What is an Offer-In-Compromise?
The Offer-In-Compromise program of the Internal Revenue Service allows a taxpayer who owes federal taxes, penalties, and/or interest to pay only a fraction of the total amount owed. It is designed for taxpayers who either: 1) can not afford to pay the taxes, penalties, and interest owed within a reasonable time, or 2) can afford to pay what is owed within a reasonable time, but believe that they either do not owe what the Internal Revenue Service claims or believe that it would be unfair or inequitable to have to pay the taxes, penalties, and interest in full. (more…)

Do not speak to the collection agents of IRS or State before you know your rights! Also do not sign up with a firm that can’t provide you with a clear plan on how to solve your problem.

It is understandable to be afraid when after receiving Levy notice. But don’t let fear be the driving force in deciding how to help solve the problem. The collection agents of IRS and State love it when the taxpayer who has just received the Levy notice calls, they can hear the fear in their voice and they know the taxpayer will tell them more than they should and agree to terms that are to their detriment. The tax collection agent doesn’t care about your financial problems or the reason why you have them! It is their job to collect from you and get onto the next taxpayer.

At the same time, “fast talking sales people from boiler room firms” will tell the caller what they want to hear as long as the agreement is signed and check has clears the bank and often the tax problem isn’t resolved.

Levies can be released quickly provided the taxpayer is in compliance with tax returns. What information is needed to get the Levy Released is dependent on the amount and type of tax liability. Most taxpayers tax liabilities can placed in an affordable Installment Agreement or in Non-Collectable status as a precursor to filing an Offer-In-Compromise. It is important that the taxpayer understand why a tax solution is being negotiated on their behalf and what is the up and downside of the solution.

A common trick by the “boiler room firms” is to file an Offer-In-Compromise or place a taxpayer in an Installment Agreement knowing the taxpayer will be either default or be rejected because the coming year tax liability. These firms do this in order to charge their client’s more for the same service down the road.

When you call us we will provide you a plan on how we will get the Levy Released and put into motion a plan to resolve your tax liability that is in your best interest that is based upon your unique financial circumstances.

Hire a firm that has their representation work and fees clearly stated in writing. These “boiler room firms” have murky agreements that are written so they can increase charges based upon hard to understand criteria so you pay more or they will threaten to stop working on your case. It is an effective threat when a client has the IRS or State breathing down their neck. The goal of the “boiler room firms” is get you in the door and agree in writing to your tax liability amount, so later they can charge you more based upon on a higher tax liability. Most clients are confused about the amount of their tax liability. It is very common that their actual tax debt is higher, because they don’t understand penalties and interest or have only received a portion of the paper work from the tax authority.

Never hire a firm that won’t tell you advance who is working on your case. This is very important because the “boiler room firms” have non-qualified “tax rookies” working on client’s cases. Recently a client found out that the person working on her case wasn’t licensed to work with the IRS and had only two weeks of training, the client only found this out because of client’s previous dealings with the IRS. The IRS loves this and results are horrible for the client. The person working on your case should be licensed, their name appear on the Power of Attorney and be the only person working on your case with the IRS. The only way these “boiler room firms” can afford to advertise as much as they do is cut back on quality personal to handle the client cases; as a result they hire low cost, untrained, non-licensed personal to work on your case.

Since we last wrote about the TRA of California problem we have had spoken to dozens of ex-TRA of California clients, or should we say victims. The situation is not very good for most of them, they paid in advance and believed they were going to get the help they needed, and obviously they didn’t get the help. Most are understandably angry, scared, and distrustful - who wouldn’t be. Many ex-clients of TRA of California had Offer-In-Compromises (OIC) filed, but it was rejected because they (the client) didn’t even qualify for the basic criteria of an OIC. Many other OIC’s were rejected because of sloppy work, incorrect information, and lack of follow through. Other ex-client returns were never completed or were done incorrectly, levies were not released and Installment Agreements were never set-up.

The most painful calls were from potential clients that spoke to us prior to signing up with TRA of California. Now they are back looking for help again after discovering what the “guarantee” and great BBB rating really means. The BBB now rates the company with an F and states the company is shut down.

Here is what to avoid if you a seeking help:

• Never hire a firm that demands full payment in advance or even half now and the balance in 30 days. You will most likely never see your money again.
• Never hire a firm that guarantees the outcome of an Offer-In-Compromise. The IRS takes a dim view on these guarantees or implied outcome promises and the IRS has even published warnings regarding this practice. Go to this link to read the IRS warning.
  http://www.irstaxreliefassociates.com/news20041025.php
• Never hire a firm that tells every potential client that they qualify for an Offer-In-Compromise. Our firm finds that about only 3 out 10 people who call should consider filing an Offer-In-Compromise.
• Never hire a firm that doesn’t stand by their Offer-In-Compromise submissions by supporting the client with appeals as part of the fee agreement.
• Never hire a firm that lumps all tax solutions into one fee structure. These firms like to call the service “Tax Resolution” or some other official sounding heading and list all services under that heading. Why should you pay the same for a service that takes less than 30-days to perform as you would for one that takes eight months or more?
• Watch out for the Penalty and Interest Abatement sales tactic. The outcome of this service cannot guarantee either and there are some basic circumstances that a client should have to even file for one. These “everything can be done by the “Great and Wonderful OZ” firms” are selling you a bill of goods.
• Watch out for traveling salesperson firms. These firms claim to have offices located throughout the United States. What they have is traveling salespeople who are paid commission to sell you on their services. They meet clients in temporary offices. They sell you and send your personal records to a central office. Most likely you will never ever talk to the “trusted” smooth talking salesperson again.
• Avoid firms that state what they charge is based upon the amount of taxes you owe. The amount of tax debt is only one factor in determining the complexity of the case. It is a way for these “gouging” firms to over charge potential clients.

Find a firm that doesn’t succumb to any of the above. Clearly we would like to have you for a client, but we also recognize we are not a fit for all clients. There are number of reliable firms that can help. Ask good questions and you will find the help you deserve.

We would welcome your comments on this blog.

Usually we are thrilled when the phone is ringing non-stop, but this week is different because the callers and their circumstances are different. We are used to talking to people that are stressed or even understandably panicked because tax debt, levies, liens, IRS mail, etc, but this is different. The phone has been ringing off the hook this week because these callers are trying to reach Tax Relief Associates out of California. We explain to them we are different company that is incorporated in the State of Washington, but these people want to talk more, so we listen. (more…)