The tax advantages and the future of solar and other green technology. Plus, a Security and Fraud specialist offers insights on IRS scammers.

Episode Transcript

Intro:

Welcome to the Practical Tax podcast, with tax attorney Steve Moskowitz. The Practical Tax podcast is brought to you by Moskowitz, LLP, a tax law firm.

Disclaimer:

The information contained in this podcast is based upon information available as of date of recording and will not be updated for changes in law regulation. Any information is not to be considered tax advice or legal advice and does not form an attorney/client relationship. Further, this podcast may be construed as attorney advertising. You should see professional consultation for your individual tax and legal situation.

Chip Franklin:

Welcome again to Practical Tax with tax attorney, Steve Moskowitz. Steve, you’re looking good, my friend.

Steve Moskowitz:

Thanks so much, Chip.

Chip Franklin:

Lot to talk about today. And there’s a lot going on in the world. One of those really involves us here in California. We have so many days of sunshine, maybe not in the sunset district of San Francisco.

Steve Moskowitz:

It’s wonderful here.

Chip Franklin:

The ironically named sunset district, but one of the things that it always blew me away is that we don’t have more solar panels on every… Well, I don’t know, on every building from San Francisco down to the border with Mexico, and I find it fascinating. And that’s one thing we don’t have that we should, but maybe there’s reasons that I don’t know. So we invited our first guest today. He’s a green energy expert, and he’s here with us. Ali Samana joins us here on the Practical Tax podcast. Ali, thank you so much for being here. Good to have you. And it’s really great to be able to talk to somebody that can maybe clear some of this up for us. Happy sunny Friday.

Ali Samana:

Hey, happy Friday to you too. And howdy from Texas. How are you, Chip?

Chip Franklin:

I’m well. I’m glad I’m not in Texas though. It’s hot down there.

Steve Moskowitz:

Well, I don’t know. Half of California is moving to Texas too.

Chip Franklin:

Yeah. Yeah, if you believe the ads, it seems like it.

Steve Moskowitz:

Every day clients are telling me. Even today, clients are well, we’re moving to Texas.

Chip Franklin:

Have you been to Texas, Steve?

Steve Moskowitz:

Many times.

Chip Franklin:

All right. No knocking you Ali. I love California, but I guess everybody has their own.

Steve Moskowitz:

So do I, doesn’t mean I can’t like Texas too.

Chip Franklin:

Fair enough. Okay. So Ali, let’s start with just across the country, and then we can focus in on California. What are the challenges facing the expansion of solar energy in California and across the country?

Ali Samana:

So there are several challenges that are facing the green energy market. So if you imagine where the cell phone technology was about 30 years ago, that’s kind of where we are. We have this infrastructure, this very heavy grid infrastructure, and now we’re going down to what’s called distributor generation. So there’s a lot of pushback, number one, from these grid operators, because if everybody just goes off, well, these poles and wires and everything that they’ve spent billions and billions of dollars on, nobody will really need anymore. California has a unique problem that the country is… California leads a lot, by the way, for the rest of the nation to follow. They’re number one in installs year after year. So the problems that they face today, the rest of the country will face in two, five, or 10 years. One of the problems that California faces for example is called the duck curve, and what the duck curve means is you’ve got all of these solar installs that are producing energy throughout the day.

Normally, your grid operators would see a parabolic curve. They’d see a parabola going back to geometry in high school for usage, as it gets hotter in the day, you use more electricity. Well, as it gets hotter in the day, you produce electricity now, when you have so much solar, so the curve looks like the duct and they just don’t know what to do with it because at night you still need energy. Early morning, you still need to pull energy but during the day, there’s so much energy being pumped into the grid that it’s actually lowering the demand to a point that they just have no idea how to stabilize the grid. So grid stabilization is one of the challenges, which is where storage technology and some of the other new innovative technologies will help. But at least in the short run, that’s one of the challenges facing our markets.

Chip Franklin:

What about storing that energy? Tesla and other companies sell these batteries for your home. Are they efficient enough to, I mean, I’m not asking you to support one or another, but do they work? And is it a good idea?

