I thought that I would share with you this Craigslist post that one of my clients forwarded to me:

TAX RESOLUTION ASSOCIATES

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Tax resolution associates wanted for Boulder financial company. ATTENTION: YOU DO NOT HAVE TO HIT A $25k OR $30k FOR BONUS!!!!!!!!!!!We pay 15% at $15k, 20% at $20k and 25% at $25k. Also you will receive a bonus for hitting $15k, double bonus for hitting $20k and a triple bonus for hitting $25k. We’re not greedy like the other companies and we pay our employees well in addition to treating them as professionals. No screaming or yelling at our place of business. Put the emphasis on your clients first instead of pulling money for your company.

Job location is BOULDER, CO
Compensation: $2100 base plus comm & bonus; Salary range $40-96,000.

Note the absence of any qualifications or experience requirements in the job posting. Maybe it is just me, but this is not the type of person or firm that I would want to help my friends or family (or anyone else) with a tax problem. While I applaud this firm for not permitting “screaming or yelling at [their] … place of business,” this posting highlights some of the problems in the “tax resolution” industry.

As I have mentioned on this blog before, I often encounter taxpayers who hire “tax resolution” firms to “resolve” their tax debts and troubles only to find that the so-called “resolution” firm (1) merely submit basic forms to the IRS, (2) do not advise the taxpayer of all of their options, (3) fail to respond and/or keep in contact with the taxpayer, and (4) charge the taxpayer several thousand dollars for this “service.”

There are a lot of non-lawyer and non-CPA professionals that hold themselves out as “tax resolution experts.” There seems to be a few new firms everyday. Unfortunately there is little to no regulation over these firms — other than bringing civil suits against them, an option that is most often cost prohibitive.

This is particularly troubling because many taxpayers who end up using these firms do so after recovering from several years of financial hardship and all they really want is to come into compliance with our tax laws.

There can be little doubt that this industry needs regulation. Much of the problem seems to stem from these firms working on a volume basis and their paying employees on a commission payment arrangement.

By volume basis, I mean that these firms focus all of their efforts on marketing and very little effort on providing tax related services. One cannot type the word tax into a search engine without seeing these firms’ advertisements.

I myself have called a few of these firms to see what services they offer, etc. In one conversation I asked the representative who “had handled thousands of cases,” how many tax related court cases he had read recently and whether he could cite any tax code section by number. The answers from this guy were: “tax case, what are you talking about. I don’t read tax cases” and “code section, we don’t do code sections here.” The conversations usually go down hill from there. If you ever get the time and you want a laugh, you should try calling these firms….

As for commissions, it is not proper for anyone to work on a commission basis to help taxpayers come into compliance with our tax laws. The commission work structure incentivizes employees (1) to use hard sale tactics to convince taxpayers to sign up or continue with the firm and (2) to charge up unnecessary hours or expenses or charge outrageously high flat fees.

In an average month I am approached by about five to ten clients who ask me to review their cases as they are not happy with the work a “tax resolution” firm has performed. Upon reviewing these cases I often find that my rates are a fraction of what these other non-lawyer firms charge, and the “service” from the non-lawyer firm was “incomplete” at best (and that is the polite version).

For example, after reviewing cases from these firms I often find that: (1)the IRS did not properly assess the underlying tax therefore no tax was due, (2) the statute of limitations for collecting the tax had long since expired so no tax was collectible, (3) the IRS had recorded the incorrect tax information, when corrected showed no tax due, and (4) the tax liability was fully dischargeable in bankruptcy which puts the taxpayer in the superior negotiating position with the IRS, which was never mentioned in the negotiation process.

The IRS has long complained about these firms as well. In fact, the problem is so bad that IRS employees will often grant huge concessions to taxpayers merely because the taxpayer was formally represented by and harmed by a “tax resolution” firm. Often when I mention that my clients were formally represented by these firms to IRS employees, the typical IRS employee response is “not another ______________ [company] client, that is the ________ [number] of these taxpayers this month.”

So I am not sure where that leaves us. Personally I think that it is morally wrong to take advantage of taxpayers when they are just trying to get back on their feet. Maybe someone will read this and start talking to their legislators….

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