Recently there have been several companies representing taxpayers who have gone out of business and taken payment for services that were never delivered. Unfortunately, many taxpayers have been left with a mess to handle on their own and no money to fight the IRS. That is a frustrating situation to be in.

What has happened in the tax service industry is no different than what often happens in life. Someone got greedy. An idea to represent the average helpless taxpayer turned into a scam. Many times the average taxpayer finds himself or herself drowning in a sea of tax debt and no way to dig out of the black hole. Often depression sets in and even thoughts of taking one’s life comes to mind.

It is a shame that we hear of people paying for tax representation that are often taken advantage of by unscrupulous practitioners or the high pressure salespersons that make “pie in the sky” promises that are not realistic. Often they promise the taxpayer that if they pay $4,000 to $7,000, they can get an Offer In Compromise through the IRS maze and all their tax debt will be reduced to pennies. What a joke this is! No one can make any guarantees when it comes to negotiating with the Internal Revenue Service. A good tax practitioner can do a lot of damage control, if they know what they are doing, but no one can make guarantees as to what the IRS will do. A good representative should know what to do to make the IRS do their job and therefore, serve the taxpayer. A practitioner that promises to settle a case for “pennies on the dollar” creates a bad situation for all practitioners.

First and foremost, a taxpayer should check the references of the professionals who will be representing them. The Better Business Bureau (BBB) is a good place to start your research. For a professional to have few complaints is a very good sign. You should check out the reports of the BBB and determine for yourself if you think the professionals are performing at a level that you find acceptable.

Choose a tax professional, such an Enrolled Agent “EA”, who can represent you in any state in the United States, or any country in the world, with regard to IRS tax matters. An Enrolled Agent has passed a very difficult exam which focuses on all levels of administrative tax law and ethics. An EA must obtain continuing professional education hours each year to maintain that license and keep updated on all the latest tax law changes. Enrolled Agents are admitted to practice before the Internal Revenue Service in all areas of administrative tax law.

Beware of firms that spend a bunch on money on tv ads and radio spots who may take on more clients than they can adequately represent or make promises they cannot keep. Caveat Emptor or buyer beware applies to tax professionals too!

Janet Greaves, EA

Redd & Greaves, P.C.