Don’t settle for just okay
If you are shopping for a tax relief company, you will easily see a glaring difference between companies that are providing a legitimate service versus those who are out to make a quick buck and while providing marginal to no benefit. Most people can spot a true scam from a mile away. Weeding out the scam-artists is easy. The bigger task is weeding out the average so you can find the best fit for you.
For now, let’s talk further about the steps to evaluating and hiring a great tax relief firm to fix your back tax issues. This decision will quite literally affect the next 10 years of your life, both financially and emotionally.
We will continue to review tax relief companies across the spectrum from “avoid” to “recommend.” If you have a suggestion for a tax relief company review, please email us at [email protected].
1) The infamous Offer in Compromise
Tax relief companies that make hasty promises to erase your liability, reduce what you owe, or get you a settlement through an ‘Offer in Compromise’ are usually in nature and should be avoided. You have to owe a lot of tax compared to your assets and income before you can “make an offer,” which is actually just a formula the IRS created and adheres to very strictly.
2) About penalties and interest
If you are told that penalties or interest will stop when you hire, hang up the phone or walk out of the room. Interest runs as long as there is a balance due. Period. Penalties occur when some action has not taken place, usually a failure to file or failure to make a payment. You cannot hire a tax professional and just stop filing or paying taxes without consequences.
3) It’s not the license, it’s the who
All legitimate firms that you hire to negotiate with the government must have attorneys, Enrolled Agents (EAs), or CPAs to legally act as your Power of Attorney with the IRS. Having licensed employees on staff should be uniform across the board, so this feature should not be viewed as a major selling point because it’s a legal requirement. But not all licensed tax practitioners are created equal, and perhaps, more importantly, is that very few tax relief companies have licenses tax relief professionals doing the initial consultation and proposal phase, which we find shocking and a non-starter.
4) The proposal – not too fast buddy!
Any company that is trying to get you to pay them money, sign a work agreement or power of attorney form before you have had time to research their company is usually hiding something. No matter how dire your situation, you do have 30 minutes, or a day, to research. By considering these tips you can separate the best from the rest.
If a sales consultant sends you a proposal or contracts to begin work, make sure that he or she included evidence of personal licensure. If they pass this test, then it’s important to take the time to research before further before agreeing to anything. A small amount of research can save you thousands of dollars and untold frustrations.
5) Multiple sources of positive evidence
More than few Better Business Bureau complaints a year is a good filter. The validity of a BBB report lies in their ability to track and report the volume of complaints from verified customers. The subjective grade given by the BBB of A+, B+, or A-, for example, is virtually irrelevant because that grade is given by the BBB, where complaints and testimonials are given by customers. It doesn’t matter if a specific firm handles 2,000 cases per year (few do). If a firm has an “A” BBB rating, but 20 or 30 formal, verified customer complaints with the BBB or Trust Pilot, this should raise a red flag for the consumer. Picture 30 disgruntled people standing in your living room. That is a lot of unhappy people.
6) Discern trusted sources
Thomas Jefferson wrote that we “Shouldn’t trust everything you read on the internet.” (Laugh)
But seriously, be careful of “Complaints,” “Rip Off,” or “Pissed Consumer” websites because they allow anonymous posting and then turn around and attempt to charge the complained-about company a lot of money to remove the review – which may or may not have been legit in the first place!
7) Promises, promises
The bigger the promises a sales consultant makes at a tax relief company, the more you should be skeptical. In fact, a tax relief company that is willing to tell you “no” when asking for guaranteed results of eliminating a big portion of your taxes is a very good sign of honesty end ethics – and knowledge. For example, a consultant who tells you, “No, we probably won’t save you much money on penalty reductions because of why you accrued the liability” is probably the consultant who is speaking the truth. If he or she spends extensive time explaining why you do NOT qualify for a reduced settlement, you are probably on the right track. Companies that want to under-promise and over-deliver are a rarity but exist. If it sounds too good to be true, it probably is.
8) Flat fee fallacy
This is a big one. Fee structure. Companies who tout their “flat fee” almost never have a truly flat fee. It isn’t a viable business model any company. The flat fee promise is solely so they can get their hooks into you. Classic bait and switch. Pay close attention to the wording throughout the work agreement. You will quickly see that the contract contains 2 or 3 sentences detailing ways in which the company reserves the right to ask you for more money, often for no reason. If you hire a company for an agreed-upon fee, and you add more work (like another tax issue not previously discussed), expect to pay more than your initial fee to fix the new issue.
9) Character and ethics
This one is simple. Companies that show an involvement in the community reveal something about the true character and culture of the organization. Working closely with charities, performing pro-bono work for those in need, and other acts of outstanding ethical behavior on a corporate level are all indicators that the organization is an ethical one, in it for the long-haul, working to better the community, and not exclusively engaging in activities that are revenue producing.
As a special ethical note, should any tax sales consultant imply they have “special relationship” or get “preferential treatment” from the IRS or its Revenue Officers, they are not just lying but are actually in direct violation of the US Department of Treasury’s circular 230 www.irs.gov/circular230, which governs the legalities pertaining to practicing before the IRS, including marketing practices. Run don’t walk, if such relationships are implied. If their firm is willing to violate the law to earn your business, the purity of their ethical standards and “moral compass” certainly comes into question!
10) Years of industry experience
Many sales consultants in the tax relief field claim their firm has been in existence longer than is true. In reality, they have been around for less than a year or two. Others brag of their combined years of industry experience. This is not necessarily a factor that equals good work product because you aren’t going to have fourteen people working on your case. You will have one or two. A firm that has been around a while typically has a large staff who has been there a while too.
To get a general idea of how long a company has been in business, look their company up on the BBB’s website, www.bbb.org. If you want a more precise date, go to the Secretary of State website where the corporation is located.
Wrapping Things Up
By now we may have scared the pants off you. But do not fear. You are already way ahead of the curve because you are on this website and have read all the way to this point. If you do a little bit of research and take some notes and you will see a pattern of tax relief companies that look good and look questionable. A conversation or two will make it clear which tax relief company stands head and shoulders above the rest. The small amount of time invested will ensure you end up in good hands.