Do not assume your current accountant/advisor/relative can represent you adequately. This is a highly specialized area. Often, CPA’s are excellent accountants, but when it comes to representing their clients before the collection division of the IRS, they fail terribly. Apply the following checklist to your current representative. It may save you a lot of money and headaches.
1. Reputation is Important
Do internet searches under the name of the company you may want to hire, and put the word “fraud” or “scam” after the company name, (YOU ABSOLUTELY MUST DO THIS) or after the name of the actual representative who will be working on your case. Many so called “IRS PROBLEM” solving companies are the subject of lawsuits and large amounts of consumer complaints. If they can’t give you referrals, hang up the phone FAST! Even though this is confidential work, if they can put testimonials on their web site, then those people should be willing to speak well of the company. As a CPA I can ethically give referrals, so why can’t they? If you are told that there will not be specific person assigned to your case or a group is assigned, run the other way. This is a way to hide their “lack of responsibility”. A team of $7.00 per hour accounting clerks will not benefit you. Be careful about references. Even bad accountants have a few people who are willing to say good things about them. Discuss exactly what you will be paying for, and what results you can expect with the person who will be actually working on the majority of your case. Do not let a sales consultant sign you up! This is professional legal representation not auto repair!
Your representative must have at least one of three credentials: a CPA (certified public accountant), EA (enrolled agent), or attorney. However, they must also possess the accounting, tax skills, and representation experience, necessary to be effective. Someone who has passed the CPA exam or the Enrolled Agents exam has shown the technical ability. Many ex: IRS collection division employees are given the EA (enrolled agent) title when they leave the IRS, without HAVING TAKEN THE EXAM! I would not hire such a person or an attorney unless they can show you they have done a large volume of tax returns and representation cases, to overcome their not having passed the exam. Remember this must be true for the person who will be doing the actual case work and negotiations. There will always be a licensed person “supervising” the case otherwise they won’t be able to negotiate in your behalf. I am saying that the person doing the tax work, filing out the IRS forms, being responsible for due dates, etc. must possess the above. Do not short change yourself!
3. Watch Out for the Common Tricks
Statistics such as we did an offer in compromise for someone who owed $250,000 and settled for $3,000. Offers are based on the taxpayer’s assets and ability to pay. So if someone doesn’t have equity in assets, and no or very little income, the offer will settle for just a few dollars, with or without the representative’s help. A better statistic would be something like the following… The offer division wanted to include the accounts receivable, average balance in the bank account, and $20,000 for the inherited pile of junk (only worth $500) from “Uncle Louie”. I fought the caseworker and manager to exclude these values. They still wouldn’t budge. I researched each item; case history, tax code, employee manual etc., and filed an appeal, and then settled the case ON MY TERMS. Now that would be impressive! Beware of people who say that they will do your offer for pennies on a dollar. First of all, an offer is an agreement to settle for less than the full amount. Any accepted offer, since it would be for less than the total, would be for pennies on a dollar anyway. Maybe it would be 80 or 90 pennies, but still pennies on the dollar. The implication of course when someone says this, is that the offer will be for a “few” pennies. The IRS is currently cracking down on people who use this phony statement.
Please hire an individual who has the knowledge, the experience, the credentials, and the dedication to still be there for you 8 months later when the IRS still has questions!
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