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The Straight Skinny on Tax Resolution Companies – Caveat Emptor (Buyer Beware)

by | Oct 10, 2022 | IRS, Tax Law, Taxpayer Defense

We talk to many clients who come to us after working with another tax resolution firm, only to find – after paying a lot of money – that the firm that took their money didn’t really do much, if anything, to resolve their tax problem. Often the firm that took their money was in another part of the country, and the client’s only contact with that firm was with a sales rep over the phone.

Many people are lured by commercials that promise a “quick fix” to problems that have been building over many years – advertisements that promise a quick resolution to their tax problems for “pennies on the dollar.” Others are lured by phrases like “we’ll do all the work.”

Well, guess what? Problems that have been developing over many years are not going to be resolved overnight. Nobody can wave a magic wand and make your tax issues magically disappear. And no legitimate tax professional can actually represent you without getting specific information from you – and gathering that information is going to involve a certain amount of work on your part.

Sure – a tax resolution firm can go through the motions. They can throw together an application for an Offer in Compromise without getting much information from the client, knowing full well that the offer will be rejected immediately because it doesn’t fall within established IRS parameters for a successful offer. Then the tax resolution hustlers go back to their clients and ask for more money.

At Willi Law Office, we analyze a client’s tax situation, income, and expenses before we ever recommend an Offer in Compromise. After all, not all clients are actually offer candidates – your income and expenses must fall within certain established parameters in order for the offer to be successful. And sometimes we discover that for strategic reasons, an Offer in Compromise is simply not the best way to go because the client’s tax debt will soon expire, anyway.

And this is our first line of inquiry – before we ever recommend an Offer in Compromise to a client: is this client actually a good candidate for an Offer in Compromise?

And, of course, if a client has unfiled tax returns, the first thing that they must do is to file those unfiled returns. Those returns must be prepared, filed and processed by the IRS before an Offer in Compromise can be filed or before an IRS employee will even talk to your legal representative.

Quick fixes are always appealing. After all, who wouldn’t like to lose 10 pounds in a week, or 50 pounds in a month?

But before you buy into a quick fix for your tax problem and pay a lot of your hard-earned money to a tax resolution company in another part of the country based on their promises of quick and easy results, ask yourself whether their promises really make sense.

Most people realize that the only way to lose weight safely and effectively is gradually and over time – with a lot of work (exercise) and self-denial.

So too, the resolution of tax problems that have been building over many years is going to involve time and effort. Filing unfiled returns; accumulating financial information; and in some cases, creating books and records for a small business that never really existed in the first place.

There’s an old saying in the legal profession: Caveat Emptor (“Let the Buyer Beware”). Before you sign on with a Tax Resolution company and pay any of your hard-earned money, do your homework. Check their references. Talk to prior customers. If possible, work with someone local. And above all else, ask yourself: “Do their promises really make sense?”

Willi Law Office, LLC, has been providing personalized legal services to individuals and businesses in Central Ohio for over 25 years.