The Tax Savings Your CPA May Be Missing | Ron James

Arthur Andrew Bavelas (00:01.453)
Hello, welcome everybody to another episode of Arthur's Roundtable. Super grateful for everybody that's paying attention and sharing and listening in. So thank you again for that. Ron and I know each other for, I don't know, maybe a couple years now. And we're super happy to have him on the program and you'll see why in a minute. So Ron, thanks for doing this.

Ron James (00:23.414)
Yeah, thanks for having me, Arthur. It's great to be a part of this.

Arthur Andrew Bavelas (00:26.027)
You bet. So let's we're we're gonna go back to your history because I think it's relevant to where you're landing right now and the business that you've launched. And for the audience, we met when the tax credit thing was ERC was like a big thing and you guys were huge working with your friends there. And so that was the genesis of our connection.

but you're doing some super interesting things now related to that in some way. So why don't you start at the beginning a little bit?

Ron James (01:02.294)
Yeah, yeah. So we met gosh a couple of years ago when I was at Innovation Refunds. And so before that I had spent thirteen years in the tax world at H and R Block, running the Mountain West region. So I ran Colorado, Utah, Idaho, Nevada, and Wyoming. And we filed about four hundred and fifty thousand tax returns a tax season in my region. So when I got the opportunity to to do something different,

Arthur Andrew Bavelas (01:23.393)
Wild.

Ron James (01:28.586)
I I learned a little bit about the ERC credit. I had no idea what I was jumping into. And at Innovation Refunds, I ran the tax partnerships in the beginning. So I helped create fulfillment partners on the backside that would do the work. And I built the compliance strategies and all that around what they were doing and and how do we vet that and what that looks like. when I left, I was SVP of all of the operations there. We recovered six billion dollars worth of ERC credits for our clients.

so it was a pretty significant business that we did. And I I learned then, you know, you have all these conversations, Bezos and Trump never pay taxes and they cheat and all that. And and no, they just they have the resources to pay the people to find the to find these credits and incentives that are out there. And so I knew then that, hey, I wanted to to do something where I had the opportunity to to help small businesses find.

all of these in credits and incentives that are available to them at a price they could afford. And so if I I knew if I could find a way to scale it, I could get them in front of some of the the people that do really good work in this space. And they wouldn't have to be paying $20,000, $25,000 a month retainers like some of the big companies do in order to get these. So you know, Amazon, Walmart, all those guys, they're taking advantage of these credits all the time because they have attorneys that that's all they do is they work on these. And so gosh, about six months ago,

We we I launched a company called Opscale Exchange, which really connected small businesses to a platform fulfillment partners to do tax credits and tariff refunds. what I learned is hey, there's a significant opportunity to help to get this really in front of folks is is through their accountant, their CPA, their their tax preparer that's doing the work. And so yeah.

Arthur Andrew Bavelas (03:16.631)
Let's let's talk about that for a second. Cause you would think that people would if they heard about it, the relationship they have with just if it's just a tax preparer is a trusted one because they're disclosing all their financial information. But do you still think there's an opportunity for direct to consumer, let's just call it that, for people to just upload their t tax for the last three years and

run it through your grinder and see if it there's an opportunity to do the work.

Ron James (03:50.507)
Absolutely there is. Yeah. There's definitely an opportunity for someone to just come off the off the street and upload their their information and us do the work there. we just did one gosh just the other day with five cost segregation studies and and did that. And in fact a a buddy of mine did that with his company, Lind API, and we actually found him four hundred thousand dollars in research and development credits. and he was he was frustrated that he hadn't been doing it for

For years. We could only go back three years. So he couldn't capture others that he had missed. So he was really frustrated that, hey, why didn't my CPA tell me about this? How did, you know, how did this, how did we get here? My CFO didn't even tell me about this. and so yeah, I think there's an opportunity for people to come in right through the streets and be able to upload documents right at opscaleexchange.com and us to check them out and and get back and show them where they could get us. So there's all kinds of different credits out there that we can qualify them for through that.

Arthur Andrew Bavelas (04:49.343)
And does does the business tax return and the schedule Cs and so forth usually disclose sufficient amount of information to discover that the opportunity's there?

Ron James (05:04.46)
Yeah, and a lot yes, it does. A lot of it's revenue and and industry based. so so a lot of that we can get just from from what they call the NACE code, NAICS code that's on everyone's tax return. And then we can we can actually run that and show them what kind of credits and stuff that they're they're eligible for. Some of them are a little more in depth. The research and development credit is going to really ask for a summary of the projects that they've done that that require the

Arthur Andrew Bavelas (05:10.403)
Mm-hmm.

Ron James (05:31.874)
them to be qualified for it. That's going to ask for, you know, a bigger, a bigger breakdown on payroll, what exact hours were spent specifically on that project. But at the aggregate, the information is right there on their tax return for us to say, hey, we think you qualify for this. let's let's take a deeper analysis with you and and go and find you some money that the government owes you.

Arthur Andrew Bavelas (05:55.447)
Yeah, you you mentioned earlier that people are there there's a segment of the population that think the rich people don't pay their fair share. But if you look at the taxes that they actually do pay, it it's a it's a big number, right? I mean, it's not like they're escaping writing a check to the IRS. it's just that they've what it what did the government do? The government put a bunch of rules in place, and if you follow the rules, there's benefit.

