Over the years, there have occasionally been bursts of media attention placed on the “tax debt relief”. In past years, the FTC has taken down companies such as American Tax Relief, the California Attorney General came down hard on Roni Deutch, and the Texas Attorney General won a massive civil judgment against Tax Masters. In the wake of such regulatory actions, the American consumer is likely left with the impression that all tax attorneys and tax resolution firms are just as bad as used car salesman.
While it’s true that these companies, and numerous others, have created a bad name for the tax resolution industry as a whole, the fact of the matter is that these companies are the exception, not the rule. There are dozens of companies with horrible BBB records and numerous reports on Ripoff Report and other web sites. However, for every one of those bad apples, there are dozens of reputable, hard working firms that are just as big as the con artists, and for every one of those firms there are literally hundreds of independent practitioners out there, including tax attorneys, IRS licensed Enrolled Agents, and state licensed Certified Public Accountants. Any of these licensed professionals are allowed to represent taxpayers in front of the IRS.
The FTC recently posted a consumer alert telling people to handle their IRS disputes themselves. As an Enrolled Agent myself, I’m obviously biased in opposition to the FTC’s statement, but there is also a logical side to it. Look at it this way: You have one Federal agency telling you NOT to exercise your right to representation in front of another Federal agency.
Here are five reasons you should use professional representation to resolve your IRS tax debt:
- First and foremost, you should hire professional representation when dealing with the IRS for the exact same reason that you would hire an attorney if you got a DUI: The professional knows the laws, knows how the system works, and deals with it every single day, you don’t. It’s the same reason you call a plumber when the pipes burst, or the fire department when the house catches fire. These professionals are experts at what they do, in the same way that you are an expert at what you do.
- In the same way that attorneys talk to attorneys on a slightly different level than the rest of us do, IRS collections agents, auditors, and other staff are financial and accounting people, and they will speak differently with another accounting professional than they do with you. This benefits you in a number of ways, including avoiding miscommunications and helping to cut off issues before they arise.
- Your tax professional is unique because they speak multiple languages: Tax law, accounting, negotiation, and probably a few others. These languages are important to speak when addressing the IRS. Again, it comes down to doing what you do best, and hiring out the rest.
- Your tax firm understands all your options and what to do in different circumstances, you don’t.
- A CPA, Enrolled Agent, or tax attorney is YOUR representative, and is looking out for YOUR best interests. The IRS agent on your case is not your friend, and is there looking out for the best interests of the government.
Keeping the above things in mind, choose carefully when it comes to hiring a tax firm to represent you in any IRS matter. Exercise your right to representation, and don’t let the IRS bully you around just because you don’t know the laws and aren’t an accountant.
In my next post, I’ll discuss what you should look for when choosing a representative, and questions you should asking before sending any money.