We’ve all seen the commercials on television or heard the ads on the radio that say “call us now to save pennies on the dollar!” How many times have you thought about how nice that would be? In the imagination of the audience, the scenario probably plays out a little something like this: Person owing back tax debt calls the phone number, speaks to a friendly representative and in a short time, gets a letter stating that all they have to do is pay a few dollars and their multi-thousand dollar text debt will be washed away. You’re not alone. This is the harmonious picture these ads intend to paint in our minds.
Reality check! Here’s a more realistic version of how these scenarios play out: Person owing back tax debt calls the phone number, speaks to a friendly representative (so far so good, right?) and in a short time receives a stack of paperwork to fill out (unbeknownst to the client that these forms are available for free from the IRS for them to obtain for themselves). Client sends the paperwork back to the tax firm represented in the ad, Tax Firm in turn mails the paperwork to the IRS and awaits an answer, as does the client. Once a response is received (usually a decline of request for Offer In Compromise), the tax firm informs the client. Oftentimes, clients are has paid the tax firm thousands of dollars to go through this disappointing process.
Leave it to advertisements to paint a very pretty albeit unrealistic picture. It’s not always the client’s fault. In this scenario, the client does the right thing; hired a professional to help with their tax problem. Unfortunately, these “tax professionals” are more interested in making the quick buck as opposed to providing true counsel to people who need itWhat Is An Offer In Compromise?
An Offer In Compromise is a program the IRS uses to help people settle their tax debt for less than they owe.
There are instructions on the IRS website that explain how to request an Offer In Compromise. In short, you would send information about your income, your ability to pay and your assets in addition to a $150 application fee and a non-refundable first payment (if you choose to apply for the periodic payment program). The IRS reserves the Offer In Compromise for those people that have limited income and almost no assets because they feel there’s no other way to obtain any kind of payment from the taxpayer. If you’re not elderly, if you have a steady job, if you have a home, if you have any indication to the IRS that they will be able to somehow obtain their full payment, you will be declined for the program. What Tax Resolutions Are Right For Me?
There are plenty of options for people who owe back taxes to the IRS. The Offer In Compromise is not the only program available and most of the time it’s not the best program available.
Contact a tax professional to help you sift through your options. As the IRS recommends on their website, always check the firm’s qualifications. Ideally your firm would provide you with an Enrolled Agent to work your case. Enrolled Agents are tax professionals with the highest status given by the IRS. A comprehensive exam must be passed or at least five years experience as an IRS employee must be had in order to demonstrate a thorough knowledge of tax law and representation. IRS Tips For Checking A Tax Firm’s Qualifications
Ask to see the credentials/qualifications of your prospective tax attorney.They should be current and up-to-date.
Research their history.A good way to do this would be to check their rating and number of complaints at the Better Business Bureau.
Examine their fee.It is unethical for tax professionals to charge you based on how much they can lower your tax liability. You should be charged a flat fee for work that is to be done, not on how much you are able to save.
Make sure your tax professional is available to you for questions after the work is complete.Fly-by-night services will not be able to provide this type of availability.Never sign a blank tax form.In addition, read through all tax forms before you sign them. Ask questions if there’s anything you don’t understand.
Be sure your tax professional is willing to sign your tax paperwork.This confirms that the tax professional stands by their work.