When you're dealing with an IRS tax debt, it's easy to get overwhelmed. On top of the debt, you know that the longer it goes unpaid, the higher the penalties and interest are going to be. If you're already stretched thin financially, you have to figure out how you're going to piece together a payment by delaying or skipping other bills. You have to shift your priorities, which isn't easy, especially if you're responsible for a spouse, children or other members of your family.
Despite the anxiety that comes with robbing Peter to pay Paul, the IRS expects you to exhaust every resource to handle your tax debt and handle it now. If you're working a full time job, you find yourself stealing time with your family and friends between hours spent researching how to dig yourself out of the tax hole. Finding a tax resolution company to help can be tricky, and the impulse may be to go with the one who is offering the best terms. You might even see the phrase, "pennies on the dollar", but beware.
There's a Sucker Born Every Minute
While there are a variety of reputable tax services to choose from, there are also plenty to avoid. It's helpful to know what to look out for as you're conducting your search. Making the wrong choice can mean wasted time, lost money and, worst of all, further delaying a resolution for your tax debt. As you're hunting for help, steer clear of any of these red flags:
Pipedreams – If the company you're looking at is advertising too-good-to-be-true settlement offers (again, think "pennies on the dollar"), you should probably keep looking. Obtaining a reduction from the IRS is certainly possible, but there is no magic wand that will shrink your debt to almost nothing. You may very well qualify for some type of settlement offer, but a reputable company won't promote unrealistic IRS bargains.
Time Is a Factor – A quick check of a company's history – how long they've been in business, how many cases they've handled and the types of cases they're experienced with – will be very telling. Be wary of brand new companies, particularly those with a limited background in tax resolution. Remember to focus your interest on those organizations who advertise help with back taxes, formal tax resolutions and IRS agreements. If the company you're looking at doesn't specialize in these practices, or hasn't been at it for long, keep on moving.
Recognition – The Better Business Bureau is an excellent resource to learn about a company's reputation. As this is a nonprofit organization, it presents resolution-seekers with a nonbiased overview of a company's history and client/customer satisfaction ratings. If the tax resolution company you're looking at has a low score with the BBB, or they've had a high rating for only a brief time, you'll want to proceed with caution. There are plenty of organizations that have a respectable track record, according to the Better Business Bureau, as well as time earned for good behavior. Stick to the tax companies who have proven both performance and history.
Questionable Fees – Once you've done your homework and feel confident with your chosen company, you're ready to give them a call. Many licensed tax professionals will offer a free consultation, but you'll want to confirm this at the beginning of the conversation. After you've described your tax problem, the representative will provide you with a suggested resolution before quoting service fees. Pay close attention to this. A legitimate tax resolution group will quote you a flat fee for their services and give you a detailed explanation of what you're paying for. Be sure to make notes on both the services and fees, and get the name of the person you're speaking to. Of course, you should feel free to ask the representative to provide you with any additional background on the company you're dealing with.
Doing your research and understanding the resolution you're getting will take a little time, but will pay off for you in the end. Making an informed decision about the company you're working with will ensure you don't lose time or money – precious commodities if you've got a tax debt. The specialist you ultimately choose should be realistic and straightforward with what kind of resolution you can expect. He or she will also give you an estimated timeframe for your case to be completed. Understanding these details will provide you not only peace of mind, but a clear understanding of the outcome. Making a wise decision with tax debt help is critical, perhaps more than any other financial issue you could face.