First let me congratulate you on deciding to tackle your tax debt. You won’t believe the amount of people that just want to bury their head in the sand (ostrich style) and forget about it. I am glad you are not one of them. So now let’s talk about another important step you need to take. Carefully vet out the tax resolution firm you are planning to hire. I heard horror stories about so called “tax experts” ripping people of. (And I don’t want you to be one of them.) That is why you need to research the firms you are considering before you hire them. As part of your due diligence, you want to ask them the following questions:
Question #1: Are you licensed to be providing me tax advice?
Many tax resolution firms use unlicensed sales personnel to sell their services. These sales people do not possess the professional knowledge to be advising you on your tax matters, nor are they legally allowed to do so. The only people that can advise you on tax matters are attorneys, enrolled agents and certified public accountants. Ask the person you’re speaking to whether they are licensed. If they say anything other than yes because I am an attorney, enrolled agent or certified public accountant, then they are not licensed. Some sales people have even been known to make up something or just give you their title at their firm (such as senior tax analyst). The made up or fancy title doesn’t make them a licensed tax professional who can represent you in front of the IRS. Don’t hire them.
Question #2: Are you the actual person that will be representing me?
Be sure to confirm that the firm that will provide your representation will assign your case to a licensed representative. You should be guaranteed that your representative is a licensed tax professional (i.e., attorney, enrolled agent or cpa), even if it’s somebody else in the firm other than the licensed person you’re already speaking to. The IRS will not allow non-licensed representatives to negotiate for a taxpayer, but you would be surprised at how often large firms have unlicensed assistants doing the actual IRS negotiation. Before you sign an engagement letter or send money, make sure you see the IRS Form 2848, Power of Attorney, which lists the name(s) of the people actually representing you.
Question #3: Have you ever actually been involved in negotiating tax resolutions?
In other words, has the person you are speaking to actually worked on tax cases as a representative. It’s one thing to be licensed, quite another to have actual tax resolution experience. Because the government is cracking down on sales practices, some sales closers have actually taken the enrolled agent exam and become licensed. This is better than not being licensed, of course, but it still does not make them qualified to offer tax advice regarding your IRS debt if they have no actual experience. You wouldn’t hire an eye doctor to perform surgery on you. Then why would you hire a licensed tax professional (who doesn’t do tax resolution) to represent you in front of the IRS. Don’t be someone’s guinea pig. Don’t hire them.
Question #4: What precisely does the fee you are quoting me include?
The tax resolution mills are notorious for rebilling clients for work that doesn’t need to be done, was excessively over billed for originally, or that should have been included in the original fee quote. Many tax resolution firms operate on a “flat fee” basis. In theory, the fee they quote you should include EVERYTHING needed to resolve your case. Make sure that fee includes some of these necessary actions:
- Full negotiation of resolution.
- Preparation of any missing tax returns.
- Removal of any existing levies or wage garnishments.
- Representation for all tax types, including state taxes if needed.
- Application for a penalty abatement if you meet “reasonable cause criteria.”
If the tax firm you are speaking to works on a retainer basis with hourly fees, rather than a flat fee, be sure to ask for an estimate of what the total charges will be.
Understand that hiring a representative to negotiate on your behalf is not a guarantee that your case will be resolved. You will still need to work closely with the person you hire. Although the person you hire will do all the interactions with the IRS (and other tax agencies if necessary), your participation throughout the process is vital. So be sure you select somebody that you are going to be able to work with and that answers the above questions to your satisfaction.
Oh, and if you are wondering…
- Yes, I am licensed to represent you in front of the IRS. I am a licensed attorney in Florida (and currently applying for the DC bar).
- Yes, I am the person that will personally be handling your case. I have a boutique firm, and therefore, I only take a limit number of clients per month. So, don’t wait to set up an appointment with me if you are interested. You can do so by clicking here.
- Yes, I have over 15 years of experience representing clients in front of the IRS. I also have a master in tax law (that means I stayed an extra year in law school just learning tax law). And I teach tax at the law school.
- For most of my tax resolution work, I bill at a flat fee. If you would like to talk, more about it schedule a conference with me by clicking this link.