Ron James (06:10.978)
Yeah.

Ron James (06:24.662)
Yeah, it's we're the these incentives are all incentivized by behaviors that the government wants to see. And so they're not going to go away every time a new administration comes in. Hey, we're going to incent things through behaviors. Like the research and development credit is totally to incentivize people to keep their research and development work onshore instead of taking it to other countries. And a lot of companies, if they knew that they could get up to sixty percent back of the wages they spend on that.

Arthur Andrew Bavelas (06:25.516)
Right.

Arthur Andrew Bavelas (06:32.395)
Right.

Ron James (06:52.236)
might realize, hey, I would actually be paying just as much for a a a US worker as I am for someone overseas. And so it's all designed to influence behaviors that the company's looking at. And, you know, the the wealthy folks have resources that the the others don't. And and the goal here is is hey, how do we bring those same resources to these small businesses that you know, you get into a small business and you're passionate about something, you don't realize all these other things,

And you work your tail off. You don't want something that's gonna that that you need to spend a lot more time or invest a lot of money in. And so that's where these come in. Is that you know, we have we help you do that through some of the software that we develop.

Arthur Andrew Bavelas (07:30.349)
So the R D tax trade has been around forever, right? I mean, that thing that people have been talking about that for a very long time. And of course, you mentioned cost seg. The cost segregation, and and this is just my viewpoint, so it's probably wrong, is often associated with real estate investors. Does it extend to other types of businesses as well?

Ron James (07:33.708)
Yeah. Yep, yep.

Ron James (07:56.355)
Just about anybody who owns commercial real estate, it extends to. So if you own your building, you can you can accelerate the depreciation. You don't have to wait the full twenty-seven years for your building to depreciate. You can accelerate that now and reduce your tax liability now. It's also, you know, the big beautiful bill that was introduced last year, it makes it 100% depreciable. So you you know, there's a lot of

Folks that aren't real estate investments that have small rental properties that they're doing with Airbnb and VRBO. And those are all available for cost segregation too now. so we think of a real estate investor as somebody who's got a lot of properties, but VRBO and Airbnb have kind of changed that, where the the average person can go buy a second home and then rent it out most of the year, and that qualifies for cost segregation studies. And in if you buy it this year,

You can actually write get 100% of that depreciation up front. So you can get it, yeah, you can get it right now. And you can still, even if you didn't buy it this year, get a lot of depreciation off of it. But the the one big deal bill has done that. So what we're seeing is some of these folks going and buying a second home, getting that depreciation and then using that money as a down payment on another one of these rental properties and continuing that space because it's the law has made it available to them to do that.

Arthur Andrew Bavelas (08:52.845)
Crazy.

Arthur Andrew Bavelas (09:16.867)
So you know, fast forward to where you are now with this business. Help us understand who's a good candidate to come in your front door.

Ron James (09:27.5)
Yeah. So so I think there there's two primary candidates, but one is a small business owner that's doing anything with a project that's at risk for research and development credits and that sort of stuff. And those can be what people don't think about for research and development, they think it's gotta be a tech company or I gotta work in a a lab or something like that. They don't think about the breweries out there. breweries are putting together different hops, different things all the time to create different things. dental offices.

I they have 3D printers, they're testing new ways to do things in their offices to get to get stuff done. you know, so there's distilleries. We were just talking about high west there in in Park City. You know, distilleries are always mixing stuff together and there's a risk there. They're spending money on that development of that product before they they launch it. And so all of those types of things are eligible for research and development credits. Costeg, like I said, anybody who owns commercial real estate.

Should really look at it. In fact, the IRS even posted on their website that they encourage anybody who opens c commercial real estate to to look at the cost segregation credit. It's a great way for them to reduce their tax liability. And then for us, you know, these tax offices. So the new software that we have, the specialty, it's gonna help tax offices make money year-round. they're no longer gonna have to worry about, hey, how do I keep my lights on year round? When I was at HR Block when we would acquire businesses,

We learned that many of us file extensions. And what I learned is when we go to acquire these tax offices, they didn't really need to file the extensions, but they needed to have consistent revenue coming in year-round. So they would actually, hey, I gotta get 20 of these paid at each month. So they would file extensions on them and then bill them in June, July, August so that they were getting paid. And this allows them to do that. Yeah. It allows them to do that, allows them to make money off something else.

Arthur Andrew Bavelas (11:12.195)
To even out the flow, yeah.

Ron James (11:19.838)
to to help their business grow throughout the year.

Arthur Andrew Bavelas (11:24.899)
kind of common for I I think I've filed extension every year for the past twenty years. I mean, just just to give them time to sort everything out, right?

Ron James (11:31.267)
Yeah.

Ron James (11:35.885)
Yeah, it's you'd be surprised. And today with with AI, it's gonna change all of that too, because it just it puts things together. The things I can do on quad right now are just amazing. And so a good tax practice will be looking for ways to add more value to their clients. And, you know, this way for them to add more value to their clients. It's a it's a way that they can do that. And if they're, you know, the people that win this next decade in the tax world are the people that won.

