The world of tax resolution has seen quick growth in companies and attorneys assisting individuals and businesses with their tax matters. This increase in assistance has had an overall positive impact for taxpayers that find themselves struggling with the stress and burden of dealing with the IRS. However, while much good has been done, I am constantly amazed by the stories of woe that clients tell me of experiences with other firms that provide tax resolution services. The over-arching theme I routinely hear is that they were over-sold on what the firm could deliver, and based on those promises thousands of dollars were spent.
The most common belief that taxpayers have is that a tax attorney can immediately reduce the amount that is owed. The phrase “pennies on the dollar” is like fingernails on a chalkboard to me. If you are seeking assistance with your tax problems, and the person you are speaking to uses a phrase similar to “pennies on the dollar,” I suggest you seriously question whether you should move forward with their services. Yes, the IRS has a program whereby they may reduce the total amount owed, but this program is operated at the IRS’ discretion. Less than half of all offers are accepted by the IRS. Your representative should have a very candid conversation with you regarding the pro’s and con’s of pursuing an offer-in-compromise.
There also exists the myth of penalty abatement. While the IRS has recently relaxed some standards on who is eligible for an abatement of penalties, such an abatement is not a guarantee to anyone. I have been told from numerous clients that they met with tax practitioners that promised interest and penalties would be removed. Again, I caution moving forward with any representative that guarantees you an outcome.
In the end, when looking for representation to assist you with your tax matter, do not be afraid to ask the practitioner of their experience and education with tax. For example, were they an insurance defense attorney that now sells the firm as a tax firm? What education do they have in the area of tax? Was it a weekend seminar on how to prepare installment agreements, or have they focused on tax from law school and through continued studies and work as a professional. Ask who will actually be working on your matter and what their experience includes. Is your case going to be passed off from an attorney who was merely providing you a sales pitch to staff that has not received tax training? Ask them what are you getting for the fees paid? Finally, do not be pressured into signing up immediately. Most tax practitioners provide a free consultation. Call several and see who best fits your needs.