Mistake 1: Believing That Tax Resolution Firms Are Regulated
Neither the IRS nor any other branch of the government regulates tax resolution firms. This has resulted in rampant abuse. Large nationally advertised firms have charged many thousands of taxpayers excessive fees with little or no results. Research whether a firm is a scam artist. Google the firm by entering “name of the firm, scam” or “name of the firm, complaints”. Chances are the nationally advertised firm you are speaking with has at least one huge class action suit against them.
Mistake 2: Letting Emotion Dictate Tax Relief Decisions
This is usually the result of the taxpayer falling prey to the empty promises of sales agents of the large TV advertisers mentioned in Mistake 1. Taxpayers with tax debt problems hear what they want to hear instead of what they need to hear. Do the following slogans sound familiar?
- Settle your tax debt for “pennies on the dollar”!
- The IRS has a “one chance program” to settle your tax debt!
- Reduce your tax debt to a fraction of its current amount!
- Become tax debt free!
- End your IRS fears today!
- Get the IRS off your back!
- Don’t become another IRS victim!
- Are IRS tax problems ruining your life?
Mistake 3: Choosing The Wrong Tax Resolution Company in Long Island
It is startling how many taxpayers fail to do the following necessary homework when researching a tax resolution firm:
- Avoid firms who say “former IRS agents” will handle your case. While the IRS background may be significant, it can lack “big picture” experience. Look for a tax resolution specialist with lengthy and broad experience rather than a former IRS employee with only specialized experience.
- Only Enrolled Agents, CPAs or Attorneys can represent you before the IRS. Look closely at qualifications, certifications and length (and breadth) of experience. These should suggest a dedication to the tax resolution field. The person handling your case should be the same person representing you.
- Large tax resolution firms usually do not have efficiencies which lead to faster conclusions or lower costs to you. They are more likely to neglect the case.
Mistake 4: Believing It Easy To Qualify For An Offer In Compromise
An Offer In Compromise (OIC) can lead to a significant decrease in tax debt. However, OIC programs aren’t for everyone. The IRS resolves less than 30{bf3da7fb6a4d0e0e3790d09a79b980fc065e33e2f3a2d49280f7e95b82f4982b} of cases in taxpayer favor. Reasons like significant debt or negative cash flow are not always good enough reasons to chase this solution. The taxpayer should seek the advice of a tax resolution specialist. Familiarity with IRS financial models is necessary.
Mistake 5: Focusing Only On The Back Tax Problem
Use of a financial plan can solve a back tax problem. The taxpayer may simply need to follow a budget. Often, full-blown financial planning is necessary. Trying to resolve tax debt without a budget or a financial plan is like a ship trying to reach its destination without benefit of navigation instruments.
Mistake 6: Settling For A High Cost Installment Plan
Less expensive options may be available. Lack of a budget or a financial plan will cause the taxpayer to be unaware of alternative solutions. Please see Budgeting Your Way Out of Tax Debt.
Mistake 7: Assuming The Tax Resolution Specialist Will Do All The Work
This is the single biggest obstacle to the tax resolution specialist. It increases the time to resolve a case. These taxpayer clients believe that once signing the necessary forms to engage a tax resolution firm, their job ends. Total cooperation is necessary. The client needs to present added tax documentation and background information.
Mistake 8: Believing The IRS Has Forgotten About You
The IRS might delay contacting a taxpayer. The taxpayer may then mistakenly think the IRS is finished with them. A taxpayer’s representative may file paperwork on their behalf. The taxpayer may confuse this with speedy resolution. The IRS has thousands of talented and capable employees. But the sheer size of the organization, the volume of work and complexity of tax related issues makes the IRS plodding and slow. Eventually they will get to you.
