I’m trying to get the rest of the tax resolution company reviews done before we get too far into this tax season, but wanted to at least start this page. It will be work in progress…
If you need to contact me immediately, I can be reached at firstname.lastname@example.org.
“irs back tax help, thank you so much for taking the time to answer my concerns. I stumbled across your blog/forum which I thought was just for back tax advice and helpful resources because there were many good reviews about all the different companies out there soliciting as tax advisors, so I sent in this email for your help. You’ve been very helpful and honest. It sounds like you also have a company that deals directly with these tax issues too. I would be glad to know more about your company as well as I have not been so well-informed in the past with any other places I worked with.” -T, MN
- This person contacted me after they had hired a tax resolution company a few months ago. The taxpayer owed the IRS well over $200k in past due 941 payroll taxes, and the state had a tax problem as well. We discussed Trust Fund Assessment, the 4180 interview, the options a business has for paying back taxes, and how the personal assessment can be handled. We also discussed Final Notice of Intent to Levy (Letter 1058) vs. Notice of Intent to Levy (CP504). At then end of our discussion, the person had a list of questions for his current tax resolution company. I recommended he continue the path he was already on and stick with his current tax relief group. If you are already on the best course, I will confirm it. If you have better options, I will describe them.
This is an email exchange I had with a taxpayer who owed 941 payroll taxes to the IRS.
“I have a small retail business and have a past due IRS payroll tax balance of approx $30K.”
- How many Quarters? Any state issues?
“Without digging out the records, it probably 8 quarters or so. I also fell behind on my 2011 941 which isn’t helping matters either. I do owe past state taxes but the State has not pursued me yet. I should be able to get caught up on those without much problem. I was on a payment plan for those past due taxes and defaulted on the agreement after I had two bad quarters last year.”
- How much and how long was the payment plan you defaulted? Being down 2 quarters is tough. How’s business now and how long do you think you need to fix this in a reasonable way?
“The payment plan was for $700 per month and I don’t know for how long. I was trying to lobby for a lower payment, but they were insistent on the $700 figure. Business is up for the start of this year… good things have been happening… if I could arrange another payment plan (with a workable amount per month) I could swing it. My thought was always… I’d rather have a lower payment, and if I have the funds, pay extra… instead of having a big payment that I may or may not be able to swing if business got tough.”
“My bank account was just levied.”
- If you need the money from the levied account back, get a list of payroll together, and contact the revenue officer tomorrow morning. They will need names and SSNs. If you want that money back, you have to argue hard and now. If they didn’t capture too much, let it go. Typically, they won’t levy the account for at least another month. I have more advice, but tell me which direction to go on that.
“I already spoke to the Revenue Officer and she indicated that she was not willing to release the levy… which unfortunately is making it hard for me to pay the current taxes that I need to pay to get current and keep current. I can probably work through this levy… but it’s just made things harder.
I have considered tax resolution company, but am questioning whether they can really help, or if I should just go it alone with the IRS. I don’t have money to waste and I’m half afraid the IRS will get more aggressive with me if I get outside representation.”
- My personal opinion is to steer clear of xxx (a tax resolution company who advertises on the internet). Did you get a quote from them? Their 3rd party reputation isn’t so hot. The IRS, by law, can’t get more aggressive if you hire a rep, and good reps know how to work the relationship well. Considering they just levied you, it doesn’t get much worse than that, the IRS levies when they think they have no other option. With good representation the relationship improves. The Revenue Officer knows they probably won’t collect as much, but they don’t have to work so hard to get it.
“I have not gotten a quote from xxx (tax resolution company who advertises on the internet), but have also been contacted by xxx Financial Tax Group (tax resolution company who calls if you have a tax lien) (online reviews did not give me a great feeling about them either). I rather have representation, if that will help my situation… but want to be sure that I’m dealing with someone I can trust, and won’t break my bank. Or… is it better to work with a local CPA?”