Ali Samana:

So battery technologies have been around a very long time. The battery technology that the DOD uses that our company actually endorses is a chemical called lithium iron phosphate or LiFePO batteries. They actually have the longest charge discharge cycle. When you have to look at with battery and the way that batteries are manufactured is what is the reason that this battery was made. So for example, we all have these handy dandy cell phones. Well, these batteries are made to be charged every day. And then the power is discharged over 10, 12 hours. This is lithium ion. I won’t say the names because I don’t want to need an attorney when I get sued. So there are…

Chip Franklin:

I got one right here.

Ali Samana:

Exactly. There are companies…

Steve Moskowitz:

Always happy to help.

Ali Samana:

Thank you. There are companies, one of them who you mentioned that use these lithium ion batteries for home purposes, and that’s really not a good purpose for them. They won’t last as long. They’re really not made for that so they’re not as efficient. But lithium iron phosphate is the solution at least today for homeowners that want a battery that lasts 15 years, and that does everything that they want it to do.

Chip Franklin:

Steve, what happened to California’s strong embrace of solar incentives and California and the federal government? I purchased like 50 of them for my home in 2013, but I’ve heard a lot of those incentives are gone. Is that accurate?

Steve Moskowitz:

Some of them are on the way out, but we still have some. So the bottom line is we shouldn’t ignore that because right now for 2022 and 2023, we still have them. And the other thing too, is you can never tell with the government when credits are going to expire, oftentimes the Congress will say, well, wait a minute, let’s go ahead and redo them, put them back in. But right now today, if you install solar, you get a 26% credit. You get a 26% federal tax credit.

Chip Franklin:

Wow. So let me get this straight then. Why wouldn’t a state want to encourage solar? I mean, is there downside for PG&E and some of these other electric companies, if more people start using solar? I mean, I know I don’t get credit for everything I sent in the grid, and I didn’t know this Ali until you told me it’s actually creates a problem. Because we’re sending too much into the grid, taxing the system. We’re all thinking normally that the problem is that we’re all sucking in from the grid, but there’s a two way street there. It can be another problem. I mean, to me it makes sense that everybody should have solar panels for a little more energy independence, but we’re still waiting for the perfect battery. Is that the deal?

Ali Samana:

So one of the things, by the way that you mentioned, so when you do a study of the grid and how solar helps or hurts these electric providers, it actually helps them a lot more than it hurts them. And the reason for that is the most expensive energy that is produced throughout the day is during the daytime. So here in Texas, if you’re trading electricity, it can go up to 50 cents a kilowatt hour for these energy buyers to actually purchase energy. And then at night, electricity is free because there’s so much wind energy that’s being produced. So actually solar installs are supposed to help these electricity providers and these grid operators, which is why there were incentives. I think California has that issue with the duck curve. They just have not engineered a solution for it. I know that there’s enough brain power in California to engineer a solution. Maybe wind power, just like we have in Texas might be the answer.

More wind power does more production at night. Coming back to batteries, yes, batteries are a big time solution. The challenge for a lot of these grid operators is that you can go completely off grid with batteries, and now you don’t even need to pay that meter tax. So there are some incentives in California if you get batteries, there’s specifically for people that are getting batteries, but I don’t see them lasting very long because as more and more people get batteries, they’re going to be worried that, hey, they may not need us at all anymore. And then again, this grid is just going to be useless.

Chip Franklin:

And of course, Texas, you guys have your own grid. And we saw the problems that had with that snow and ice last year. Steve, I guess when we’re talking about the state and investing into the grid, and it’s a myriad of issues here, it’s not just solar. What about investing in solar, Steve? I mean, do you have clients that are interested in energy or I guess different types of energy investing? I don’t even know if you can invest in things like windmills.

Steve Moskowitz:

Oh, sure.

Chip Franklin:

Geothermal and stuff.

Steve Moskowitz:

That’s been around for quite a while. And the bottom line is with investing a lot of times, traditionally, people think that the only reason people invest is for a certain amount of money. And that’s true for some individuals, but some people are very concerned about what good or harm their investing is doing. For example, you hear people that want to just make green investments. And there’s a lot of people that say, well, wait a minute, I really care about the environment. And yes, I want my money to go in these things that I believe in. And amazingly, investing is not just about dollars. It’s also about supporting things people believe in. Especially now, more and more people are concerned with social issues and doing these things. So it’s a combination. Sure, money’s really important, but people want to make sure that their money is doing the right thing for them and not something they don’t believe in and very strongly in certain things.