Arthur Andrew Bavelas (11:47.34)
Wild.

Ron James (12:04.896)
Realize that AI is their friend and they can use it to help make them more productive. But two, use the time that they save on that to help them build better relationships and add more value to the clients that they're serving so that their clients don't go elsewhere. Because that's what's gonna happen is people are going to some people are gonna figure that out and build stronger relationships and and do that. Cause you still AI will never replace the person that does the work. it may replace and make efficient.

More of the work in the background that they do, but the person's irreplaceable. So creating those strong relationships with your clients is what's most important.

Arthur Andrew Bavelas (12:41.717)
And and not only that, and again I don't know your business, but it seems to me that not only will give them time to build new build the relationships of their current customers is give capacity to do more tax returns.

Ron James (12:56.236)
Yes. Absolutely. It it should give them way more capacity to bring on new clients. It should, you know, at HR Block. It's crazy to think, you know, my region, which it was a large region at HR Block, but spiled 450,000 tax returns in a tax season. I mean, that's and you know, there's 10 10 regions at HR Block. So you you start to put that together and and you know, the majority of the tax business, though, HR Block has 16% market share.

Arthur Andrew Bavelas (13:12.611)
It's huge.

Ron James (13:25.634)
The majority of the market share is the mom and pops. most people are going to the mom and pops out there. And so if they start to learn to be more efficient, and that's why, you know, I'm working with a partner group that we're we're buying and rolling up tax offices, but that's why you're seeing that because they see the value in buying and rolling these offices up and the efficiencies they can gain and the other things they can do with those efficiencies to help them grow these offices and and really make great investments in them.

Arthur Andrew Bavelas (13:55.821)
So, you know, this is probably not a fair question, but I've had the same tax preparer for thirty years, right? as far as I know, he's still alive. and

Where where do p people here I mean, if you have a simple tax return, you go to H and R Block. I mean, it's simple, right? If you've got the temperament, you do it yourself if it's not complicated. But where do businesses find their tax preparers?

Ron James (14:18.52)
Yep.

Ron James (14:27.21)
Yeah, it's referral is the biggest business. You know, it's it's the number one business in this space. you don't see a lot of advertising, maybe some local guys do it on radio or whatever, but the referral piece is the big piece of it. And to your point, it it's it's funny because when I was at Block, that was the biggest challenge. You know, where do you get new new clients? So you you have about the same amount dying each year as you do coming in that have to pay taxes each year, and you know.

To your point, you know, I still use the same guy that I used in Las Vegas from 2000. I went away from him for a few years when I was HR Block because they created a policy that we had to go through them. Then I went right back to him right after HR Block and it because I trust him. And it's you know, it's like the bank. They have all your information. You may hate the bank even, but it's such a pain because they got all my information, they got everything. I just send it to them and and they get it all done and they give me a bill and we move on. And

Arthur Andrew Bavelas (15:06.264)
Yeah.

Arthur Andrew Bavelas (15:11.405)
Right.

Ron James (15:26.038)
Most people switch taxes at a li a life changing event. So, you know, marriage, divorce, I bought a new business, we're scaling our business. Things like those types of reasons is why someone switches a tax preparer as some sort of life changing event in their personal life or in their business. And that causes them to most other people do not. There's this myth out there that everyone is switching to online taxes and do-it-yourself products, and it's really not true.

The mix has been about 60 to 40 percent for the last two decades. Sixty percent go to an assisted, forty percent do it themselves. The switch has been many of those do-it-yourselvers have now switched to an online product, but they used to just paper and write it. My dad was a math teacher for thirty-four years. He did our taxes every year on a calculator and a notebook paper and a pencil and mailed it to the IRS.

Arthur Andrew Bavelas (16:03.021)
Mm.

Ron James (16:20.502)
And those are the people that switched to a do-it yourself product because it just became easier than sitting there with pencil and paper doing it at their office.

Arthur Andrew Bavelas (16:28.291)
So what do you we're big fans of Mercury, the fintech. Are you familiar with that? So Silicon Valley exit guy, entrepreneur, frustrated with all the nonsense he had to deal with with his bank, you know, his tradition traditional bank, and went and created a overlay, a fintech overlay on somebody else's bank.

Ron James (16:33.998)
Okay. I'm not. Tell me about them.

Arthur Andrew Bavelas (16:58.239)
So it was easy for venture capital firms and entrepreneurs to to offload all that banking nonsense that you you essentially can get everything that they have from Bank of America and and Chase, for example, but your local bank can't even come close, right? And oftentimes the entrepreneurs found it into in a city or a town where they have a relationship with a local bank, but the tech stack is

So weak, it's pathetic. Like, what do you mean you can't tell me every transaction I sent to this, right? It's all all the data's there, but they weren't able to extract it. So he actually went and built this thing and almost four years ago on two other bank balance sheets. And the revenue model was pretty simple. They would get DDA custody money just like a bank and share it with the bank.

But the fintech overlay was brilliant because if you're an entrepreneur, you went in and did whatever you had to do and it was done. Like you didn't even have to worry about it. And so they're actually doing they they actually just got approval from the officer of what is it, the office of control of currency and the banking regulators to now form their own bank. And so they're not trying to really make money.