- CPAs, in my experience, like numbers more than people. You don’t need a bean counter, you need a persuader. As for going it alone, you’re in that middle ground ($25-50k) for hiring someone. Based on getting the installment agreement, defaulting, and now being levied, I think you’re at that point where it will be safer and less painful to hire someone and get what you need once and for all. Does that make sense? I can make some calls to find someone reputable. Let me know.
“If you have sources that are trustworthy, that may be able to help… I’m all ears… feel free to send me names if you’d like.”
- You are like most people I talk to, good intentions that are not reciprocated by the IRS. It’s a frustrating situation coupled with a bad system of collection. Did I miss anything?
“You’ve been very helpful… if you can get me names of firms that are good for this situation I’d appreciate it. And anything else you can think of that I should do would be appreciated. Thank you. RC”
I ended up sending them a referral. If you have already had a payment plan in place, then defaulted on the payment plan, and are now being levied, if you go it alone again, you will probably get the same results.
“Yes, I would appreciate it if you could refer some of the companies you mentioned in your article that are in good standing w/fewer than 3 complaints in the last three years.
I am out in California, and have an immediate situation that needs expert assistance.
My Corp is in a collection mode, that will convert to a personal collection if not paid in the next two weeks. My concern is the assessed penalties that have been tacked on, and the fact that the IRS says they will reverse them once the “Trust” amount has been paid for the back 941 amounts.
A person at xxx Financial Tax Group (tax relief company that calls) said, that if I pay the minimum amount (which is the penalty amount), there is nothing protecting me from them not applying it to the principal & only applying it to the penalties. My point is, if I can’t afford the principal, how am I supposed to afford the principal & penalties, which is almost double?
Xxx Financial Group (tax resolution company who calls) wants to file a Power of Attorney ASAP, prior to payment, obviously to trap me into a corner w/them so I am obligated to hire them. But, on the same hand, they may also have my best interests in mind……
Not sure what to do?
Any thoughts would be appreciated.
DC in CA, Company, Inc
- I called this person within 15 minutes of receiving the email, and they told me they owed $17k to the IRS. After some discussion I realized they were confusing the concept of the Trust Fund Recover Penalty with other IRS Penalties. So I helped them understand that their total liability was a little more than $11,000 instead of $17,000. (TFRP was $6,300) We also talked about the Trust Fund Recovery Penalty Interview, aka the IRS Form 4180 Interview, and appealing the Trust Fund Assessment and its importance. Finally, we sketched out the path ahead for him and I told them not to hire anyone.
Earth shattering? No. The point is that I’m not in this just for myself. I really am trying to help.
Edited for clarity & brevity.
“I have not filed for 2007-2009; including penalties I probably owe $120,000. I am self employed had major down turn in income. Last year probably $36,000 in income. I will make much more this year.”
I’ve asked a few clarifying questions below to find your best path out of this. What kind of law do you practice?
“I use to do construction litigation but that all went away as you can imagine.
For the money that is owed, do you think you could address that in five years of less, or will you need more time? If “No Way” is the answer that’s ok, it just tells me to think differently. Because of the age of the liability ~40% of what they are trying to collect is Penalty & Interest. Penalty may be negotiable, however, interest is not. The majority of the grow rate is penalty.
“My accountant is going to get 2011 and 2010. I filed 2008 and 2009 today; met with IRS they are giving me until the end of the month to get the other two years filed and meet with them. If I can get the penalties waived then I can get five years to pay the rest back.”
“Do I need to hire someone or just my accountant?”
If you had to choose between your CPA and yourself, I think you would be better off doing it. You will be a much better negotiator. Most CPAs are not trained for that. The other question I always ask attorneys is: What is your time worth? If you have hours to bill, that makes a lot more sense to generate revenue than fight this. Does that make sense?
“I bill at $125-$200 an hour depending on the case. I do have time to do it now; so it does make sense especially since I am single with no children time is something I have now and this is the most important.”
