Choosing a Tax Settlement Company

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There are hundreds of companies representing themselves as experts in tax resolution many of them are only taking advantage of the 25 million Americans who owe back taxes to the IRS. There are far less companies that are fully certified and accredited and even less that have the experience and expertise.

Ideally, you want to find a company that are made up of certified public accountants, (CPA) and focus on IRS tax settlement. Unlike many of the companies that offer to handle your tax issues, a full service accountancy run by certified public accountants will handle your account quite differently than those companies that are only there to take advantage of your tax distress. If you need help resolving your back taxes, you will want to work with tax professionals - who are highly educated, trained and experienced in tax code and IRS policy. The type of company that resolves your tax issues with hands on services of a CPA and does not pass you on to his or her consultants or associates who are without credentials. By making sure you are working with a CPA firm you can be assured that your results will be regulated by the professional code of practices for certified public accountants.

As a tax payer owing back taxes you should be aware that there are companies that simply gather leads and then pass your case to individuals that in many cases you know nothing about their backgrounds or experience. These are tax resolution factories who churn out as many fees as possible with little concern for gaining their clients a fair and reasonable settlement. They will make claims and promises that cannot be verified and are usually selected by the lead gathering company because of the amount they pay for a lead and has very little if nothing to do with the specifics of your case.

You should look for the best representation to resolve your back taxes or other IRS issues and you should want to work with a CPA. Be sure to ask if the company you are speaking with are a tax company or a lead generating company for tax resolution. Ask if the person you'll be working with will be a certified public accountant and ask if they can provide you with references.

There is also a proper way of being charged for tax resolution services. First and foremost - beware of companies that base their charges on the amount of taxes you owe. This should immediately raise a red flag that the company is not reputable and acting properly and you should run - not walk - away from them. Companies that charge you for services based on the amount of taxes you owe are not dealing under the guidelines of ethics for certified public accountants and their reliability and intentions should be strongly questioned. There are well documented cases in which tax payers who are charged for services by the amount they owe in back taxes may never have their cases resolved or to be left with far more tax problems than when they started.

A reputable tax resolution company will first and foremost - review your circumstances free of any charge to determine what will be needed and what their fee will be. After the first consultation an experienced tax specialist will be able to inform you with an estimated time it will take to resolve your issues with the IRS or State and what the steps are to reach a suitable resolution for your case. A reputable tax settlement company will give you a written estimate outlining their services and the entire fee. Their charges should be based solely on the time it will take them to resolve your case.

Remember a company with years of experience should know almost to the minute what it will take to resolve your case and it should be able to provide you with a contract indicating their fee. A reputable company will not change this predetermined fee even if it ends up taking them longer than expected - as long as the tax payer does not withhold important fact or if in the course of negotiating a resolution circumstances arise that were not possible to know when the company quoted their fee. Any reputable tax settlement company that has dealt with the IRS in matters of an income tax review or notice for payment will know what it will take and they should be able to give you a cost based on time regardless of how much you owe.

Beware of promises made before examining your tax circumstances. It is a red flag when a company without examining your finances promises to resolve your tax debt with an offer in compromise. This type of IRS resolution is the last possible option that the IRS will consider and they will not consider such a resolution unless you are able to show an absolute inability to pay your back tax. Even if you successfully show that you are unable to pay your taxes, in most instances the IRS will place you in "currently not collectible" status and keep you in a "wait and see" period before notifying you again to collect your back tax. During that time you will continue to accrue interest and any fines or penalties that might be applied.

It is not an ideal status and you might be better off trying to establish an installment payment agreement. In almost all cases - the IRS will insist that if you are capable of paying that you pay your owed taxes in full. And perhaps the best resolution is to ask for an "installment agreement" in which you pay monthly payments. A reputable company will also pursue a "penalty abatement" whereby by showing a reasonable cause for delaying your tax payment, the IRS will waive penalties owed. It does require an absolute inability to pay the taxes owed with an acceptable explanation why you didn't pay and why you can't.

If you do qualify for an "offer in compromise" then the IRS may accept a "partial payment installment" agreement. But these are only accepted after your financial circumstances are closely scrutinized and show that without question - you are unable to pay your back tax in full. In order for the IRS to reach such a point where they accept a payment that is less than what you owe requires a strong showing of financial distress or an undue financial burden.

Don't be fooled into signing with a tax resolution company that promises to reduce your back taxes owed to.10 to.20 cents on the dollar only to learn later that you will be required to pay your taxes in full. You should have a good idea about what is possible in your case after the initial consultation. No one can make any promises when it comes to determining how the IRS will respond without first examining your financial situation.

The process of reaching gaining representation for a tax settlement with the IRS starts with an initial consultation which should be free of charge. The initial consultation will determine the steps to be taken and the fee to be charged. A contract or a "Tax Resolution Engagement Letter" will be provided that must be agreed upon, initialed and signed by the client and tax specialist.

The next step will be for the tax specialist to examine whether the tax filing in question needs to be amended to reflect any errors that might have been made in the first filing and if it properly reflects actual taxable income in accordance with revenue and the tax code.

Upon completing the review and amendment, if there is a balance owed - the tax specialist will advocate an installment agreement based on their client's specific circumstances.

Once the client is in good standing with the IRS and State Agencies, an offer using the proper form is submitted to all agencies.

The client should always be aware of the decisions being made and should sign off on the offer before it is submitted.

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Source by Steve Fecske