They're not they don't loan money. It's just the fintech overlaying the bank balance sheet and making it really easy to wire money. There's no wire fees. Stuff happens on your phone. Like it's super, super cool. Anyway, the reason why I bring it up is because they're starting to do the work that your bookkeeper would do. And the next step is to do the tax return. Right? Yeah.

Ron James (18:49.25)
Yeah. Yep.

Arthur Andrew Bavelas (18:51.885)
So one of the reasons I bring it up is that they're not there yet and they're definitely not doing what you're doing. And so there might be a partnership in there for you.

Ron James (19:02.06)
I would love to talk with them about some consulting and stuff. Yeah, it's the tech piece is interesting. You know, are you familiar with your tax transcript at all? So the IRS actually keeps a tax transcript on every filer in the US, business and personal. And think of it as your credit report of your entire er every transaction you have with the IRS.

Arthur Andrew Bavelas (19:11.384)
No.

Ron James (19:25.236)
And it's become more accessible over the last three or four years as IRS is allowing companies to build APIs into them. So that's something that that we are starting to do now is to be able to offer getting people's tax transcripts. And what that does is it opens us to all this data on their transcript to help them. in fact, I have a friend who who runs a company called FNCR that really provides FNCR is financier, it provides.

Arthur Andrew Bavelas (19:32.387)
Well.

Ron James (19:54.121)
of capital one to fifty million dollars and capital to small bank to small businesses. Folks that used to go to their local bank and they can't do that anymore because a lot of times their local bank just doesn't exist or doesn't care about a less than $50 million transaction. And so we're, you know, me and him are looking at hey, how do we use even this data to help him get people approved for loans and and find capital for them based because everyone's used to a credit report.

And what that tells you. But now what the transcript can tell you and the data there, and it even will help lenders because they can't they don't really have access to all these 1099 jobs. They almost they have to take you know your your word for what you're doing. and you know, all of that's kept on a tax transcript. So now a lender could pull that and and it could help a lender even lend money through the tax transcript. So there's a lot of a lot of great information on the tax transcript.

Arthur Andrew Bavelas (20:39.458)
No.

Ron James (20:51.97)
And a lot of people have no idea that that even exists. the reason making it accessible is important in a lot of aspects is because a CPA right now, if they need your transcript to solve a problem for you, they have to spend an hour or two hours on the phone with IRS. So being able to just request it online, which is is the product that we have in partnership with a another buddy of mine that's got the API into the IRS, is huge because now we just save them two hours of their time.

To be able to get a transcript of the client and the client can do it. I got a letter in July that they needed more time to review my return. I got the alert probably four weeks before I got the letter from the IRS. because the IRS labels on their transcript and then they'd mail it, you know, two, three weeks later. So, so you get the alert right away. In fact, it it will even trigger you to be alerted of for an audit as soon as.

Arthur Andrew Bavelas (21:32.173)
Yeah.

Ron James (21:46.232)
You know, sometimes up to six months before the IRS actually sends you the letter of the audit. So it's a very interesting tool.

Arthur Andrew Bavelas (21:53.763)
So that's super interesting. It's quietly happening, and I heard it from multiple family offices recently that the the local bank, yeah, where they have huge dip deposits, are pulling their line of credit. And it's being driven by the regulators looking at their balance sheets and not giving them the proper credit on their balance sheet.

Ron James (22:08.696)
Yeah. Yep.

Arthur Andrew Bavelas (22:22.637)
for loans that are good. Right? They're reclassifying those loans. And so the banks, while we look at them and say, You bastards, you're pulling my line, it's really them looking after their balance sheet forced by the regulators.

Ron James (22:38.028)
Yeah, absolutely. Absolutely. It's it's why all these fintechs are coming up and being able to do stuff. I mean, it's my buddy at Lend API. I mean, they have a marketplace of lenders that you know, do things like boats.com and they they come up with unique lending methods that the banks don't allow them to do, that they can find other sources to to underwrite. And that's why the fintech thing's starting to is growing more and more. And and that's why Trevor built FNCR. Trevor I actually

work together at innovation refunds. but he built it for the the reason you're talking about. Like these these folks aren't able to get capital. And and we've created a cool partnership because he's like, look, my goal is to unlock capital, whether it's free money that the IRS can give them or whether it's getting some sort of capital through through FNCR. He goes, Ron, we want to help them with both. So so we kind of we've created some cool partnerships where we we shift clients back and forth.

based on what their needs are and you know for him, hey, if I can get him a tax credit without getting them a capital through through F and C R, that's great. It's a win for everybody 'cause we solve the client's problem.

Arthur Andrew Bavelas (23:43.681)
Yeah. Is where's FNCR get its capital to lend? They don't have a balance sheet.

Ron James (23:48.067)
Yeah. No, he has a a group of lenders in a marketplace behind him. So and and they they all fight for fight for the money. So so it it actually produces better results for the companies.

Arthur Andrew Bavelas (24:03.597)
So he's sourcing credit worthy b borrowers. Is that fair to say?

Ron James (24:08.738)
Yep. Yep. All over the world. Yeah.

