Can You Do It Settle Your Tax Problem Yourself?
Most people try to resolve tax problems on their own or with the help of their tax preparer. They think that a tax attorney is too expensive, they can save money by doing it themselves and if they owe a little bit more, they'll just pay it.
In an IRS Audit, many taxpayers go into an IRS audit totally unprepared and simply hope for the best. Some think that if they can impress the IRS auditor that they are nice, law-abiding, decent human beings and not common criminals, the IRS auditor will mellow, be sympathetic, and politely let them off the hook. Forget it! IRS auditors are nice, decent human beings too, but most importantly, they pay their taxes... and they don't think too kindly of others who don't. If you are selected for an IRS audit, or owe taxes you just can't pay, you'll probably need professional tax representation.
Dealing effectively with the IRS or other state or local regulatory authorities requires specialized knowledge and experience. Your tax preparer is usually NOT your best choice if you have an IRS examination or problem with back taxes.
Do You Need Professional Representation?
Each case is different, but the more tax debt you may owe, or the more information the Internal Revenue Service (IRS) is requesting, the more likely you should hire a taxpayer resolution provider. Tax relief services are generally classified in two categories - IRS Collection Matters and IRS Audits.
IRS Collection Matters concern the payment of back taxes owed, tax penalties and tax settlements. It usually doesn't pay to hire a tax attorney when your tax debt is under $1,000. Most national tax relief companies will not help you when you owe $10,000 or less.
IRS Audits concern an IRS audit of tax returns you previously filed and are done simply by IRS letter, IRS office visit or IRS examination at your place of business. In tax audits by IRS letter, or IRS correspondence examinations, taxpayers are notified of specific, questionable tax matters they reported and are given the opportunity to object or just pay the proposed IRS assessment. IRS office visits and IRS small business tax audits are generally more comprehensive and require a review of most, if not all, of the income and deductions reported.
Who Do You Go To For IRS Help?
Only a licensed tax attorney, certified public accountant or enrolled agent can represent you before the IRS.
Tax Attorney - In the most advanced cases of IRS representation, you will probably need the services of a tax attorney. You will need to hire a tax attorney if you have committed tax fraud, are under criminal investigation by the IRS, plan to bring suit against the IRS or need to bring your case to court.
Certified Public Accountant (CPA) - A local CPA firm is your best choice where you need to prepare business tax returns or compile financial information needed in a tax audit. Only select CPAs have the knowledge and experience to represent you effectively before the IRS.
Enrolled Agent - Enrolled agents are also federally-authorized tax practitioners with technical expertise in taxation authorized to represent taxpayers before the IRS.
Choosing whether to work with a tax attorney, certified public accountant or enrolled agent will depend upon the nature of your case. In some cases, you may need the services of more than one professional.
How Much Does Taxpayer Representation Services Cost?
The cost of taxpayer representation services vary widely from a few hundred to thousands, and sometimes even tens of thousands of dollars, dependent upon the type of tax problems you have and the settlement options you can obtain.
In matters concerning a late tax return, the cost of income tax preparation is only slightly higher than that you would normally pay for tax return preparation. To properly prepare a late tax return, you should generally take additional steps to contact the IRS, asking for an extension of time, obtaining and reviewing your IRS transcript.
In help with tax debt problems, you will generally need to file all back tax returns before you can negotiate a settlement. If you're able to pay the taxes owed the costs of representation are minimal. If you're just looking for a little more time, or a tax payment plan and don't owe much, professional fees are quite affordable. The costs of paying back taxes will increase significantly depending on how much you owe and the terms of the settlement agreement.
In an IRS audit, it will usually cost you the least in an IRS examination is as a result of an IRS letter and the issues and years under examination are limited. If your audit is more comprehensive, such as an IRS office visit or IRS audit at your place of business, the costs of professional fees are almost always more. If you owe taxes and do not agree, you can usually appeal the IRS audit results or take your case to court. The cost of services can vary greatly depending upon how far you need to take it, if you owe taxes, how much you owe and the difficulty associated with each tax audit.
In many of the simpler IRS audit or tax debt cases, you may be able to contract the services of a tax attorney for a fixed fee. The estimated cost of tax attorney services will be ultimately dependent upon the difficulty of your case and how much time is required to settle your tax problems. Reputable tax attorneys will never charge you based on how much they can save you and can never guarantee your results.
How Do You Get Started?
Many tax attorneys, CPA firms and tax debt relief firms can be easily found on the Internet. Often, the initial consultation from many tax debt relief companies is FREE. Be wary of Internet marketers when looking for IRS representation services on-line. Avoid calling 1-800 phone numbers to IRS audit matters, because you must be represented by a local CPA or tax attorney. Always ask to speak with a licensed CPA, EA or tax attorney before discussing any confidential information. You can to this! Good luck.
Mitch Helfer is the managing partner of CPAMiami; a full service public accounting firm providing guidance with federal and state tax matters, tax preparation and strategic consulting, IRS representation and problem resolution. Visit our website at http://www.cpamiami.com/ for more helpful information and get your tax problems resolved today!
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