Chip Franklin:

And I don’t even know if this plays out, Ali, but in California, obviously we have tremendous water issues and desalinization is a big power suck, right? We talk about having to build a nuclear plant just to do that. Does solar energy hold hope for a state like California to create energy so we could desalinate?

Ali Samana:

So I would be biased or at least you would expect me to be biased and say the answer is yes. But the reality is that the most important track that we as a country need to be on is to be on the green power that does not put the carbon into the air at the rate that we’re doing. Nuclear is honestly a great option. I know that a lot of times people are worried about it, but with the advancements in nuclear fusion and nuclear fission, it’s cheap power. It produces 24 hours a day.

Chip Franklin:

Well, fusion is still a dream. We don’t have a fusion machine now, right.

Ali Samana:

That’s true. But there’s a lot of research being done specifically with the Gates Foundation, and they’re actually testing a lot of it as well. So in the next five to 10 years, there can be a lot of possibilities. But we have to adapt it as a country, I think.

Chip Franklin:

And a fusion reactor, the only byproduct is what helium and hydrogen is that it basically?

Ali Samana:

Yes, sir. That’s exactly right. Wow, you know your stuff.

Chip Franklin:

I mean, I believe in good listening to this since 1979 at Three Mile Island. I lived about 30 miles from that one.

Steve Moskowitz:

How could you have done that, Chip? You were in kindergarten then, weren’t you?

Chip Franklin:

Yeah. Well, there’s that. There’s that. All right, last question. And Ali, you’re going to come back again because this thing continues obviously, and I appreciate your time with us. Our tax incentives for solar panels, is that fair when so many people rent and don’t actually own their home? It doesn’t seem to me to be a straight up fair equation. And I know attorneys don’t like to deal with the word fair. It’s the law.

Steve Moskowitz:

Oh, I’m going have something to say. Don’t worry, we’ll let Ali speak first. I have an opinion on this.

Chip Franklin:

No. I want to hear you first, Steve. Please.

Steve Moskowitz:

Okay. So number one, and I’ve based my whole career on this, there’s two purposes for the tax law. One, we all know about is get money out of us. But the other one is a system of incentives. We’re a democracy. In democracy, the government can’t order us to do something, even if it’s good for the economy, good for the country. So how’s the government get us to do something they can’t order us to do? They pay us. And they pay us with tax incentives. You pay less taxes, and you can do that for anything. Why is it that somebody owns a home, gets his off mortgage interest when an apartment renter doesn’t? Why is it if you make a charitable contribution, why is it that this and that? There’s a whole long thing you will never be fair to. That’s impossible. So the government says, okay, what do they want to give incentives for? What do people want to do? How do you get to do them? And then they pay you through saving taxes. That’s why.

Chip Franklin:

Yeah. Okay. Good. Ali, would you agree pretty much?

Ali Samana:

Well, so I wanted to go back to your answer on fairness. And I think the reality is that I think it’s fair personally. Again, I may be a little bit more fiscally conservative than a lot of the listeners, but the reason is that every building, whether somebody’s living in it or whether somebody owns it or is renting it, it’s owned by someone. So we work with a lot of landlords that want to provide that as a green benefit for their tenants. So yeah, I think it is absolutely fair. I think it is needed because it makes a return on investment a lot sooner. And it, just like Steve mentioned, incentivizes the right thing to do for these clients.

Chip Franklin:

Gotcha. Ali, thank you so much. Again, Ali Samana is our guest, onesolarsolution.com. At the end of the show, you can wait and just see, we’ll have it up there too. You can see how to reach Ali if you have any questions. And we’ll get you back on the show soon again, my friend. Thank you so much. All right. You be well.

Ali Samana:

Thank you for having me, Chip.

Chip Franklin:

Thanks, Ali. How does a taxpayer know when it’s right to use a long form instead of the short form? They want to know am I leaving money on the table? Are there things to deduct? And I know contacting your office obviously is a good way, but what’s a sign that a person is leaving money on the table? Is there?