Arthur Andrew Bavelas (24:13.965)
That's super interesting. Probably not unlike you and others, I get endless inbound emails offering to loan me money. Meaning I mean I I can't be just me, right? It's just it's yeah.

Ron James (24:15.736)
Yeah.

Ron James (24:25.23)
Yes. Yeah.

Yeah, yeah, they come to everybody. They're everybody it's it's what's a scam and what's not, I guess. But there's it's just with the fintechs out there, it's just so much I mean, the banks have struck such strict rules on how that they're doing things and how they're working. And and fintechs are, you know, it's you're they're getting money from other folks that that's not necessarily a bank that are looking at it in in a totally different way is hey, what's this, you know, what what's my risk on getting this back?

Arthur Andrew Bavelas (24:35.638)
Right. Well

Ron James (25:00.072)
And a lot of times they'll do it. Even on government receivables, like like when we do a credit, I have groups that buy credits. If a business doesn't want to wait the time for the for the IRS to to pay the research and development credit, they they consider a a re a government receivable guarantee. It's just when it's not if it's just when will they pay it.

Arthur Andrew Bavelas (25:21.731)
Triple A, right? Yeah, triple A.

Yeah.

Ron James (25:27.006)
And so there, you know, I have all kinds of groups that are buying those in tariff refunds at, you know, ninety, ninety-four cents on the dollar to give people their money in five to ten days versus waiting on the government on that.

Arthur Andrew Bavelas (25:38.741)
Is the tariff refund thing real? Meaning because of what happened are they actually the is is is the government actually writing checks back dead people?

Ron James (25:52.683)
Yeah, yeah. They've paid they've paid about 40% of it back already. So there's a hundred and sixty-five billion dollars that US Customs has said was paid in tariffs, in IEPA tariffs. And they've paid about I I think the last I saw was something around seventy-two billion dollars has already been refunded. The challenge in it now is the big players all got refunds, right?

Apple, I don't know if you like if you go back and look at the last quarterly earnings, you know, Apple added two billion dollars in tariff refunds to their to their PL. Kohl's added seven hundred and fifty thousand dollars and their stocks shot up because they they've added increased their earnings because of that. Walmart, all of them have done that. It's the little players that were small tariff people who maybe, you know, I I only did $50 to $100,000 in tariffs.

Arthur Andrew Bavelas (26:23.437)
Yeah. Yeah.

Ron James (26:44.514)
They don't understand the process. They don't know. And those are the folks that in fact the US Customs r released a report on that about 60 days ago, you know, to encouraging those people to file for their refunds. but they're not working with the right people. and so some of them didn't even do things the right when they filed it because they did it on their own. It was so small they didn't use a broker. And so now they're they're in this spot where they just don't know how to do it or

They they they just they they just are still a little concerned, like you just said, hey, is this real? Are they really giving my my money back? And I would yes, they're giving your money back.

Arthur Andrew Bavelas (27:15.991)
Yeah. Yeah.

Arthur Andrew Bavelas (27:20.035)
So when are you doing it the same way you did it innovative is tightening up all the paperwork so it's correct, filing it on your behalf and taking a piece of the refund?

Ron James (27:32.896)
Absolutely. Yeah, that's what we're doing. Yep. Yeah. So and I have a group of fulfillment partners behind me that top one hundred law firm that that they're one of only ten US trade and customs departments. they have one of only ten US trade into customs departments in the US in a law firm. and that's who's doing my work for me.

Arthur Andrew Bavelas (27:35.831)
Yeah.

Arthur Andrew Bavelas (27:54.849)
And what's that is what's that if you've got a two hundred thousand dollar refund or even a hundred, is it worth doing the paperwork?

Ron James (28:02.434)
Yeah, it definitely is. I mean, if if you so so we charge you twenty percent. and so that covers covers our fees and covers the the attorney fees. So you're gonna get, you know, eighty thousand dollars back. and we can and you know, we can even do advances on that where they're getting the money in five to ten days. Yeah, they per they actually shouldn't even call it an advance, they purchase the receivable from the client. Yeah, and they're purchasing those right now anywhere between eighty-eight and ninety-two cents on the dollar.

Arthur Andrew Bavelas (28:21.453)
Well.

Arthur Andrew Bavelas (28:33.389)
Good credit.

Ron James (28:34.412)
Yeah. Yeah. It's there's a l lot of opportunity in the terra space still. it's it's knowing the folks that that imported, you have to be the importer record. So you have to be the person that actually paid US customs. and so but it's there's a good opportunity there for people to get money back. and it's not gonna end. I mean, four tariffs since the first of the year are all being are all being challenged right now.

So pretty much every tariff that Trump puts out there right now is being challenged. and they foresee it. You know, the group I work with of attorneys, they they believe that they're all gonna end up at the Supreme Court at some point. And obviously the precedent's already been set with IEPAs that that it's not a constitutional tariff.

Arthur Andrew Bavelas (29:19.967)
What happens to the refund if the tariffs get reinstituted somehow? Are they gonna try to claw it back or just

Ron James (29:30.796)
You know, I would tell you this, the best part about about the group that I have buying is that they're non recourse. So except in the curse of fraud, they even say, Look, if the government comes back and says, Hey, you you owe this money back, it's non recourse. They're the ones taking they're the people that are purchasing are taking that risk. So

Arthur Andrew Bavelas (29:48.717)
Yeah.

