Swift Chat with Kevin Knull, CFP®: Revolutionizing Client Services with IRS Data Integration

In this Swift Chat episode, Marie Swift speaks with Kevin Knull, CFP®, President of TaxStatus, a cutting-edge IRS account monitoring and tax data platform designed for financial professionals and the clients they serve, about how this innovative fintech solution is helping financial advisors enhance client services through seamless integration with IRS data. Knull shares how TaxStatus enables continuous monitoring of client activities, providing real-time notifications on new filings and offering advanced analysis capabilities that help advisors prevent tax fraud and improve the financial advice they provide.

The conversation delves into how TaxStatus streamlines the client onboarding process by simplifying data collection and offering easy access to historical tax data. This not only enhances financial planning but also empowers advisors to make more strategic, data-driven decisions on behalf of their clients. Knull also shares how financial advisors can use TaxStatus as a tool for prospecting new clients by offering a unique value proposition rooted in tax efficiency and compliance monitoring.

Looking ahead, Swift and Knull explore future developments, such as integrating AI capabilities to automate further and enhance the system’s functionality. Knull also outlines the preview experience available to financial advisors, allowing them to experience firsthand the efficiencies and benefits of the platform.

Click here to learn more about Kevin Knull and TaxStatus

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Transcript of Conversation

Marie Swift: Welcome back to another great Swift Chat. I'm delighted to see my old friend Kevin Knull. Welcome to the show. How are you?

Kevin Knull: I'm doing so well. Thank you so much for having me, Marie.

Swift: You and I go way back. We've known each other for years, mainly at T3, in the technology and financial services community. Today, you're doing something new and interesting. We will talk about your new role as president of TaxStatus. Would you start by telling us a little about TaxStatus, the solution you provide, and for whom?

Knull: I'd be happy to. I probably need to start by saying that their IRS record is the most official, accurate, and comprehensive source of taxpayers' financials. TaxStatus has built a direct integration with the IRS, enabling us to do three things. We can provide a frictionless way for financial advisors to get consent and all of their clients’ federal tax data. We also provide a means to monitor those clients' IRS accounts, and we can provide analysis and deep insights to help advisors deliver a much higher quality of advice. Ultimately, we believe better data yields better advice, and it's all about delivering those better outcomes to the client.

Swift: Why is it so important for taxpayers and their financial advisors to monitor their IRS accounts continuously and see their tax status at every stage?

Knull: I think the biggest reason right now is the risk of tax fraud because of the national public data breach that happened this summer. You may or may not know that a large data breach exposed about 272 million tax ID numbers around August. That means just about everyone's Social Security numbers are now out there. They're on the dark web, and fraudsters have access to them. A great deal of harm can come from that, including filing fraudulent returns, which is a big one. If you've never run into that, it's a real mess. If you aren't monitoring your IRS account actively, you may find out when you file your return that somebody else beat you to it and filed it on your behalf, and they may have even intercepted your tax refund.

If this occurs, it can take a very long time for the IRS to investigate the situation, get the money back, and for you to clean up the situation and receive your refund. There are other issues as well. First, your Social Security number can be used by someone seeking employment under the victim's name, which can cause immense penalties and issues later. If your child is eight years old and someone gets ahold of that Social Security number, there could be years of trouble before you catch it. A few other things that the fraudsters can do is use the Social Security number to claim government benefits, such as Social Security. They can commit identity theft, open bank and credit card accounts, or apply for loans. Of course, this all creates a lot of trouble. If you know your tax status, you can avoid some of these problems. Beyond the fraud issues, about 40% of the population owes taxes to the IRS. You can find out what you owe if you're monitoring your account.

Swift: My husband knocked on my door a little while ago and asked me to sign our tax return, and we're getting a refund. What if we found out that we wouldn't get that refund? That would be infuriating, and we would be worried. Clients have these concerns, too. How is my wealth advisor helping us make sure that doesn't happen? Our Impact Communications business account was hacked recently, and our bank intercepted it. I want to drill into this because IRS fraud has been rampant for years, and some bad actors claim refunds without the taxpayers knowing. How does TaxStatus help taxpayers in a deeper way than you've already explained?

Knull: In addition to helping the advisors and their clients access all of their data, our service provides a continuous monitoring service, which allows us to notify the financial advisor if something is happening on the IRS account. That could include things like new filings, audits, or fraud activity. There are monetary activities such as payments, penalties, or additional taxes assessed, or even collection activities such as notices or liens. The challenging thing with all of these is that when you get upside down with the IRS, they sort of compound on each other. It keeps getting increasingly complicated and can snowball quickly if you're unaware of it. This monitoring service helps advisors keep their clients up to date with what's going on.

Swift: You and I have worked with financial advisors and wealth managers for many years. There must be so many other opportunities for advisors. For instance, my wealth manager could see our tax report, which I think they asked for the first year we worked with them but never since. Let's talk about all the other values that the wealth management manager or the investment advisor could bring to their clients.

Knull: That's interesting. I've said for a long time, how do you render a fiduciary recommendation or advice without all the information? Getting that information is challenging for financial professionals, financial advisors, and planners. It only takes about a minute or so for your client to provide access and consent to receive their data. That allows us to go to the IRS, pull all the data going back as far as ten years, and then share that data with whomever the client chooses, like your financial advisor. That provides a much more complete picture.

