With liability becoming a large problem not only for individuals, and businesses there has been a proliferation of liability management and liability settlement companies promising to reduce your liabilities by saving you thousands in interest and penalties. Moreover, many are even claiming to be tax experts or IRS tax professionals who can help you resolve the major tax problems you are having with the IRS or State.
Let’s first discuss the liability settlement or liability management companies in general. Many from the mortgage industry moved over to liability settlement and liability relief companies during this economic downturn. They work by charging someone in liability typically 10-15% of what they owe in fees for their”liability relief services.” These services often entail negotiation and the settlement of your liabilitys with your creditors (creditors could be credit card companies, health care providers, banks etc). Many charge other lavish fees and often times leave you with more liability than when you started. Furthermore, these liability reduction companies will often times settle with one creditor but leave the other creditors unrestrained in calling and bothering you for their money. Whether you have worked with a good company that followed through with promises or you haven’t, they are not best positioned to help you with major tax problems such as IRS back taxes.
Working with a liability settlement company to settle or resolve your tax problems is like using a stock broker to manage your finances. Why? Dealing with the IRS is very different than dealing with a credit card creditor or bank. The IRS has more powerful collection mechanisms, takes priority in collecting on liabilitys, and has a set of formal procedures and mechanisms to be followed. Liability settlement companies have experience in working with everyone but the IRS and their “liability consultants” most likely haven’t even gone to school to resolve these financial issues.
At least with a tax resolution company, or a good one, professionals on staff range from tax attorneys, CPAs, tax accountants, Enrolled Agents, to former IRS agents. CPAs, tax attorneys, and Licensed Enrolled Agents are licensed professionals. There are many new “tax relief” firms out there who have tax consultants who will qualify you and document the problems you are having with the IRS or state — then if you qualify they will put you in the hands of a licensed tax professional who can help you file, pay, and settle IRS taxes. When selecting a tax resolution firm make sure they have a diversified set of tax professionals, a money back guarantee, and reasonable fees ($3000 is the industry standard fee depending on the service). Ask them what their success rates are for certain types of tax mechanisms (Installment Agreements, OICs, Partial Payment Installment Agreements, filing unfiled tax returns etc) Furthermore, make sure they don’t charge these sticky retainer fees (deposits before service), and at least offer a free consultation before committing to anything.
Leave a Reply
You must be logged in to post a comment.