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7 Tips To Avoid Getting Screwed Over By A Tax Resolution Firm

March 24, 2012 | Comments: 0 | Views: 138

The stereotypical sales worm is a used car salesman. However, I'd like to replace that stereotype with a new one: The tax resolution closer. This special type of salesman is turning out be slicker and more aggressive than your friend at the used car lot. The Federal Trade Commission and several state Attorney Generals have started cracking down on the unscrupulous sales practices used in the tax resolution industry.

Tax resolution firms are currently being investigated for a number of bad practices. For example, some firms have been promising acceptance of Offers in Compromise without proper evaluation for eligibility (most people are NOT eligible for this program, for one reason or another). Other companies have been running credit cards and debiting checking accounts without prior authorization, and threatening that IRS asset seizure action is inevitable if you don't hire their company (IRS seizure of tangible assets is actually very rare these days). Some companies use threatening and aggressive sales tactics to coerce taxpayers into signing service contracts, and then fail to provide the contracted services. In some cases, no services were provided at all. Another common practice is to promise actions that have no basis in law, such as promising to have Revenue Officers removed from your case or guaranteeing that your lien will be released. In reality, Federal tax liens are very, very rarely released if you still owe money, even if you are on a payment plan, and the IRS will never release a lien if doing so won't in some way benefit them getting paid.

In order to prevent becoming a victim of such sales practices yourself, here are seven things to look for when considering hiring any tax resolution firm.

1. Get it in writing. If the firm won't give you a contract, with the services to be rendered explicitly stated, then RUN. Very quickly, in the opposite direction. Many tax resolution sales closers will promise you the moon, and say anything to get you to sign and send a check, but read the contract carefully. If it's not in writing, it doesn't count. Know what services are included and what services are not. Does the fee include filing any tax returns that you are missing? Does the service include Appeals that may need to be filed? What about levy and wage garnishment releases, are those included or extra? Are both of your companies included in the fee, or just the one you initially spoke to them about? These are all very important questions you need to have answered before sending them a dime.

2. File missing returns yourself first. The IRS will not consider ANY resolution options if you have unfiled tax returns. Very few companies include any tax return preparation in their service fee, and if they do, it's often at a highly inflated price. Do yourself a favor and file your tax returns FIRST. It will the process much easier on everybody involved, and you can often do it cheaper through your normal tax preparation channels, whether that means you do it yourself or have somebody you go to that does them. This not only makes the resolution process much faster and easier, but will also save you a ton of money in the long run.

3. Shop around. Not all tax resolution services are created equal. Get multiple quotes from multiple companies. Make sure that you are comparing apples to apples, though. E.g., make sure you are comparing fee quotes for the same services.

4. Perform extensive due diligence. Thoroughly research every company you are considering hiring. Check out their Better Business Bureau reports, and do an Internet search for the name of the company plus the word "complaints" -- you'll be astonished at what you find.

5. If the salesman is pushy, snakey, or aggressive, move on. If a tax resolution closer is being pushy, he's looking out for his own best interests, not yours. If you get a strange feeling about the salesman, investigate that hunch. This really applies when you're looking to purchase anything, but especially so when you're talking about a service that costs thousands of dollars and directly impacts your personal or business financial future.

6. Seek out a flat-fee service. Some companies work on retainer and hourly billing, others work under a flat fee system. The flat fee system is the best option, and even it has several forms. Know what is included in the flat fee service, and what isn't. Common things to ask about are whether the flat fee also includes any tax return preparation, as mentioned earlier, and what tax TYPES it covers. Also find out about Trust Fund Recovery Penalty representation if you are going to need that -- it's usually not included in a general fee. To repeat tip number one, get it in writing!

7. Is the person you're talking to LICENSED? This is my personal favorite, and a major pet peeve. I'm sure that, if you're reading this, you'll agree that taxes are an important and complicated topic. In short, it's not something you want to screw up. Well, consider this then: If you are speaking to a sales rep at a large, nationwide tax resolution firm, that person is most likely in no way qualified to be giving you tax advice. I'll say that another way: The person on the phone telling you what your resolution options are most likely doesn't know squat about tax law, and is not even legally entitled to be offering you tax resolution advice. The fact of the matter is that only licensed attorneys, Certified Public Accountants, and IRS Enrolled Agents can legally represent you in front of the IRS, and these are the licensed people that know what they're talking about. So, ask your salesperson for their LICENSE NUMBER. This could be their bar registration number for attorneys, state license number for CPA's, or Treasury Department Enrollment Number for Enrolled Agents. If they're not licensed, and they've been giving you tax advice, you need to disregard the majority of what they may have told you about your resolution options, eligibility for IRS programs, and other matters related to tax law itself.

I hope that these seven tips save you from the aggravation of having to deal with an unscrupulous tax resolution firm, or even worse, being in a position where you can't get back thousands of dollars you already spent. There are plenty of good, honest, reputable tax resolution professionals out there that will charge you a fair and reasonable service fee, offer you solid, well founded tax advice, and do it in an ethical manner without taking advantage of you, all while communicating openly with you and putting into writing what they are doing for you. There are so many good firms out there that it isn't worth your time to mess around with a huckster and risk getting shafted.

Jassen Bowman is an IRS-licensed Enrolled Agent, and assists small businesses and individuals with resolving IRS tax debts, creating tax-advantaged business processes, establishing systems and procedures for more efficient business operations, and implementing results-oriented lead generation campaigns to fuel revenue growth. For free tax and business operations consultations, call 970-930-1040.

In his free time, Jassen enjoys geocaching, ice dancing, and is a figure skating test judge.

Source: EzineArticles
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