Steve Moskowitz:

So two answers. One is everybody should start off trying the long form. And then if it doesn’t work, you have the alternative. But the bottom line is, and not just because I’m a tax attorney, but the reason I went to law school was to do tax planning. The law is so complex. There’s so much stuff hidden in there, and I’ve spent my entire career finding where are these secret hiding places, what can we do here and there. And most people are not familiar anymore than I wouldn’t try to give you medical advice. So that’s the thing. What I would do is for everybody, I would suggest at least go to a tax professional once and say, well, what if anything could you do for me? Could you make a difference? But the tough part with that is the law keeps changing. And the bottom line is there’s a risk in everything that you do. But so many people have tax savings they leave on the table, not everybody. So again, you have to make a decision. Do you want to gamble and see if you have something? And that’s something…

Chip Franklin:

It’s not a huge gamble though, right? The first time, right?

Steve Moskowitz:

No. And also we’re taking a look at the complexity of the return. If you’re talking about you own the corner candy store, your return’s going to be different than if you’re talking about the tax return for General Motors.

Chip Franklin:

Well, you and I have been doing shows for eight years, and I learn about mean amazing things all the time. For business owners, for individuals, college students, everything, there’s stuff out there. And if you don’t go looking for it, it’s not going to find you. All right. That’s asking…

Steve Moskowitz:

It’s like taking a credit on your electric car.

Chip Franklin:

Right.

Steve Moskowitz:

We could easily miss that.

Chip Franklin:

All right. Boy, when my mom was alive, at 95, she was tough. She had worked for the US District Attorney’s Office for 30 years. And occasionally those IRS scammers would call her, and she would have fun with them. She would get them on the line and just mock them. And at the end it with the Bronx cheer. So I remember this, but not everybody was like my mom. And a lot of these people obviously had to worry about that. Joining us right now is Terence Lee, a risk management expert. He’s nice enough to be with us on Practical Tax with Steve Moskowitz. Hi, Terence.

Terence Lee:

Hey, Chip.

Steve Moskowitz:

How you doing?/p>

Terence Lee:

Good. How are you, Steve and Chip. Thanks for having me.

Steve Moskowitz:

Doing great.

Terence Lee:

Nice to meet you.

Chip Franklin:

So was my mom at 95, she was ahead of the curve, right? Because tends…

Terence Lee:

Totally ahead of the curve.

Chip Franklin:

And Steve knows this too really well, but seniors are prey for these people that pretend to be with the IRS. I’m going to ask this question of both of you. And I’ll start with you, Terence. What do they do? And how do they take advantage of them? And then at the end of this, let’s talk about things that they can do to avoid it.

Terence Lee:

Well, I think they target the elderly because those people are less likely to be familiar with technology. They’re also more inclined to answer a stray or random phone call and then actually engage that person in conversation. And I think younger people have learned, because they’ve grown up in this internet age and this age of scammers that in some cases, not even to answer their phone if they don’t identify the number, but they’re a little more savvy about it than the elderly. My 83 year old mother-in-law calls about once a month with a question about an email she got and is it legitimate or not? It’s endless.

Chip Franklin:

And Steve, obviously you get this all time. I’m sure you have clients that say, the IRS called me and said I owed them money. Does the IRS ever call people?

Steve Moskowitz:

So there’s some dead giveaways with this, Chip. First of all, normally the IRS does not call. Normally, they do not email. Normally, the initial contact is snail mail. And something that I promise you, an IRS will never, never, never, ever ask you to go to a store, get those gift cards and then give its number.

People have been cleaned out that way. And they make these threats, the sheriff is on his way to arrest you so you should wait right in your house unless you run right out to the store now, get the cards. And if you can call me before he gets there, I’ll tell him to turn around. And I know one time a guy called me like that. I had a little fun too like your mom. I said, are you really sending the sheriff? He says, yes we are. We’re sending the sheriff. I said, well, since this is a federal offense, why aren’t you sending the Federal Marshal? The sheriff wouldn’t be enforcing this. And the guy hung up on me. So for somebody’s familiar with it, there’s so many holes in that. You know they don’t do that. They don’t. But again, I’m thinking about some nice person, especially an elderly person who they’re scared to death and also a little more afraid of authority because they were older, and oh my God, they’re coming to arrest me. But yeah, people actually do get those cards.

Chip Franklin:

Terence, how do they get on my caller ID that says they’re from the IRS? That can’t be legal, right?

