As the Federal Trade Commission and state Attorney Generals crack down on scam tax relief firms, where can consumers turn to for help with their IRS and state tax problems?

November 2, 2010 by

Just last month, the Federal Trade Commission shut down American Tax Relief, a Beverly Hills, California-based company that guaranteed it could settle tax debts for individuals for a fraction of what they owed. The state of California recently filed suit against Roni Deutch, AKA the “Tax Lady”, for a deceptive ad campaign that offers very little proof that the firm’s clients are getting any real-world benefit and overstates claims of winning against the IRS. Suit was also brought against J.K. Harris of Charleston, South Carolina by the state of Massachusetts in conjunction with the attorney generals from 17 other states for false and deceptive trade practices and nonperformance of work. A $1.5 million judgment against J.K. Harris was awarded to the state of Massachusetts and the other 17 states. Are these three isolated cases? Can you believe any firm that says they can help settle your tax debt for less than what you owe?

“These three firms are just the tip of the iceberg when it comes to companies claiming to be tax debt relief specialists who say they can settle your tax debt for pennies on the dollar,” said Matthew Previte, CPA, of Matthew J. Previte, CPA, PC and TaxProblemsRUs.com. “The sad part is that tax representation firms like these create a genuine distrust of any company who can genuinely help delinquent taxpayers with tax debt owed to the IRS or their state DOR.”

Previte, whose Natick, Mass.-based tax representation firm has specialized exclusively in representing individuals and businesses with IRS and state tax problems since 1997, says the real problem with companies like American Tax Relief, Roni Deutch, and J.K. Harris is that they make promises to clients that they can’t possibly deliver on. Says Previte, “The simple fact remains that approximately 95 percent or more of delinquent taxpayers do not qualify to settle their tax debts through an Offer in Compromise.”

So, what options do Americans who owe the IRS or their state DORs have besides representing themselves? Previte suggests there are plenty of reputable tax representation firms out there but consumers must do their due diligence before selecting a firm, such as:

• Avoid firms that guarantee a settlement – There are four main factors involved in settling your tax debts through an Offer in Compromise. The four factors are: (1) your current financial condition, (2) the tax law and IRS procedure, (3) your cooperation in providing the requested information needed to settle your case, and (4) the competency of the tax representation firm you have chosen. A tax representation firm that guarantees settlement is a major red flag since the first three of these factors are completely outside of their control and can change while in the process of trying to settle your tax debts causing an eligible Offer candidate to become ineligible. Meaning, you could start off as a great Offer candidate but later become ineligible due to changes in your financial condition, tax law and IRS procedures, or your failure to cooperate.
• Use a locally based tax representation firm staffed by licensed tax professionals (CPAs, Enrolled Agents (EAs), or tax attorneys) that practices exclusively in resolving IRS and state tax problems – Negotiating with the IRS or state DOR is a unique skill set unto itself. CPAs, EAs, and tax attorneys, although they perform various tax services such as tax return preparation and tax planning, are rarely well versed in the workings of the IRS or state DORs. It is rare if they handle one tax controversy case a year. You want to work with a licensed tax professional whose firm focuses exclusively in representing individuals and business in trouble with the IRS or state DORs, with a physical, brick-and-mortar location that’s within driving distance to you so you can schedule a face-to-face meeting before engaging them to represent you.
• Ask for references – If you don’t know anything about a particular tax representation firm, ask for references. Most will be more than happy to provide contact information for satisfied clients or conventional tax professionals (CPAs, EAs, tax attorneys) who have referred them clients. You can also research a prospective tax representation firm by going to your state’s society of CPAs web site, state bar association web site, or state society of Enrolled Agents web site. The overwhelming majority of licensed tax professionals working at any reputable tax firm will be members of one of these societies. Also, do a search with your local Better Business Bureau and state licensing board (CPAs, tax attorneys) or IRS Office of Professional Responsibility (EAs) as well as a general Google search. You would be amazed at what you can discover about your prospective tax representative online.
• Work with a smaller firm – When it comes to larger vs. smaller firms, you are most likely to get personal attention when working with a smaller firm. Larger firms tend to assign your case to junior staff and there’s a possibility that a senior staff member might not even review your case. For many larger firms, the focus can be more on selling and collecting retainers than getting actual results. With smaller firms like Matthew J. Previte, CPA PC, the principal reviews every case.

“It makes perfect sense that somebody carrying a huge tax debt would turn to one of these tax representation firms for help with their IRS or state tax problems. What you don’t want is an additional problem, like wasting precious dollars on a tax representation firm that makes promises it can’t keep,” said Previte. “By doing a little research before handing over a retainer fee, you prevent your hole from getting any deeper and can feel rest assured you’re taking a positive step forward in resolving your IRS and state tax problems.”

For more information on Matthew J. Previte CPA PC, please visit www.TaxProblemsRUs.com. To schedule a free confidential consultation, call 877-259-8200.

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A taxing situation…With the new IRS, coming forward is the best option for late filers, non-filers, and delinquent payers.