“I can negotiate but don’t know what my parameters are to negotiate so it might be helpful to have someone. I would be very happy, as I stated earlier, if they would just waive the penalties and set up a payment plan. It is a legitimate debt so I don’t mind paying. It got to be a problem because I misfiled the first extension in 2008.
Also Blue Tax wanted $12,500 flat fee in advance. If I thought they could do what I wanted I would pay but I have my doubts. THANKS!”
It’s great that you are getting all your filings in. Once they see that, I think you should try to see it through with your initial plan. A penalty abatement and 5 years to pay remainder. If they are willing to do that, you’re done, take it and move on with your life. The Revenue Officer will make or break this. Be careful of the Revenue Officer saying “let’s set up a payment plan and then see what we can do about the penalties” it’s part of their training to get you to start paying the full amount and later say “they couldn’t do anything about the penalty” You may also pursue a tiered installment agreement. This sort of agreement has the monthly payment increase at the end of every year.
If it is a Revenue Officer who feels you should pay everything, including the penalty & interest, I’d suggest an alternate route and having someone represent you. This path will involve a partial payment installment agreement or an offer in compromise.
Use a common sense test with this, if the agreement you make will not cause hardship now, 6 months from now or 3 years from now, take it and move on. If you feel you are being over-obligated, or unfairly treated and you know what the IRS is pushing for will cause you to substitute different problems for this one, I will find you someone with the experience to get you what you need.
Your third alternative, if you just don’t want to deal with it, is to hire someone now to guide you through. I think a more realistic cost for this is the $4k-5k range. They will do all the negotiating and representation, and you can provide the raw data. The attorney’s I work with all have more than 10 years working with the IRS collection division, and the bona fides to match.
I have my doubts about Blue Tax as well. Let me know what else I can do. I’m happy to be your plan “B”.
“ibth, thank you.
May I ask why you do this? I was sure there would be some hard sell at the end.
No problem. I used to be sales manager for a few of the companies in Colorado. (they have the right intent and reputations to match and are reviewed on this site). I watched a lot of other companies around the country using advertising to make a lot of money fast while ruining people’s lives (JK Harris, TaxMasters, Ronni Deutch, etc…)
I realized that if people had a better resource, they could make better choices for themselves. So I went independent, started writing the blog, and make money from referrals and I just added google adsense to my website, so I’m curious to see how it works.
Overall, my goal is to improve the quality of service in the industry and connect people who need and want the help with the people who have the right intent and skill set to deliver it.
The attorneys I work with are on board and don’t advertise on TV or mail. They know they are getting well vetted clients that haven’t been “railroaded”, and the clients win, because the attorneys know they have a criteria to meet or they lose my referrals.
A question for you, if I edit our email exchange to make it anonymous, may I use it as one of my testimonials? People still expect that “hard sell” because of their experience with others.
“Of course. Can your attorneys in (Colorado) represent me if I need one or do I need someone local? Problem is I know all the local attorneys, including one of my former partners who is a tax attorney and none of them have any experience in this area.”
The attorneys I use are all in Colorado, however, they do represent for taxes nationwide. Representation before the IRS respects the attorney client relationship, but is not defined as “practicing law”, so licensure is not required state to state as long as the attorney is licensed somewhere. For most appeals and programs other than an installment agreement, the case leaves the local area.
For example, the OIC people only exist in two offices for the whole nation. These attorneys are used to operating at the national level.
You hit the nail on the head with local representation. They may be a great tax attorney, but still have no experience with this. That’s why the exclusivity is so important. They need the repetitive case work to get good at it…
As usual, not ground breaking material, but hopefully it shows irs back tax help is sincere in our efforts. In this situation, I encouraged the person to pursue their original option. If they get what they need, they won’t hire anyone, and will solve their problem. If the IRS is not reasonable, we will provide plan “B” at a third of a competitors quoted price.
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