Terence Lee:

Well, it’s not legal, but the technology to actually spoof the phone system, it’s been around for a very long time. It’s definitely not legal. There’s tech out there that could look like Steve is calling you, and it’ll come through as if it’s from Steve. It’s pretty savvy, and it’s definitely not legal.

Steve Moskowitz:

And another thing I would say, for anybody that’s watching this. There’s a real easy way to know. If you truly owe money, they don’t do anything horrible to you on the first ask. Normally, the first ask is a letter and gives you 30 days to respond. So if your first contact is somebody on the phone demanding you paid today, it’s probably just a scam. And alls you need to do is just hang up and not worry about it. Or you can call the person that does your taxes and say John Smith at number 123 said he was calling… But those are scammers. So normally I just tell people, hang up on them. The IRS doesn’t do that.

Chip Franklin:

It can happen to anyone. I mean, I got scammed this summer trying to buy a baseball ticket off Craigslist. And I went through the whole thing, and it was Venmo. And those people on that end can’t protect you. But who is protecting us from IRS scammers? Is it supposed to be the Treasury Department or does local law enforcement? Either one of you?

Steve Moskowitz:

So what happens is the IRS asks if that happens to go ahead and report it to the IRS. The problem is if the scammer is sitting in some foreign country, in some boiler room, the chances are that’s pretty tough to enforce against him. However, there have been cases where those foreign boiler rooms have been raided in cooperation with the foreign government. So it’s not that it doesn’t happen. It’s just it’s not going to happen overnight. So if you report it to the IRS, the IRS will do what they want with it. But they may work with the law enforcement and the local jurisdiction.

Chip Franklin:

Terence, obviously this is not sitting still. I imagine these guys are doing their homework. Who’s winning the race right now, the people fighting these scammers or the scammers?

Terence Lee:

I think the scammers are. My company Protecht Group, our technology’s used to protect corporations for various types of risks by putting certain controls in place. But the underlying common factor is the individual. And it’s really up to the individual to be savvy enough and to take action. If you get a phone call, you can always tell them, hey, I’m going to call you back and go look up the phone number on the IRS website. Don’t take a number from them to call them back because then you could be part of the scam.

Steve Moskowitz:

Or more simply, you can just call whoever does your tax and say, Hey, do I really owe any taxes?

Terence Lee:

Exactly.

Steve Moskowitz:

And he or she can easily tell you.

Terence Lee:

Yeah. I think there’s a number of organizations that are certainly trying to help email providers like Google and Apple. They’re doing more and more screening, potentially harmful emails. Some of the antivirus vendors take steps to try to stop the inbound flow of scam emails as well. And then of course, there’s newsletters and news outlets that warn of scams that have come in via phone and email. But that’s typically after they’ve already been reported and people have gotten burned.

Chip Franklin:

And sometimes, and this happened to me. I was getting letters from California saying I hadn’t paid my California tax, which I had. And I would call them and go through this thing, and they’d say, ah, just ignore it. But the papers all look legit. And there was nothing on the paper that was trying to send me someplace, other than legit. They were trying to get that first step so that I would see this, I’m guessing, and then get my phone number and then call me because maybe they already had that. And say, we sent you this paper. But I never responded to any of this because I know I’d paid my taxes but it went on.

And then I got a lien notice that they were going to come. And my accountant’s like look… If you think about this, Steve, obviously, even for people and maybe sometimes for people like me that think they know everything, when something like this comes along, we’re even more vulnerable. I mean, I bet you are. And you’ve been surprised by clients that have contacted you before that you thought were really savvy that were in the midst of a scam.

Steve Moskowitz:

Unfortunately, we’ve done a bunch of those cases where somebody called. But again with our clients, what we always tell them is the reason you have us is you should have no direct communication with the IRS. We always tell clients, you get anything from the government, just give it to us. We know the difference between a scam and not, but it’s kind of like a bank examiner examining a hundred dollar bill to determine, is this a real hundred dollar bill or is this fake?

Chip Franklin:

Right. Exactly. Yeah. And I think that’s part of it is that nobody likes to get scammed. I mean, there’s a pride thing in part of it, even if it’s not a lot of money. In my case for the baseball ticket, it was 75 bucks. I was mad, but I’m not going to call the police department because it was a burner phone. Venmo does… I mean, there’s some companies out there that sound really… And I don’t mean to trash Venmo, but they were like, you’re on your own, man. PayPal kind of the same deal, Zelle kind of the same deal, a lot of those. The only way to really do it is to show up with cash where the guy lives so you can always come back to his house. But I mean, if people would tell you, don’t buy things off Craigslist, I don’t know. When did this really get this bad, Terence? When was the point? Was it the internet? Is that the thing that really exploded this?

