. You need to know what you need to deposit and when you need to deposit it. Because failure deposit is a penalty.

Anthony Codispoti (28:55.103)
Use software.

Charles Read (29:22.229)
late deposits of penalty. So those five things will solve most of the problems that you create. Now, on the other hand, the IRS makes millions of mistakes a year. I’ve had them lose electronic files. Okay, literally, I’ve had to send them the electronic acknowledgement of a payment for them to go find whatever they did with it.

because it’s not in the system right. The IRS uses obsolete technology. Some of this stuff goes back to the 1960s. They don’t have the budget and they don’t have the expertise. A number of years ago, they spent billions of dollars trying to modernize everything and gave up. Under Chuck, they’re still spending a lot of money and they are beginning to modernize things, but it’s a long process. You know, you’ve got 180 million tax returns.

some of which are quite complex. You’ve got years of history. The job is just enormous. And as we saw with Obamacare, the ability for the IRS to create, or the government to create a website, they spent $600 ,000 creating a website, or six million or 60 million, whatever, that should have cost 50 ,000 bucks. We know that the government’s not efficient. They’re civil servants. They don’t have a profit motive.

They’re not interested in the bottom line. That’s not where their attention is. You and I, we know that every dollar we overspend comes out of our pocket. So we don’t overspend if we don’t have to. We’re very motivated not to. I want to spend those dollars where I want to, not on something I don’t need to. So when the IRS makes a mistake, you need to respond to it.

If they say you didn’t make the payment, show them where you did. If they say you didn’t make it on time, show them that you did. If in fact you didn’t make it on time, you know, if you have a good excuse, now this is going to sound funny. The IRS cannot penalize you for a simple mistake.

Charles Read (31:42.101)
They can only penalize you for gross negligence.

Anthony Codispoti (31:44.382)
Really?

Charles Read (31:48.725)
while the IRS makes the definition.

Anthony Codispoti (31:50.11)
How do you define the difference?

Charles Read (31:54.581)
But in the end, it comes down to whatever the judge says. Okay? So this is why you fight these things. Because if it is a simple mistake, the one I gave you earlier on the $80 ,000 penalty that we got reversed, we got that finally treated as a simple mistake, which is what it was. No tax were not paid. No taxes were paid late.

Just a form was misfiled and then properly filed, and it was a simple mistake. And so we got that penalty and the interest all reversed out because we fought it all the way. You only need one yes. But if you can get anyone to agree, yeah, it was probably a simple mistake, you’re home free.

Anthony Codispoti (32:51.582)
Charles, I’m curious with your connections, what are you hearing? Is the IRS going to start reviewing ERC claims again?

Charles Read (32:56.437)
they’re reviewing them all right now. They’re all held up. There’s a lot, a lot of fraud. As there was fraud in the PPP, there’s fraud all over the ERC. When you started hearing people on the radio advertising, you can get all this money back.

Charles Read (33:15.669)
I’m sorry, radio advertising, you know, it’s like the air conditioning companies, okay. And the roofers, you know, some of us, hey, look, there’s legitimate business people out there. Don’t misunderstand. We do the RC claims for our clients. Okay. We have a number of them that we said, no, you’re not eligible. You don’t meet the criteria. And they’ve come back to me and said, well, so -and -so said we do, and they’re willing to file it for us. And we’re going.

you don’t meet the criteria. You’re going to have problems. And some of them did it and are having problems. And some of them will have problems because they are effectively fraudulent claims. And when they’re audited, they will lose it. And then they will have to pay it back. The IRS set up a program that if you filed an ERC claim that was not appropriate,

You can reverse it and you only have to pay back the amount that you kept. You can not pay back. You don’t have to pay back the amount you paid a promoter, which is incredible. The IRS has now said, yeah, you got scammed and we’re going to pay for it. That was what I never expected to see, but they put that in place earlier this year because the ERC fraud was so prevalent.

Anthony Codispoti (34:31.934)
Mm -mm.

Anthony Codispoti (34:41.917)
Hmm.

Anthony Codispoti (34:50.973)
big deal. Let’s shift gears for a moment, Charles. How about discussing a big, either personal or professional challenge that you’ve had to overcome in your career and some lessons that came from that?

Charles Read (35:05.781)
Couple years after we were in business, I lost my eldest daughter.

She died of ovarian cancer.

She came and lived with my wife and I while she died.

Charles Read (35:26.293)
Her passing devastated me.

It took me several months to pull my head out of my ass.

And when I did, I looked at the work I’d been doing for my clients and it was garbage.

And I apologize to him.

Charles Read (35:44.853)
And all but one, all but one said, we understand.

Charles Read (35:58.023)
And that was a very humbling experience. I got good clients, let me tell you. I value them, they value me. Some of them have been with me 30 years, some of them, the clients are the kids, the people I took on originally. So, you become friends after 30 years with these people. So that was a major thing. I take care of my clients, they take care of me.

The next one was nine years ago I lost my wife.

Charles Read (36:38.933)
My staff ran the business.

My wife was in intensive care for three weeks. I would come in by the office in the morning on the way to the hospital and stop by on the way back for maybe five minutes. And for months between ICU and intermediate ICU and then in hospital rehab and then rehab at the nursing home.