Super interesting.

Ron James (29:53.123)
Yeah.

Yeah, this whole government receivable and credit world is a it's an interesting space to be in and it's a it's a great space to be in to help small businesses out just because it's challenging to navigate it.

Arthur Andrew Bavelas (29:55.863)
Yes.

Arthur Andrew Bavelas (30:08.533)
Is it easy for you to it's not fair to call it easy. Is is it a big lift for you to target certain industries that you know that you can help?

Ron James (30:23.924)
No, not in today's world too much. I mean, I I think it well, I I should say it's a lift financially in those pieces because the data costs money. and so and so I would tell you that's the restraint. I the data's out there to go grab. the importer one's been a little bit more challenging for me to grab. I've had a few people that have thought they had good lists and they've turned out to not be as as good as they thought they were.

of folks. So it it's been a little bit more challenging for me to get to the right folks who are who are importing goods. the other other things I mean, really, you know, my biggest opportunity is the is the financial piece, right? It's capital, just like every small business. The capital to be able to go after it and and do what I need to do to market to the the stuff. I know it's working. I know that's there. So what once I get some of this capital, I'll be in really good space.

Arthur Andrew Bavelas (31:16.043)
And the firm that you mentioned earlier that's doing business loans, are they also doing receivable type stuff?

Ron James (31:22.614)
Yeah, he's actually purchasing yes. So he can do he's working with he's working with he's one one of the guys purchasing some of the R and D and Tariff refunds. He's also working with another group that I I introduced him to to on a debt facility in Canada for oil. so he'll he does debt facilities and stuff too. So yeah.

Arthur Andrew Bavelas (31:45.175)
Yeah. Super interesting. So have you had any you know, so so many of the family offices have operating business, so it's not even fair to ask you if you family offices are interested in this because they would be if their COO was paying attention in their operating company. have you have you s have you gotten much feedback, the CFO actually?

From organizations like private equity funds that have multiple operating companies.

Ron James (32:18.208)
No, I haven't. I haven't spent a lot of sp time targeting that space. I probably should spend more time targeting it. I've kept you know, I've kept it to targeting to the direct to consumer and to to tax professional firms and and CPA firms. so it's something that I should look at doing is is you know, having that conversation with some of those folks and

and understanding it a little bit. I know there's a lot of family offices that are even in the tax space and and doing things in the tax space. So I think there's some a lot of synergies there with what I'm doing in some of the family offices.

Arthur Andrew Bavelas (32:52.823)
Yeah, we know a fan hand there's a lot more than that the ones that we know, but there's a a lot of private credit fam people that you know, they're sitting on big balance sheets and they just want to lend the money out and get paid back, right? So we and they're doing some of them are just doing one off things, underwriting it well, and others act actually have a real business of underwriting loans like your friend is doing.

Ron James (33:06.562)
Yeah. Yep.

Ron James (33:18.454)
Yeah. Yep. Yeah, I'll definitely make the intro to to you and Trevor.

Arthur Andrew Bavelas (33:24.228)
yeah, that would be great.

Ron James (33:25.762)
But yeah, I think there's a there's just a lot of synergy in the family office space in this. man, the whole family office is so new to me being in corporate America. You know, James actually introduced it, the family office to me, our good friend James. And man, it I I didn't even know this world existed out here of of folks who who had these family offices that were, you know, buying stuff. In fact, I'm working with another group right now that it's and we're not with a family office, but looking at rolling up

some tax offices and buying them and looking at some of these tax advisory strategies and stuff. And, you know, for me this this software that I got I think's got some really good legs and some things that some family offices would probably be interested in.

Arthur Andrew Bavelas (34:06.519)
What what's the multiple on roll ups for those types of tax offices?

Ron James (34:11.884)
Man, it's a it's an interesting strategy that we have that's a little different than most. There's this so I I met this guy about a year ago, and and he he brought me into a different even world than tax credits in his tax strategy and advisory world. And there's a lot of tax advisory and strategies out there for the high net worth individual, which is typically about 10 to 15 percent of the clients out there in an in an office. And

They're looking for strategies to to reduce their tax liability. So these are folks who make over 300 grand a year, paying over 50,000 or have $50,000 in tax liabilities a year. And they're looking for ways to reduce that. I mean, we just took a guy from 3.6 million down to 200,000 in his tax bill. And he did this with his friend who owns a CPA firm and he does the tax advisory work. And they made in one year off 17 clients over $300,000 in EBITDA.

And the c the office is only serves about 250 clients. And so Sunil and I met through a friend, and with my experience at HR Block, he's like, Man, I think, I think if we got the right investors in mind, we we could scale this and we could do some things here that that that you know somebody hadn't thought about. So, you know, you can buy these offices at about seven or eight cents on the dollar. and then our our thought is is, you know, we're we're been

Putting the business model together. In fact, we have it and we're ready to roll once we get some investors in it. but the thought is is you know, hey, we did it, he showed it could work in one. Now let's let's get five and let's let's see what we can do in this tax strategy world. where we we talk to these folks about these strategies. We you know, you make the the client would gladly pay you $30,000 for an annual fee when you just saved him eight hundred thousand dollars on his taxes.

