Taxpayer’s Guide to Tax Resolution Services
Tips on How to Choose a Tax Resolution Firm
Tax resolution services is an umbrella phrase for services that help you resolve tax problems. In some cases, you may be able to get these services from your usual accountant, but in most cases, you should work with a specialist as this is a very unique part of the tax landscape.
At The W Tax Group, we focus on tax resolution services. We provide services designed to help with a wide variety of tax problems. Want to know if we can help you? Then, contact us for a free consultation today. We’ll talk about your tax problems and the best services for your situation.
What Are Tax Resolution Services?
Tax resolution services are designed to help you deal with tax problems. These services help you deal with issues such as unpaid taxes, penalties, unfiled tax returns, and tax audits. They also help if you’re facing collection actions such as tax liens, garnishments or asset seizures. If you’re having a dispute with the IRS or a state revenue agency, you also need tax resolution services.
There are many different types of tax resolution services, but here are the main categories:
- Making payment arrangements or negotiating settlements on unpaid back taxes.
- Applying for penalty abatement.
- Appealing collection actions or tax assessments.
- Representing individuals and businesses during tax audits.
- Helping with the trust fund recovery penalty.
- Filing for innocent spouse relief.
If you get tax resolution services for unpaid back taxes, your tax attorney may help you apply for an installment agreement, an offer in compromise, or a partial payment installment agreement. Or they can help you apply for currently not collectible status if you cannot afford to pay anything.
Types of Problems Addressed With Tax Resolution Services
These services provide taxpayers with help for the following issues:
- Unpaid taxes — When you can’t afford to pay your tax debt in full, a tax resolution firm can help you make arrangements with the IRS or state revenue agency.
- Unfiled returns — A tax resolution company can also help you catch up on unfiled returns for yourself, your business, or both.
- IRS notices — If you don’t understand or aren’t sure of how to respond to a tax notice, a resolution company can help you out.
- Penalties — IRS civil penalties can add up quickly, even doubling your balance due in some cases, but a specialist can help you apply for abatement.
- Tax liens — A lien is the IRS’s legal claim to your assets based on your unpaid tax bills. A specialist can help you remove, withdraw, or subordinate liens.
- Tax levies — Tax resolution specialists can help you if the IRS tries to garnish your wages or seize your accounts/assets.
- Tax audits — Audits require you to back up some or all of the details on your tax returns. They can also call into question your interpretations of the tax law.
- Business tax issues — This includes problems such as unfiled corporate returns, late payroll taxes, work classification issues, and more.
- Foreign account disclosures — The IRS has very strict requirements about reporting foreign bank accounts and specified foreign assets over a certain value. Failure to file the right returns can lead to very high penalties and possible criminal charges.
There are many unique tax situations. If you’re having a tax problem that is not on the above list, you should still reach out to a resolution firm. Regardless of the specifics, the chances are high that they’ve helped previous clients resolve a situation similar to yours.
Where to Get Tax Problem Resolution Services
Start by asking your existing accountant, but keep in mind that they don’t specialize in this area. Some accountants will simply tell you that they don’t provide these services and recommend that you find a specialist. Others will attempt to provide the services, but due to a lack of experience, they won’t be able to provide you with the high-quality help you need.
Be straightforward and ask your accountant if they have experience with the issue you’re having. Most accountants can help with relatively straightforward issues, but they don’t know the ins and outs of more advanced issues such as innocent spouse relief, tax assessment appeals, or offers in compromise based on doubt as to liability.
Keep in mind that in most cases, you will need to reach out to a specialist. Look for a tax attorney, a certified public accountant (CPA), or an enrolled agent who specializes in tax resolution. Before hiring them, make sure that they have experience with your specific concern. If you’re dealing with a state tax issue, look for someone who is experienced in resolving issues with your state revenue agency — this is imperative as all states have different rules.
How Taxpayer Representation Works
When you work with a tax resolution firm, you give them the authority to negotiate with the IRS or state tax agency on your behalf. They can receive letters and notices for you. They can respond to phone calls and requests for information, and of course, they will file forms that allow you to apply for tax resolution programs.
If you grant them a Power of Attorney (POA), they can also make certain decisions on your behalf. Your tax professional will let you know how the process works with their firm.
How to Choose a Tax Resolution Firm
Many firms offer free consultations that allow you to get a sense of their processes. You should also review their websites and customer reviews. Consider asking the following questions:
- Will you be handling my case? What are the credentials of the person who will be handling my case? Ideally, you want a licensed tax professional (CPA, enrolled agent, or tax attorney) taking care of your case.
- Are you a member of any tax resolution groups? There are a variety of professional groups, including the American Society of Tax Problem Solvers (ASTPS).
- What type of experience do you have? Make sure they’ve helped taxpayers in similar situations, and if dealing with a state tax issue, ask about state-specific experience.
- How do your rates work? Tax resolution firms may charge on a per-project or per-hour basis. Be aware of companies that demand large upfront payments without fully explaining what services you are receiving.
- Will I have an assigned liaison? It’s often easier to deal with tax problems if you have a dedicated point of contact in the resolution firm.
Word of Caution About National Tax Relief Firms
The Federal Trade Commission (FTC) advises people to stay away from big nationwide tax resolution firms. It reports that these firms have a history of consumer abuse. It says that consumers should avoid any companies that promise to reduce their tax bill without collecting any details first.
Unfortunately, these big firms are the first ones that come up in most web searches, and despite government warnings against using these companies, they’re highly rated by the big review websites. To protect yourself, you should avoid hiring one of these companies.
Also, beware of companies that outsource work to other professionals. When talking with potential resolution companies, ask if they have tax resolution pros (enrolled agents, CPAs, or tax attorneys) on staff. These are the only professionals who can represent taxpayers to the IRS, and if these pros aren’t on staff, that means the company is likely outsourcing your case to another professional. They’re taking a big cut for fees.
This means that instead of going toward solving your tax issues, your fees are going toward huge sales fees and marketing costs.
So, what’s the alternative? The FTC advises finding a local tax resolution services company to help you.
At The W Tax Group, we are based in Michigan, but we represent clients from all over the country and have all our staff hired internally. We can help you identify a resolution for your tax problems whether you’re dealing with the IRS, your state, or even multiple states. To get tax resolution services, contact us today.