In recent news, there have been multiple firms, (including some well known lawyers, like Roni Deutch) and other “tax professionals,” indicted and/or prosecuted by the IRS or state attorney’s general for misrepresenting what they could accomplish for people with tax problems. You’ve seen the commercials on TV, or heard them on the Radio—they generally indicate that these firms have settled tax cases for “pennies on the dollar”, and often create the impression that you don’t need to pay your full amount of tax.
Tax Resolution firms and their promoters (Roni Deutch) aren’t a silver bullet for taxpayers, and many have created more tax headaches then they’ve resolved. Roni Deutchcharged many of her clients thousands and thousands of dollars, without resolving any of their problems.
Some people turn to easy alternatives to be swiftly finished with the process, yet these easy alternatives could result in difficult consequences. For example, if you go into a tax resolution firm and they claim their firm is the best at helping their clients pay pennies on the dollar, get up and leave. One tax resolution firm cannot significantly decrease your taxes than another firm, so be wary of situations like this.
Here are some ways to be aware of tax relief scams:
- Avoid tax firms that center their pricing structure around the percentage of the amount of refund—this practice is generally illegal under the IRS Circular 230.
- Make sure the firm is reliable – check BBB ratings or with local bar associations before retaining a firm. Make sure that there are lawyers or accountants and not just enrolled agents that can answer any of your questions in a timely and truthful manner
- REVIEW your return and make sure to ask questions on anything you do not understand.
- YOU are the one ultimately responsible for your tax forms, not the tax firm—the IRS won’t allow a defense of they prepared it, I just signed it.
- Make sure the employees in the firm are all accredited with the proper credentials, e.g. CPA, Accredited Tax Preparer, Licensed Public Accountant, Tax Attorney, Etc.
- If you are on a website, make sure the firm’s website is on a secured network when filling out important information, e.g. “https” rather than “http”
- BE SMART – if it seems too good to be true, it probably is…
Here are links to the IRS’s web site on ways to avoid tax relief schemes and your taxpayer rights:
Tax Resolution Firm Score Cards?
While Attorneys are subject to discipline from local bar associations and state administrators, and accountants are subject to their own rules of professional conduct, Tax Resolution Firms are often not structured as law or accounting firms. In many instances these firms are owned by people who are neither lawyers or accountants, or even enrolled agents.
The Better Business Bureau rates many of these firms very poorly—wise consumers should check with the BBB before engaging a Tax Resolution Firm, that is not a law firm or an accounting firm. Lawyers are frequently rated on sites like AVVO, which lists disciplinary complaints and compile ratings based on a lawyers reputation and experience.
Some BBB Scores for well known Tax Resolution Services follow: