You may have seen the television commercials that claim we can settle your tax bill for pennies on the dollar, or heard the radio advertisement that announces, that newly passed legislation grants the IRS greater flexibility in settling you tax bill for less, but only for a limited time. Or you may be bombarded with letters and unsolicited phone calls from these organizations. The objective some of these firms is to make verbal contact with you, in an effort to extort money from you by preying on your emotions. They may prey on your fears by telling you that the IRS will seize your home, car, paycheck and shut your business down. Or they may prey on your hopes by telling you we can settle your case for pennies on the dollar even though they haven’t conducted a proper evaluation of your case. They may offer you a free consultation over the phone or meet you in an office that they rent by the hour. In some instances, you will not be meeting with a qualified tax specialist, you will be meeting with a salesperson ready to sell you a solution for between $1,000 and $10,000.The bigger the fee arrangement the bigger the commission for that salesperson. Usually, you will sign a retainer agreement and put a large portion of the fee up front, and your bank account will de debited monthly until the entire fee is paid. Some firms don’ t even begin working on your case until the fee is paid in full, even if it means missing significant IRS deadlines that could affect your case adversely. Once they have the total fee, you may never hear from them again. Many of these organizations are many states away and get away with this type of theft regularly. The Internal Revenue Service has posted a consumer alert on their website as well as the Massachusetts Department of Revenue.

Before you engage with any firm to represent you before the IRS, the following information will assist in making an informed decision:

Find an Expert that specializes in representing taxpayers before the Internal Revenue Service
Only attorneys, CPA’s and Enrolled Agents are licensed to represent taxpayer’s before the IRS. Nobody else is allowed, irrespective of the title they represent to the public, such as tax accountant, tax consultant or certified tax advisor, etc. Not all attorneys, CPA’s and Enrolled Agents specialize in representing taxpayer’s before the IRS. Therefore, don’t settle on someone that represents taxpayers before the IRS occasionally and risk the outcome of your case. Find an expert! I would describe an expert as someone that has been representing taxpayers before the IRS on a daily basis for over ten years and has met educational requirements that set this person apart from anyone else offering such services.

Hire someone local
The reason you want to hire someone local is to further protect yourself from becoming a victim of theft. Consider this, you send money out of state to one of these firms, you don’t hear from this firm for a month, so you call this firm to inquire about your case to find that the phone is disconnected. Where does that leave you? Another good reason to do business locally is the fact that your case is assigned to the IRS District where you live or where your business is located. Therefore, if you live in Massachusetts or New Hampshire, it doesn’t make any sense to hire someone from California, New York or Texas. You are much better off with someone from Massachusetts or New Hampshire, so that it is possible for your representative to have face to face meeting with you and on your behalf with the IRS. Additionally, if you were served a summons by the IRS that required your appearance at an IRS District Office it is unlikely that a firm from out of state would fly out to accompany you at this meeting. It’s very likely that a local representative will accompany you.

Google and Yahoo
Type in your potential representative’s name or firm then type the words, scam, rip-off, theft. You will find that some of these firms take large advance fees, don’t provide you with the service you paid for and won’t return your calls or your money.

Fees – Do not pay the entire fee in full in advance of receiving services
A large part of the advance fee you pay upfront, may be very well the salespersons commission on the solution they sold you on for between $1,000 and $10,000. Once this firm has the entire fee from you, what is the motivating incentive that keeps them striving for the best outcome of your case. There isn’t one. Banks that make construction loans to people having homes built monitor the payments to the contractor based on progress. This keeps the contractor working and minimizes the banks loss. This concept is a great way to minimize risk while working with a representative.

Be aware of firms that lie
Some firms will tell you that we can definitely settle your tax debt without even asking you a single question about your financial status. A minimum offer in compromise cannot be calculated unless a detailed financial analysis is conducted. No exceptions! Some firms will tell you that you qualify for an offer in compromise knowing that you clearly do not. As a result, the client pays thousands of dollars to find out a year later that they never qualified for an offer in compromise. If a firm or representative tells you qualify for an offer in compromise, tell them you want to see a copy of their computation that brought them to that conclusion. To find out who you are really dealing with asked these basic tax practice and procedure questions:

Q. What Internal Revenue Code sections govern offers in compromise?  A. 7122

Q. What Internal Revenue Code section governs exemptions from levy?  A. 6334

Q. What Internal Revenue Code section governs trust fund recovery penalties?  A. 6672

If these answers don’t roll off this person’s tongue you are speaking with, you are dealing with a salesperson or someone who is not an expert.