Arthur Andrew Bavelas (36:07.949)
Course.

Ron James (36:08.83)
And and that's kind of the model is hey, it has an annual fee. but but we guarantee that we'll double whatever your annual annual fee is. Usually it's it's way more than double what your annual fee is and your tax liabilities. And and we we have a we look at your tax return and we go through and we we offer different strategies. A big one's costeg, but there's a lot of others. There's there's short-term rental strategies, there's a redeployable home strategy that a lot of people haven't heard about.

there there's just a ton of strategies out there that high net worth individuals are are highly interested in. and and they're you know, they're they're good strategies that we have lawyers that back and and all the paperwork to to keep us safe and the clients safe and and obviously we defend the work too.

Arthur Andrew Bavelas (36:55.799)
Yeah, so oftentimes that person for a high net worth client is the tax lawyer.

Ron James (37:01.73)
Yep. Yeah, it is. And it it's funny. so I won't mention the the company, but the company that does my tariffs, their tax attorney is has been she's a good friend of mine just from the time at IR and all those things. And she's been looking at these strategies and she's she's looking at some of them for herself. Like she didn't even know some of these existed. and so you know I

The world is changing so rapidly in this space, that these new strategies are coming up, you know, like redeployable homes. I mean, redeployable homes, and the IRS sent a letter about it saying, Hey, this is a good strategy. Just make sure that that whoever's doing it is evaluating the home correctly. But the the strategy is is you you build these box houses, those container homes, and the company's right there in Utah that does this, and you deploy when there's a natural disaster.

So the government is already giving, you know, money to FEMA to to get these homes. Some of them have been sitting out in Maui for for now two, three years since the fire. And you deploy these out there and the investor invests, you know, $100,000 up front on the home. And then they they're able to take all of the value of that home as a as a depreciation asset right there that year. So it's upwards of three hundred thousand dollars or so.

And then they rent these homes. This company actually navigates renting these homes, these redeployable homes, out to FEMA and other places, in order to, and then you make money off that investment, and you're paying off the home with the rental that you gener money that you're generating. And it's actually gonna be big in data centers, I think. They they were telling us the so Delta, Utah is a little town you may know about it south of Salt Lake City.

That they're looking at putting a data center there. And it's gonna cut it's gonna take, you know, seven, what'd they say? Five to seven thousand people to build it, is what this guy that did the readable. Yeah. So they can drop these houses in there, rent them out for five to seven years as a construction company, get through all the the red tape that the city has of building new homes here, and an investor basically invests in that stretch best invests in those homes, then they deploy them down there and they collect on the rent.

Arthur Andrew Bavelas (39:05.613)
So work workforce housing, right?

Ron James (39:27.042)
and the investors sharing in some of that rent money too. So there's a lot of really cool strategies that man, I I think that we're on to something really good with with how we want to do this roll-up of tax offices and doing a little differently than most investors do. They focus on, hey, how quickly can we grow new clients and all that sort of stuff. And we we just told you, you know, you and I just talked about how hard it is to get a new client in the tax world. But man, if you can go find your

top 20% earners that are your tax clients and create better value for them. and a reason for them to stay as your client. and then word of mouth travels quickly. So those people tell two or three people, each one of them this year, and you got new clients already without spending a lot on marketing.

Arthur Andrew Bavelas (40:15.447)
Yep. Sticky and also the inbound referrals are huge. So it just coincidence we on this program we interviewed two firms that are heavily invested in mobile homes or whatever, you know, this variety of yeah. Not no, but just like mobile home parks.

Ron James (40:20.044)
Yeah. Yep.

Ron James (40:34.35)
Redeployable.

Ron James (40:39.838)
Okay. yeah. I have a buddy that does that in Vegas, yeah.

Arthur Andrew Bavelas (40:42.803)
And so there's some tax benefit. The it's the traditional cost seg and all that business, but there's some tr tax benefits to that as well, right?

Ron James (40:51.628)
Yeah, yeah. Any any of those, you know, there's a lot of things. Mobile parks are typically put in opportunity zones. so there's a lot of credits out there. new homes, low income housing, and historic housing tax credits. but the the new homes and low income h homes, so these are where you de you're doing something in an opportunity zone, which is the areas where mobile homes are

you know, we're are great in. You're creating you're creating homes and things there that are that are low income and there's a lot of credits in that space. hotels in those space, multi unit family centers are are you know apartments and things in those those areas are really big. If you buy one or if you build one, there's a lot of credits in that space. Yeah.

Arthur Andrew Bavelas (41:42.603)
What about conservation tax easements, which have been a listed transaction for years, but people are still actively doing that? In fact, you know, most golf courses and people have big swaths of land, throw them into an easement to get the tax credit. Is the IRS still looking at those with a a jaundiced eye?

Ron James (42:10.07)
I would tell you, I I think the what the Trump administration has done is changed so much things in enforcement in the IRS that if you're gonna do anything, right now, it it's the time. there there is you know, the Trump administration has made us especially the these easements and things, they want people to take advantage of them. They they they're your friend regardless of what you think about them in any other aspect.

