Your tax resolution questions answered.

Tax resolution refers to any program that helps reduce the taxes people owe or develops a repayment plan they can afford. Tax relief is part of the IRS’s stick and carrot approach to getting people to pay their taxes. The stick includes IRS audits, fines, liens and levies, garnishments, public auctions, and interest payments for taxpayers who pay late or don’t file their tax returns. Tax relief is the carrot, which includes programs like installment agreements, offers in agreement, and currently not collectible (CNC), to mention a few.

Yes, it is possible to negotiate directly with the IRS and state revenue agencies. If you owe less than $10,000 and your case is straightforward, you may be better off dealing directly with the IRS. Otherwise, you can often benefit from hiring a tax resolution company to negotiate on your behalf. Tax relief experts, such as enrolled agents, can save you time and improve your chances of negotiating generous terms on your tax settlement.

The IRS can seize or garnish almost any of your assets, including real estate property, salary and wages, bank accounts, retirement accounts, pension plans, social security, and more.

It varies depending on the complexity of your case. Simple cases, such as tax penalty abatement or installment agreements on small amounts, can take a few months to fix. However, more complex issues with larger balances can take over a year to resolve.

Tax relief can allow you to break down your back taxes into payments or reduce the amount of tax you pay to the government. In some cases, your entire tax balance could be forgiven. Here is how the tax resolution process usually works. A team of tax experts meets and investigates your tax situation to determine what major tax issues you’re facing and which solutions provide the best chances of success.

Common strategies include requesting an offer in compromise, an installment agreement, penalty abatement, innocent spouse relief, or claiming currently not collectible status. Once they choose a strategy, they negotiate with the IRS or your state revenue department until there is a resolution.

Eligibility requirements vary depending on the tax relief program you apply for. However, tax resolution firms can’t guarantee you will qualify for a tax relief program. Only the IRS or a state comptroller can make that decision. If a firm claims it can guarantee a specific outcome, they are probably a scam. Reputable companies usually offer potential clients a free initial consultation to discuss options and determine which tax relief programs they may qualify for. Typically, taxpayers who owe the IRS more than they can afford to pay will qualify for a tax relief program, if they are up-to-date with filing their tax returns. Some tax resolution companies will also help you with filing missing tax returns.

Start by reading this guide below which outlines four things to lookout for when doing your research. With this information you can make an informed, intelligent decision.

#1 Overpromising Results:

If someone guarantees to settle your tax debt for a certain amount through an offer in compromise, or promises you a certain monthly payment amount, that should be a “red- flag” to you. That’s like you going into a trial and your lawyer telling you he knows which way the jury is going to rule.

They don’t and can’t know ahead of time. It’s the same with the IRS. The IRS is the final arbiter, they have the last word.

A reputable firm will conduct a thorough analysis of your case, before they ever agree to take you on as a client, to determine what’s more likely than not to resolve your matter based on (their years, number of cases, etc.) historical experience with cases such as yours.

#2 Bait and Switch:

Beware of firms that quote seemingly low fees for a particular service just to get you in the door then turnaround and inform you of additional services needed, and want MORE money from you, to complete your case.

A reputable firm will let you know at the onset, even before becoming a client, what the total fees are to achieve permanent resolution.

Some firms will also bill you by the hour and nickel and dime you for copies, faxes, time on hold with the IRS, phone calls, postage, etc. You’ll never know what it will cost you to achieve final resolution.

Most reputable tax resolution specialists will usually require a reasonable deposit to start your case which will include getting Power of Attorney to gather all of the tax information the IRS has on you. Then, they work on a fixed or flat fee basis, so you’ll know, “all-in” what you’re going to pay to achieve permanent resolution.

#3 Salesperson vs. CPA, EA or Attorney:

You should always ask the person you are speaking with on the initial phone call or meeting how many cases they have successfully settled. The answer may surprise you, as only a CPA or Enrolled Agent or an Attorney can represent you before the IRS.

If you’ve called an “800” number 10 states away, chances are you are speaking to a salesperson who makes a large commission for signing you up and has no direct bearing on your case.

When going over you relief options, you want to make sure you are only speaking with a licensed professional, who is also a tax resolution specialist, regarding your situation and possible remedies.

#4 Large Upfront Fees:

Beware of firms requiring you to pay the entire amount of the fee upfront, before knowing what the IRS has on you. These are generally the large national Tax Resolution firms you hear advertising on the radio and late-night TV. They’re hungry for your money to continue to pay for their expensive advertising without regard to completing your case. It’s like a giant Ponzi scheme.

A reputable tax resolution specialist will usually require a reasonable deposit to start your case which will include getting Power of Attorney to gather all of the tax information the IRS has on you. Then, they will work with you on a solution and tell you the cost to proceed IF they know they can help. They do not overpromise and underdeliver.

Enrolled Agents—The Licensed Tax Professionals. An enrolled agent is a person who has earned the privilege of practicing, that is, representing taxpayers, before the Internal Revenue Service.

Enrolled agents, like attorneys and certified public accountants (CPAs), are generally unrestricted as to which taxpayers they can represent, what types of tax matters they can handle, and which IRS offices they can practice before. In contrast, practice before the IRS is much more limited for other individuals such as un-enrolled tax return preparers, family members, full time employees, partners, and corporate officers.

• Our Enrolled Agents at Tax Resolution Services of Hawaii have familiarity with both federal and Hawaii-specific tax laws which allows us to provide a tailored strategy for your Tax Resolution case.
• The profession has been regulated by Congress since 1884.
• Enrolled Agents are licensed by the federal government.
• Enrolled Agents are the only tax professionals who receive their right to practice from the United States Government.
• Enrolled Agents are authorized to appear in place of the taxpayer at the Internal Revenue Service.
• Only Enrolled Agents are required to demonstrate to the IRS their competence in matters of taxation before they represent a taxpayer.
• Enrolled Agents take a difficult two-day examination administered by the IRS, which covers taxation of individuals, corporations, partnerships, estates and trusts, procedures and ethics.
• Enrolled Agents are required to complete a minimum of 24 hours per year of continuing education to keep them abreast of any and all tax law changes. Our national association (NAEA) requires a minimum of 30 hours per year which also includes ethics.
• Enrolled Agents are bound by Circular 230, which gives them limited client privilege in situations where the taxpayer is being represented in cases involving audits and collections matters.
• Enrolled Agents are subjected to a rigorous background check conducted by the IRS.
• Unlike CPAs and attorneys, who may or may not choose to specialize in taxes, ALL Enrolled Agents specialize in taxation.