What You Should Know Before Hiring a Tax Resolution Firm

It is important to conduct research on the tax resolution firm(s) you are considering before agreeing to purchase their services. This should at least including visiting the Better Business Bureau at www.bbb.com to research for complaints and/or good standing with the BBB. You may also want to ask your IRS or state representative if they have heard any positive or negative feedback regarding your representative or their respective firm. Before signing a contract for taxpayer representation, be sure to confirm that the firm that will provide your representation will assign you case to a licensed representative. You should be guaranteed that your representative is a licensed attorney, licensed certified public accountant, or a licensed enrolled agent, before you sign any contract. The IRS will not allow non-licensed representatives to negotiate for a taxpayer.

Be sure to ask if the individual selling you the tax resolution service has ever been involved in IRS or state tax negotiations. Many times you will get a delayed answer because that answer is "no." Be wary of salespersons that will base how they can help you from a sales script. Any case-experienced salesperson should be able to walk you through the case proceedings from start to finish.

Understand that hiring a representative to negotiate on your behalf is not a guarantee that your case will be resolved. You will need to work closely with your representative to ensure that your best interests are always held in the highest regard. Although your representative should do nearly all of the interaction with the taxing authorities, your participation with your representative is vital to the resolution process.

You will want to confirm that the fee you are paying for the service you are purchasing is a flat fee. If you cannot get this guarantee in writing, it is not a flat fee. Many salespeople will state flat fee over the phone but will not guarantee this in writing. If you do not understand the terms and conditions of your representative's contract, you may be trapped into receiving unexpected requests for additional fees.

Wait for erroneous commentary when being sold a tax resolution service. For example, be leery of working with firms that state they will abate both penalties and interest. First, understand that there is no guarantee that penalties or interest will be abated. The decision to abate is decided solely by the taxing authorities. A request for an abatement can be submitted for penalties or interest via IRS Form 843. Penalty abatements will be determined by whatever "reasonable cause criteria" the taxpayer demonstrates in their written request. The taxing authorities will abate interest charges in case of an error in their calculations or if a taxpayer can prove that erroneous advice was received by a federal agent, but interest cannot be abated under any other circumstances. Less than 1% of taxpayers receive interest relief.

For assistance in obtaining state tax contact information, please call Phoenix Financial Group at 1.888.572.2179