My staff ran the business. I just signed letters.

Charles Read (37:23.061)
I couldn’t, the business would not have survived without them.

Charles Read (37:28.949)
It proved a couple of things. I have great staff and second, they don’t really need me for most things. So.

It was that again was a humbling experience that I have great staff and they’re dedicated to the business and to me and it worked. We got through it.

Anthony Codispoti (38:01.18)
Appreciate you sharing that, Charles. So we can honor them properly. What are the names of your daughter and your wife?

Charles Read (38:05.013)
My daughter was Nancy Michelle Reed.

She was age 30 when she died.

My wife is Livonia Ruthreid.

Charles Read (38:18.165)
They’re buried together.

Anthony Codispoti (38:31.9)
What advice can you give people who are experiencing a tragedy that feels like there’s no coming back from? Something that is just crushing them.

Charles Read (38:46.901)
Tomorrow is another day for my father. Tomorrow is another day.

and this too shall pass. When my wife died,

Charles Read (39:05.205)
I seriously consider just laying down and dying. Many men do.

And I had a business and responsibilities and the sun came up the next day and I got up and got dressed and went to work.

And the next day, and the next day, and the next day.

It’s like my daughter. And I tell this to other parents who’ve lost a child. It will never hurt less. You just won’t think about it every moment. Life gets in the way. And I miss my daughter. I miss her every day. And it hurts as bad when I think about it. But I don’t think about it all the time anymore because life gets in the way. Same thing with my wife. It’s been nine years.

I miss her every day and every night. But life gets in the way and you move on. And the sun comes up.

Charles Read (40:10.197)
Life goes on and so do I.

Anthony Codispoti (40:16.54)
And you try to find that purpose outside of yourself, that reason to get up with the sunshine each day.

Charles Read (40:18.133)
Yeah. You have to. I play a lot of poker. Somebody asked me how is a good day. And I say, hey, every day is a good day. Sun came up this morning. I got out of bed. It’s a good day. As opposed to, you know, I’m looking down on the grass instead of looking up at it. So yeah, you’ve got to have a good attitude about life and about what’s happened and about these things. And hopefully I’ll see them.

both in a better place and that’s a pleasant thought.

Anthony Codispoti (40:56.828)
Nice. Thanks again for sharing that, Charles. I appreciate you being open with that. I just have one more question for you, but before I ask it, I want to do two things. One, if you like today’s content, please hit the like, share, or subscribe button on your favorite podcast app. The second thing I want to do is point people to the best way to get in touch with you. We’ve already talked about the payrollbook .com, where people can get your free book.

GetPayroll .com if they’re interested in a payroll service that supports their clients with any kind of ensuing tax questions that are going to come as a result. And how about connecting with you personally? What’s the best way for people to get in touch with you?

Charles Read (41:40.821)
CJR at getpayroll .com is my email. And if they’ve got a quick question, 972 -353 -0000 is the phone number.

Anthony Codispoti (41:58.012)
How about that? He’s giving you his direct line. Beat that, ADP. But last question for you, Charles. I’m curious, how do you see your industry evolving in the next five years? What do you think are the big changes that are coming?

Charles Read (42:13.685)
Well, we’re integrating more and more services. We’re becoming more full service to handle everything that’s payroll and payroll related, whether it be retirement accounts and benefits, 401Ks, timekeeping, all these things are morphing into a single access point. And that’s the software getting better and better and better, and the system’s getting better.

I see a lot of our competition going to automated systems and chat bots and so on and so forth, which I think is a mistake. I think our clients deserve better than that. I think they deserve a real person that they can talk to and they can call back and talk to the same person over and over again that understands their problem is working on it. And maybe if we get to a million clients, I’ll think differently, but I don’t think so.

I would prefer that we operate in a way that allows our clients to have personal contact with somebody they can trust and develop a relationship with. So I don’t see that happening in the industry. I see it more automation, more, they call it AI, it’s intelligence systems. There is no such thing as AI in reality. It’s all programming, it’s all computers. So more of that’s happening.

And technology is changing. So and the other thing is government is getting more intrusive. Now states are mandating retirement and savings programs. They’re mandating time off. They’re mandating sick pay. They will continue. They’re mandating higher minimum wages. They’re mandating. They’re mandating. They’re mandating. This is the way that the government does is they increase their control. That’s why they exist.

Charles Read (44:15.701)
Why bureaucracy? Bureaucracy exists to expand. People in bureaucracies get paid based on headcount. The more people they can hire, the more they get paid, the more services they can force on the public, the more people they need to hire, and the higher the bureaucrats get paid. So it’s a self -fulfilling situation. You give bureaucracy that power, and they will expand.

Anthony Codispoti (44:47.703)
Charles, I want to be the first one to thank you for sharing your story with us today. I really appreciate that.

Charles Read (44:51.253)
Anthony, my pleasure. Thank you for having me.

Anthony Codispoti (44:55.096)
Folks, that is absolutely. Folks, that’s a wrap on another episode of the Inspired Stories Podcast. Thanks for learning with us today


Comments

Leave a Reply

Your email address will not be published. Required fields are marked *