Terence Lee:

Yeah, I think it was well, partially the internet, but I think it was the proliferation of the use of email and the way people use email for their personal life as well for their business life. When that took off and granted, that was a long time ago, 10 plus years ago, that’s when I think the scammers started to figure out ways to manipulate people and then coupled that with the internet and the easy access to information and easy ability to look up people’s phone numbers and to confirm the area they live in or use a tool like LinkedIn, a professional networking tool and discover where they work and the role they had and then scam them based on information from their past. It’s going to sound legitimate to them.

Chip Franklin:

Wow. I got one more question for you, Steve. And I asked you this the other day, and your response surprised me because I thought it was the opposite. If I get taken by one of these scammers for $100 or a $100,000, is it tax deductible in any way?

Steve Moskowitz:

Unfortunately, the Tax Cuts and Jobs Act took that away. So when the old…

Chip Franklin:

Why?

Steve Moskowitz:

Because our Congress people in their infinite wisdom have decided that is what’s best for we, their children. Remember when I was a professor, what I always told the new law students was unlike physical science, it is because it is, law is only what those in power at the time say it is. That’s all it is.

Chip Franklin:

Yeah. Obviously, the law and our perception of the law are often quite different. And the things that we think are out there to protect us, Terence, you probably your company aside, it’s kind of like buyer beware. You have to get a little savvy nowadays, whether you want to or not.

Steve Moskowitz:

Unfortunately in today’s world, you need a professional to go to that you trust and say, hey, is this real or not? You get all these scam emails and all these other things. And again, it’s stuff we work with all the time. But I imagine if you do something else, stuff, for example, I look at and say, oh, well, that’s wrong, gee. How many people would know well, the sheriff wouldn’t be enforcing something federal? That would be a Federal Marshal. It’s, oh my God, the Sheriff’s coming for me. Especially if the person’s older.

Chip Franklin:

That’s funny too. And Terence obviously, you guys consult. But at the end of the day, they have to take your advice, right?

Terence Lee:

They do. And in companies that are, I think of companies that use a lot of third party vendors, they put themselves at risk every time they do business with another corporation. So they have, in most cases, rigorous vendor risk management programs. And what they’re doing is evaluating the risk of doing the business with that company measured against the value they get or the transactions they perform with that company. But ultimately, if they didn’t do that, then they could be doing business with an organization that can’t respond to a disaster or disruption of themselves. A lot of the corporate breaches that you read about today are from third party vendors, not illegitimately, but simply because they don’t have the budgets to defend themselves against scams as well.

Chip Franklin:

That was the whole idea. Well, I mean, that’s not the reason why Steve Jobs decided to not allow third party vendors to come into the Apple platform without approval, but it did protect many Apple users and still does from many of the viruses that are on PCs.

Terence Lee:

Absolutely.

Chip Franklin:

Terence, this is great stuff, my friend. Protecht Group is the company. And will you come back again talk to us in the near future?

Terence Lee:

I’d very much like that. Thanks very much, Chip. Nice to see you.

Chip Franklin:

Thank you so much. Bye-bye. I cut him off. I apologize, Terence. Yeah. So it ticks me off so much people that do this. Steve, that take advantage of people, older people, mostly, but also immigrants, people that are here and…

Steve Moskowitz:

Especially sad is when some scammer goes after an elderly person and wipes out their life savings. They’re not going to make that again.

Chip Franklin:

Unbelievable. All right. You can get all this stuff and all our other videos from Practical Tax. Go to MoskowitzLLP.com. Also, you can download it as an MP3 and listen to it as you’re in your car. And you can find them on YouTube as well. That is Steve Moskowitz your tax attorney. I’m Chip Franklin. This is Practical Tax. See you next time./p>

Outro:

Thanks for joining us on the Practical Tax podcast with tax attorney Steve Moskowitz. To hear more and view more podcasts, go to moskowitzllp.com/practicaltax.