When it comes to choosing a firm to settle your tax liabilities, it’s important to conduct thorough research on them before permitting them to represent you before the IRS.
But you might ask, “What sort of things should someone be asking?”
8 questions to ask before paying any tax resolution firm a penny.
Is OIC the most common resolution method you recommend?
The OIC (Offer in Compromise) program has very strict requirements, any firm recommending it without thoroughly understanding your case is just trying to sell you something they cannot deliver. All in an effort to collect higher fees from you, the unsuspecting taxpayer.
The blunt truth is a lot of national tax resolution firms advertise OIC because it promises to reduce your tax debt (good for the taxpayer) AND commands higher fees (good for the firm). The problem is, only a small fraction of cases actually qualify for the OIC program and all others will be denied by the IRS. Leaving these taxpayers with nothing but empty promises and a drained checking account.
At BDK Advisors we will never recommend any tax resolution option without first reviewing your case entirely to determine which options you qualify for and which option is best for you, the taxpayer.
Can you help with my State and Local taxes as well?
If you have IRS tax debt and you live in a State with income taxes, chances are you may also have local tax issues. It doesn’t do you any good to work the IRS issues until you have first put the local tax debts to bed. This is because more often than not, the State and Local taxing authorities are much more aggressive with their collection practices than the IRS.
For example, a State we deal with typically files a lien on a delinquent taxpayer’s property much faster than the IRS does. In addition, once the collection time has expired the IRS would let the lien expire, while the State would keep the lien in effect for up to 40 years!
The general rule is to take care of the local tax issues first and then resolve the IRS issues.
Have you ever actually been involved in negotiating tax settlements?
In other words, has the person you are speaking to actually worked on tax cases as a representative. Its one thing to be licensed, quite another to have actual case experience. Because the government is cracking down on sales practices, some sales closers have actually taken the Enrolled Agent exam to become licensed.
This is better than not being licensed, but it still does not make them qualified to offer tax advice regarding your IRS debt if they have no actual tax case experience.
Any case-experienced, licensed salesperson should be able to walk you through the case proceedings from start to finish.
Are you the actual person that will be representing me?
Before signing a contract for taxpayer representation, be sure to verify the person working your case will be a licensed representative (EA, CPA, or Attorney). 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 negotiations.
Before you sign a contract 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, and verify their credentials.
Are you legally 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 Enrolled Agents (EA), Certified Public Accountants (CPA), and attorneys. Ask the person you’re speaking to whether they are licensed. If they say anything other than EA, CPA, or attorney, 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 (“Senior Tax Analyst”).
Several people have received criminal convictions for this misrepresentation, but it still occurs.
What’s your review rating?
Do a Google search for the name of the company to verify their public reputation. Are there a lot of negative reviews or complaints? If so, maybe you should look elsewhere. Ask the company what their BBB rating is, and then verify it. If they are listed on the BBB, you can see their rating, plus how long they’ve been in business and how many complaints they have had.
Always try to work with companies that have at least a 4-star rating online.
What precisely does the fee you are quoting me include?
The tax resolution industry is notorious for rebilling clients for work that either doesn’t need to be done, was excessively overbilled, or that should have been included in your original fee quote.
Many tax resolution firms operate on a “flat fee” basis. In theory, the fee they quote should include EVERYTHING necessary to resolve your case.
Make sure that fee includes these necessary actions:
· Full negotiation of resolution
· Preparation of any missing tax returns
· Filing of all needed forms, support, documentation, letters, and financials
· All Appeals
· Representation for all tax types, including state taxes if needed
· For business owners, make sure you are covered for Trust Fund Recovery Penalty representation. This is critical to prevent getting personally stuck with your business tax bill.
· 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 see a schedule of service fees, and get a copy of their billing policy. Ask for an estimate of what the total charges will be, and get that in writing.
Understand that hiring a representative to negotiate on your behalf is not a guarantee that your case will be resolved. You will need to work closely with your representative to ensure that your best interests are always put first.
Although your representative should do nearly all of the interaction with the taxing authorities, your participation and cooperation with your representative is vital to the resolution process, so be sure you select somebody that you are going to be able to work with without personality conflicts.
Can you put that in writing for me?
Lastly, be sure that anything and everything you discuss with a tax resolution firm, such as fees, covered services, responsibilities, deadlines, etc., are all in WRITING. Don’t sign a contract, and definitely don’t give them your credit card number without seeing everything in writing first.
Armed with these tips, you should be better positioned to make a wise decision regarding hiring professional tax resolution services.
At BDK Advisors we would be more than happy to answer all of these questions (and more) to help you feel comfortable and confident putting your faith in our tax resolution professionals.
We would also like to offer you a free, no obligation, tax case review so you can get a better sense of where you stand and what options you have.
Our hope is that this will provide some relief by removing some uncertainty from your tax settlement journey.