Tax resolution seems to be the new buzz word in the tax industry. You have probably heard it, and wondered what tax resolution was. This article will delve directly into exactly what tax resolution is, the primary companies that do this kind of work, and the usefulness of the industry. In 2013, I formed a company named Tax Crisis Center®, LLC. Tax Crisis Center® is a tax resolution company. I got into the tax resolution business because it is a very nasty business and it doesn’t need to be. Many companies owners have gone to prison and been stripped of their licenses for taking people’s money and never doing anything. In this article we will run the gambit of this business and explore it inside and out.
We should begin with the definition of tax resolution. Tax resolution is to resolve someone’s tax debt. A taxpayer owes the IRS or the State money, and a tax resolution firm specializes in representing a taxpayer’s interest before the IRS or the State to resolve the debt in the most advantageous way for the taxpayer. Owing the IRS is worse than owing the mafia. The IRS can take EVERYTHING that you own to satisfy a debt, and they scare and intimidate most people. People that have either a tax lien filed against them, wage garnishment, or bank levy know all too well what the IRS can do, and what they can’t do.
Let’s talk about how people get into these situations to begin with. In April taxpayers all over the country file their tax returns. In my experience as a tax professional, if you have waited to file your tax return until April, you have been putting it off because you know that you owe the IRS money. Some people will put it off even longer by filing an extension in April, prolonging their fate until October. Nevertheless, when a tax return is filed, and an amount is due, the IRS will assess the tax owed. The date of assessment is very important. The IRS has ten years from the date of assessment to collect the tax that is owed. This is known as the Statute of Limitations. There are many things that you can do as a taxpayer to extend this time that the IRS has to collect the tax, but for now let’s discuss the ten year time frame. Once the tax is assessed, the IRS will send an initial notice to the taxpayer stating that an amount is due. If a payment isn’t made, then 30 days later, the IRS will send a more serious notice stating that an amount is due. If payment isn’t made the IRS will send a certified letter called an Intent to Levy Notice. This notice states that the IRS will levy the taxpayer’s assets if arrangements are not made to pay the tax. If nothing is done after that the IRS will send a notice 30 days later stating that they will levy the taxpayer’s State Refund. If nothing is done, 30 days later the IRS will send a Final Intent to Levy. This is the serious letter, and if not answered within 30 days, the IRS will place a lien on the taxpayer.
When is lien is placed on the taxpayer it does a couple of things. First it effects the taxpayer’s credit rating. Secondly, it allows the IRS to begin forcible collection of the tax that is due. The IRS can levy your bank account, meaning that the IRS will send notice to your bank stating that you owe them money and they want the bank to take that amount out of your account. The bank will place a hold on your funds for a period of 21 days. After 21 days the IRS will then collect their claim. The IRS can garnish your wages. What this means is that the IRS will send your employer a letter stating that each time you get paid they will take a certain amount of money for a specific period of time. If you are self-employed the IRS can seize your accounts receivable, and notify your clients or customers that you have a tax lien and they will need to make payments to them instead of you. The IRS can show up at your home, and go through your assets in your house, and can have a public auction to sell your furniture, and other assets that you have in your home. Depending on the State that you live in, the IRS can also seize you home and sell it at auction to satisfy your debt. A tax lien is nothing to play around with.
Back in the 60’s, 70’s, 80’s and most of the 90’s the IRS abused their power so much that in 1998 there were Congressional Hearings that were held. Out of these hearings came the Taxpayer Bill of Rights. You have rights now. Probably the most important right you have is the right to appeal the IRS’s collection of taxes, and the outcome of an audit. For example, when the IRS sends the Final Intent to Levy Notice, you have 30 days to appeal the collections actions. Most people don’t know that. Even after the 30 days, you have limited appeal rights, and you have a right to a Collections Due Process Hearing. At this hearing you can protest the amount you owe, come up with payment alternatives, if the collection of the tax resulted from a tax audit that you didn’t agree to, you can ask for the case to be thrown back into audit. There are a number of things that you can do. This is what Tax Resolution Companies specialize in.
In order to be in the Tax Resolution business you have to be licensed. To prepare a tax return, you don’t need a license, but to represent a taxpayer, in most cases you do. An Enrolled Agent, Certified Public Accountant, or Attorney can represent your interests, without restrictions before the IRS. Some Enrolled Agents and CPA’s can even represent your interests before the United States Tax Court.
Tax Resolution is a nasty business to be in. From the professional’s side you are dealing with different clientele than you normally do. For instance, my tax practice caters to clients that have a high net worth. Dealing with them, is completely different than dealing with a tax resolution client. Now, before I say this I do want to state that about 1 percent of the tax resolution clients that I have dealt with are just people that found themselves in this situation by accident. The other 99 percent just simply ignored the IRS when they were asking for money. They won’t pay the most notorious collection agency in the world, so you have to get a majority of your money upfront in this business or you won’t get paid. However, there are many unethical professionals in this business. Since a lot of money is taken upfront, some companies will just steal the money from the client. They will promise that they will help, but at the end of the day they just steal client’s money. A lot of them get shut down because of this. There are hundreds of tax resolution companies, which is why if you find yourself in a situation where you need one, do your homework before you hire them. Their famous pitch to every potential client is that they can settle their debt for pennies on the dollar. In all reality, what they are talking about is something called an Offer in Compromise. 18 percent of all offers are accepted. That’s it.
This was the main reason why I formed Tax Crisis Center®, LLC a year ago. For 19 years I was a partner in an accounting practice. In 2013, I went out on my own. Tax Crisis Center® was an idea that I pitched over and over again to my partner, but he wanted nothing to do with it. The concept behind Tax Crisis Center® is to be an honest firm in the midst of all of these other firms that just basically promise clients the world, and then steal from them. I have lost potential clients, because I tell them the truth. If I don’t think they are a candidate for an offer, I don’t file one. Filing an offer you have to give the IRS a lot of personal information like bank account numbers. So, if the offer isn’t accepted, you have just told the IRS where the money is so they can seize it whenever they want. You have told them the assets that you have, so they can take those as well. For me it isn’t about the money, it is helping clients. Our trademarked slogan is Let YOUR Voice Be Heard™.
Now you know what Tax Resolution is, and if you ever need help resolving a tax debt, put Tax Crisis Center® to work, for you.
Craig Smalley is the managing partner of CWSEAPA®, LLP, which is an accounting and financial firm located in Delaware, Florida, and Nevada. Craig has been Admitted to Practice Before the Internal Revenue Service, is a Certified Estate Planner™, and is a Certified Tax Resolution Specialist™. Craig specializes in taxation and IRS representation all the way through the United States Tax Court. Form more information visit www.cwseapa.com, call 1-844-CWSEAPA, or email him at email@example.com
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