Then, the advisor can render better recommendations with all the information instead of just the one tax return they received from you. Our firms have had much success in helping clients find forgotten IRAs and other accounts. People change jobs so frequently that forgetting about an old IRA or other bank accounts is easy. The IRS knows where they all are. Even if the client has passed away, we can still find that information. From a friction standpoint, the mere fact that the clients no longer must provide copies of their tax returns to their advisors is a big benefit. Your advisor wouldn't need to ask for copies of your K-1s, 1099s, or business returns. They'll be able to receive all that without bothering you for it.

Swift: This could also be a great prospecting tool. Let's discuss that and how advisors can use TaxStatus to provide a hyper-personalized service.

Knull: Yes. Having acted as a financial planner and advisor and worked directly with clients for years, I've always found that getting the data you need to have a meaningful conversation is the most challenging part of the new client or prospecting process. Most firms will have a two or three-meeting discovery process where you talk about each other and introduce yourselves, and then you ask for a big pile of data and fill out this 28-page data-gathering form, which always feels intrusive. It's a lot of work for the client because most of us aren't super organized with our financial lives.

With a process that the prospect can complete on their phone in just over a minute, they can provide permission to the financial advisor to pull their tax data and information that they would have to track down. If we go back ten years and then provide the next three years of data for monitoring purposes, that's an enormous amount of information for both the personal and business side. That information is so rich and can help the financial advisor do their job.

Swift: I made a list of things that I think TaxStatus could help advisors do better. Better financial planning, faster returns, avoiding underpayments, potential cost savings, streamlining mortgage approvals and car loans, and other benefits. Do you have anything to add?

Knull: We have so many different use cases. Every firm is different. For example, you mentioned mortgage approvals and car loans. Financial institutions, banks, and credit unions have a problem as they're trying to manage the fraud happening during the credit card or loan approval process or on existing loans. We do have financial institutions that use us to monitor the health of their loan portfolio. Because we can provide information on the health of the business, the IRS record, and so forth, they don’t have to bother their clients with a request for a copy of the tax return every year, and instead allows them to render better suggestions and advice to their clients.

My passion has always been improving the quality of advice. This falls squarely into that mission because we have so much data and information, but all of it is consent-based. The nice thing about TaxStatus is that the client must agree to share it. The data doesn't belong to us; it belongs to the client. We just help them share the data with whom they want to share it.

Swift: Toward the end of our conversation, Kevin will tell you how to try this for yourself and how looking at your tax data could be helpful. First, let’s talk about where TaxStatus has been, how you've evolved, and what's on the horizon.

Knull: Like many, this company has undergone a transformation over the years. We initially worked with many banks, credit unions, and lending companies because we had a unique data set that made it easier for them to do their jobs and care for their customers and clients. Over the last year, we dramatically pivoted to focus exclusively on the wealth space; register investment advisors, family offices, broker-dealers, trust companies, tax firms, and so forth to help them deliver better advice through the data.

Because we have ten years of data and the consent to retrieve the data for the upcoming three years, it's logical that we build out capabilities to enable advisors to render a much higher quality of advice. We'll soon release a series of reports that analyze the data to surface new insights, which should create meaningful efficiencies for firms. It'll eliminate bias and allow the firm to have everything they need to consider all the recommendations rather than the few they regularly recommend. I'm most excited to release our artificial intelligence capabilities that will serve as extremely specific observations based on all of the financial references and client data. This will include personal, business, and trust return data to help advisors deliver better client outcomes.

Swift: That is all very exciting. I can't imagine that there is a financial professional who is listening and wouldn't want this to provide better advice and protect their clients. You don't have a solution for consumers right now, so you need a financial advisor to be able to utilize TaxStatus. Is that right?

Knull: That is correct. We work with financial professionals, but many consumers come to us directly and ask for our solution. We always reply and ask them who their financial professional, financial advisor, or CPA is, and they can make a request via that professional.

Swift: Let's talk about the advisor who might want to kick the tires and see how easy it is to experience this wealth of information themselves.

Knull: We've created a sort of abbreviated process that shares a handful of our reports to let advisors experience what a prospect would experience, and that allows them to go through the 90-second KYC process. We ask for the basic information, scan the driver's license, do a selfie check, check everything against the watch list, and so forth, and then we pass that consent request to the IRS, the same thing their prospects or clients could do. If they go through that process on our system, which you can do right on your phone, as soon as we get the data back from the IRS, we’ll share those reports and the last ten years of your tax transcripts.

It's a mountain of information, and you won't be able to unsee it once you see it. That allows you to delete that information, take it with you, or if you see the value in it, you can purchase a subscription to our software.

Swift: This is amazing. You're processing a huge number of requests every year. I was stunned. Do you remember that number?

Knull: It's over 1.5 million tax records a day.
 
Swift: That's amazing.

Knull: It's a lot.

Swift: The firm is about eight years old, and there's so much more that you're innovating and planning to do. We won't talk about that today. I hope we'll see you at some financial services conferences this fall and spring, maybe T3 in 2025. Until then, how can people learn more besides scanning the QR code? What should our financial advisor audience do to check out TaxStatus?

Knull: They can go to our website, taxstatus.com, and there's a fair amount of information there. If they'd like to learn more, they can contact us or click get started if they're ready to dive in. Otherwise, they can go through the process themselves if they click the QR code right here. We'll turn around that data as quickly as we get it back from the IRS, and then they'll be able to log in, view their information, and either delete it or move forward.

Swift: Fantastic. It's always great to see you, Kevin. Thank you for being here.

Knull: Thank you so much, Marie. It is always a pleasure. 

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