CHAPTER 6: DETERMINING WHEN YOU NEED PROFESSIONAL ASSISTANCE
So far, we have covered the IRS and your rights, some basic payroll tax concepts, the time component with taxes, and the nasty things the IRS is legally allowed to do to you.
Now I want to make a few comments about determining when you need professional assistance. At the end of the day, not all tax cases need professional representation. Not all professional representatives are the same either, so in this chapter I want to go through a few scenarios of when to hire someone, as well as a few ways to select a consulting firm, the fees, and so forth.
First, let us talk about if you even need professional assistance.
Do I Need Assistance?
Your payroll tax resolution case is unique. Given that its unique, not everyone needs professional assistance from a licensed tax practitioner. However, there are a few general rules that I like to follow to determine if you should secure representation or not. If you fall into one or more of these categories, read the rest of this chapter.
Otherwise, move on to Chapter 7.
1. You Have More than One Year of 941’s that You Haven’t Filed and Haven’t Paid Taxes on.
If you have not filed, the last four quarter’s worth of Form 941’s then your case is going to be more complex than you likely want to handle by yourself. That’s:
- Four 941’s that need to be back filed
- Four CSED and ASED periods that need to be accounted for individually based on quarter, and
- An entire years’ worth of taxes that need to be paid that now have compounding penalties and interest. You will likely want to pursue a Penalty Abatement and I highly suggest you have a go-between representative for that process.
2. You Will Qualify for the Trust Fund Recovery Penalty
I say the word “qualify” as if this is a good thing, but it is not. If you are a responsible person and willful regarding not sending employees’ tax withholdings to the IRS, then you will be slapped with a 100% penalty on the amount owed to the IRS. Do not navigate those waters without representation.
3. You Already Have a Levy or Lien on Assets or Business Property
If you already have a levy or lien filed on assets or business property, a representative can act quickly to help get things removed or paused. The IRS can be bullies at time, and you will want someone to be on your side with these touchy situations.
4. IRS Personnel are “Banging Down” Your Door
Finally, if the IRS is getting aggressive with your case, you may just want someone to be the go-between. You will lose more time, stress, and have anxiety over the process if you are getting things done by yourself.
If you do not fall into one of those categories, move on to Chapter 7. If you do, read below on tips to find a professional.
How to Select the Best Tax Consulting Firm
When choosing a firm that will represent you before the IRS, it is important that you evaluated them wisely. Here is a list of things to consider when picking the professional you want to work with:
Look for those that have years’ worth of experience in the industry. You do not want a novice firm or tax professional that has had little to none experience dealing with the IRS.
The reason this is of worth to you is because the amount of experience that professional has under their belt will help you get to the best outcome in the end.
2. Go Niche
Find a practitioner that has experience with your industry and business type. For example, here at Western Tax Alliance, we only work on 941 cases with sub-contractor businesses. With our team being specialized, we understand the pain that industry is going through, and have helped others in the sub-contracting business get out of that pain and ultimately helped them move forward from the whole ordeal.
3. Length of Time in Business
The experience that a firm can offer to you is directly tied to how long it has been in business. If they have been in business for at least 2-3 years, with an average client intake load of 40-60 cases per year (plus them being niched to your industry) I think you will have a winner.
It also matters about the staff involved. Some new businesses will hire seasoned professionals to help them complete cases, and that experience should be accounted for.
4. Transparent Pricing
A good tax resolution firm will be clear with its pricing and tell you upfront how much you can expect to pay for its services. You will want to avoid firms that charge flat rates without giving you a breakdown of all that rate/fee is paying for.
In the industry, it is common for the big scammy firms to do “rewrites”. This means that after a firm quotes and charges you for a service, they come back later saying it is going to cost more to finish your case. Often, at that point you either must let them finish (because you are already invested) or you walk away losing your money in the process.
5. No Guarantee
Some firms offer guaranteed satisfaction. A tax resolution company cannot guarantee the outcome of your case at all, nor can they guarantee you will get the resolution you want from the IRS.
A good firm will tell you upfront that the outcome of your case depends on a lot of factors, such as: how much you owe the IRS, the age of your debt, penalties and interest you own, where you are at with levies or liens, and so forth.
Every case is unique and slightly different. A guarantee of 100% success with the IRS is false information. Be careful of those that guarantee this.
6. Your Role in the Case
Finally, you want to find out what your role will be in your own tax resolution case. You should find out what the company expects from you from Day One so you can act and prepare accordingly.
You can find out these details by insisting on getting clear expectations on your involvement and how you can stay proactive in your IRS tax debt case.
How to Save on Professional Fees
The single greatest advantage of representing yourself in front of the IRS is that its most often free (or incredibly cheap). You just must be willing to put in the time and work to keep up with your case, file all the necessary forms, provide documentation, negotiate with the Revenue Officer, and the list goes on.
If you do choose a professional to represent you, you can still get good deals by:
- Talking to multiple representatives and getting quotes to compare (a.k.a. shop it out!).
- Pay upfront, and therefore get a cash discount.
- In exchange for a payment plan, offer certified payment to reduce the risk for the practitioner. Certified payments can include cash, direct deposit or ETF, or specifically credit cards or debit cards.
Tax Professionals to Consider
In general, you have three options of tax professionals to represent you in front of the IRS. These are attorneys, certified public accountants or enrolled agents.
These are the only three groups of people allowed to represent you before the IRS, and unfortunately, many companies do not follow this rule. Many firms have those in sales (the people you will talk to first generally) that do not have one of these three designations but are required to by the IRS even as a salesperson.
When you talk with the firm, ask about their staff members. How many are credentialed? Can they represent you to the IRS in the first place?
How to Find a Tax Professional
Ironically, look to your typical tax professional first. According to the NAEA, less than 2% of Enrolled Agents offer any sort of tax representation services. According to the AICPA, only around 10% of licensed public accounts indicate they offer such services. Even attorneys usually practice in extremely specific areas of the law, so many are not practicing tax resolution.
The reason they are awesome to talk to, is because since most of them do not offer this service, they all likely have a referral source. Someone they trust to refer these types of cases (and yours) to.
You can also find many online but be careful. Fully vet them out and really make sure you feel they are trustworthy.
If you decide to represent yourself, keep reading the rest of the book to get educated so you can defend yourself with the IRS. Otherwise, happy hunting to find the right professional, or…