August 2, 2010 by

By April 15, 2010, 84 percent of Americans filed their tax returns on time. That means 16 percent didn’t. That omission translates to a figure somewhere near $345 billion in taxes owed to the U.S. Treasury Department. With a budget deficit in the trillions and rising, the IRS is expected to increase its audits of both personal and business tax returns as well as pursue greater enforced collection action against individuals and businesses using levies, liens and seizures.  And that puts late filers, non-filers and delinquent payers on notice: Uncle Sam wants you now more than ever.

So, what’s a non-filer or delinquent payer to do? Many will delay dealing with the problem, literally hiding from the IRS. Yet according to Matthew J. Previte, CPA, a local taxpayer advocate expert and owner of TaxProblemsRUs.com, the IRS will get its money and then some from non-filers and delinquent payers in penalties and interest. The key is to be proactive and face the music.

“When we’re children, our parents said if we told the truth, things would be far easier on us than if they found out later. That may sound rather simplistic, but it’s the same with the IRS and your state’s DOR,” said Previte. “There are a number of options that you can work out with the IRS and your state to address your situation.”

Besides a lack of funds, pride, procrastination and a number of other reasons, most people are quite intimidated by the IRS and hesitant to come forward before the IRS comes to them. Since 1997, Previte’s Natick, Mass.-based tax firm has specialized solely in representing individuals and businesses with federal and state tax problems, including audits, non-filers, and delinquent payers.

“What most people do not realize, and that includes many CPAs and tax attorneys, is that dealing with the IRS and state DORs is a specialty unto itself,” said Previte. “We can provide our clients with resolutions to very sticky situations not only because we’re licensed tax professionals but because we have successfully worked with both the IRS and state tax agencies full-time on a daily basis for many years and we know how they work.”

So what are some of the options available to people who owe taxes? Some options include:

  • Offer in Compromise program – This little known program enables qualified taxpayers to negotiate a settlement for a fraction of what they owe. Who qualifies? Those taxpayers who can demonstrate an inability to pay their delinquent taxes in a short period of time.
  • Payment plan – Many people are able to pay their tax debts but just need a little time to pay it off. Negotiating payment terms you can live with is the key. Unfortunately, penalties and interest will continue to be charged on your outstanding balance as you pay the debt off. However, you may qualify to have the penalties removed or abated if you can show reasonable cause for filing late or paying late. For those unable to pay their tax debts in full over time, a Partial Pay Installment Agreement may be available. Under this option, payments are made until the collection statute expires. Any unpaid balance at the end of the collection statute expires and becomes legally uncollectable, leaving the taxpayer free from paying the remainder of any balance due.
  • Bankruptcy – Did you know that taxes in many cases can be discharged or wiped out in a bankruptcy. Many people, as well as attorneys, are not aware of this. For those who qualify, bankruptcy often times can be the solution to resolve their crushing tax problems. Proper pre-bankruptcy planning—for Chapter 7, Chapter 11, or Chapter 13—is key to determining if bankruptcy is or can be a viable solution.
  •  Uncollectible status – Every year the IRS puts many taxpayers into the “Uncollectible Status” category or classifies them “Currently Not Collectible” (CNC). What essentially this means is that the IRS will not proactively seek back taxes from a taxpayer that owes because of validated economic hardship. If their finances improve (as they will monitor) collection efforts will resume.
  • Penalty Abatement – The IRS charges penalties for filing late, paying late, underpaying your estimated tax payments if you’re self-employed, negligence if you make mistakes in preparing your tax return, etc. Many citizens could pay off their tax debts if it weren’t for penalties that double, triple, or quadruple their tax bill. The law does allow taxpayers who have “reasonable cause” to file for a Penalty Abatement.
  • Lien Subordination – Some taxpayers could pay off their tax debt if they could get a home equity loan. Unfortunately, these taxpayers can’t get home equity loans to pay off their old tax debt because the IRS has filed Federal Tax Liens against their property. A Lien Subordination allows the IRS to reduce its Lien priority and give your bank superior Lien priority protecting their loan in exchange for the proceeds from the loan. This way, the IRS gets the equity it had a Lien against and your bank is protected by their superior Lien.
  • Innocent Spouse Relief – When married couples sign a joint tax return, they both become liable for the taxes on that return. If at some future time the IRS audits that joint tax return and determines that additional taxes are due, both spouses become liable for the taxes. Unfortunately, these additional taxes are sometimes due to the misdeeds or fraud committed by one spouse. Sadly, the Innocent Spouse also gets saddled with the tax debt. Innocent Spouse Relief was designed to alleviate unjust situations where one spouse was clearly the victim of fraud perpetrated by their spouse or ex-spouse. If you qualify for Innocent Spouse Relief, you may not owe any tax.

“These are just a few of the scenarios where having a qualified licensed tax professional represent you can literally save you thousands of dollars and dramatically reduce the stress and anguish that comes with having tax debt hanging over your head—and your family’s for that matter,” said Previte.

For more information on TaxProblemsRUS.com, please visit www.TaxProblemsRUs.com. To schedule a free confidential consultation, call 877-259-8200.

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