In this world, that administration has has opened up a lot in the real estate space and done a lot to to help people to be able to take these credits even more now and and made the credits more valuable. And so yeah, those those easements are still there. I I think the important thing to do is make sure you use somebody that's that's trusted. You know, do do they do they give you a a a defensible survey? Will they work directly with your CPA to do it, which we do.

You know, I I think the people that want to do it on their own, want to leave your CPA out of it. you know, we want your CPA to be involved. We want them to know what's happening. We want we want them to file the work. And so in any of them, I think that's the most important thing is is do it with folks who are reputable, folks who will continue the relationship with your CPA, not try to switch you to their CPA. I I I think that those are the ways to stay out of trouble.

Arthur Andrew Bavelas (43:31.607)
Yeah, listen, the the IRS loved these because they allowed farmers that had no basis in their property to to to enjoy the growth of of the land and keep it open space. But the syndicators are what killed it, they went out and syndicated the tax credits and overvalued, like you said, the survey, the the valuations were inflated so they could sell more syndications.

Ron James (43:55.714)
Yeah.

Arthur Andrew Bavelas (44:01.611)
I mean pretty much got what they deserved. It's just sad that it happened that way.

Ron James (44:07.916)
Yeah, it it's just, you know, the same thing with this with this redeployable home strategy. They they gotta get make sure that the valuations seem right. If it if it doesn't pass your own smell test, then you should question it. So that that's the thing I would tell you because they're they're great they're great credits and there's always people out there trying to exploit things and and do that. I I think man, I when I think about it, you know, my my unique career at Walmart for a decade and then senior leadership.

Arthur Andrew Bavelas (44:20.983)
Yeah, for sure.

Ron James (44:37.25)
Roles at Best Buy as well. And then HR Block. I I worked with these companies that had conservative leaders. Best Buy may not be as conservative as HR Block and in Walmart. but I understood compliance really well. I mean, it was driven into me from day one at Walmart. And obviously at HR Block, there's just no gray space. and that's something that I've taken with me with everything, even at at Innovation Refunds. You know, we we had quality partners that we knew could go do quality work on ERC and

We were never concerned about about some of the stuff that people were doing and saying fraudulent stuff because I I knew who who we had done, I knew we vetted them, I knew we had good people. And just I I guess growing up in the Walmart country in southern Missouri and and in that compliance world at Walmart just taught me, hey, it's it's not worth it to take shortcuts because your reputation is all you have in the life, and that's the one thing you don't want to damage.

Arthur Andrew Bavelas (45:35.115)
Yeah. And listen, it's aside from the reputation which is Paramount, those companies knew that they were targets and so they didn't need to go on the edges, right?

Ron James (45:46.989)
Yeah, yeah. yeah. We had OSHA show up. We my Walmart stories. That's a Walmart stories is time for some bourbon and a a night in Salt Lake City or Park City. I got some great Walmart stories. You I I I never knew how powerful Walmart was until I worked for him. And man, they are a powerful beast. Yeah.

Arthur Andrew Bavelas (45:56.439)
Yeah, come on out.

Arthur Andrew Bavelas (46:07.341)
Yeah. Huge. I just saw I guess it was one of the football games where they were scanning the museum for Sam Walton where they had reproduced his office in the museum. Yeah.

Ron James (46:23.094)
Yeah, the five and dime store in Bennville. If you ever get a chance, it's worth it. It has it has his his old Ford truck is there. you know, and he drove a Ford truck till the last day he worked at Walmart. the same one. And his double barrel shotguns in the the back corner, which would probably not be allowed in today's world in an office. his his theory was is you never knew when it was a good time to go hunting. So

Arthur Andrew Bavelas (46:40.93)
Mm-hmm.

Arthur Andrew Bavelas (46:44.555)
Yeah.

Arthur Andrew Bavelas (46:48.953)
Right.

Ron James (46:49.558)
He but yeah, his office is exactly how it was left when it was there. I I worked there shortly after Sam died, but the stories about Sam were great and you know, growing up I grew up in Neosho, Missouri, which is about thirty, forty miles from Bentonville, Arkansas. So I grew up right in the middle of of Walmart company country and started with him there and kinda I worked my way across the the West with Walmart as we opened supercenters. That's how I ended up in Saint George, Utah. So yeah. Yeah.

Arthur Andrew Bavelas (47:15.767)
Yeah, amazing. Amazing. So just we're gonna make sure everybody gets this, but just say the best way to get a hold of you for the group.

Ron James (47:24.962)
Yeah. Yeah, just email me at Ron at opscalepartners dot com. That's a great way. Check us out on my website at upscaleexchange.com. you'll find a lot of information about our credits and the products that we that we offer. So check those two places out.

Arthur Andrew Bavelas (47:41.109)
Awesome. Thanks for doing this and thanks everybody for paying attention. Thank you, Ron.

Ron James (47:45.26)
Yeah. Thanks Arthur. As always. It's great to connect with you.

Arthur Andrew Bavelas (47:48.663)
My pleasure. Hang in there a second.