Tax resolution firms are causing huge problems for consumers in our country. They charge excessive cost from meek consumers and almost never resolve anything. These firms are relatively in fresh development.
Tax resolution frauds are advertising tremendously, they offer to settle debts from government tax and asking for a few percentages of the amount owed, even for “pennies on the dollar.” There are ads broadcasting about the limited availability of a “special IRS program” that settles the remaining balances of tax. If you come across firms claiming that you can millions of dollars by working with them, run away as quickly as you can.
These advertisements, for sure, are false. An offer in compromise is seldom accepted by the IRS. There are many preferable ways of acquiring subsidy from a threatened or actual levy (seizure) of the wages or bank accounts of a taxpayer. But the target of the ads which are the ignorant and innocent people do not know about this. The IRS levies wages or bank account, and numerous taxpayers are facing this IRS levy. A taxpayer who contacts the tax resolution firm is associated with one or maybe two high-pressure salesmen. The taxpayer is guaranteed that his tax debts will be cleared up and reconciled by the firm. The salesmen obtain dividends and huge bonuses. Tax resolution firms usually take a large retaining fee, usually five thousand to ten thousand dollars. Somehow, the taxpayer appears with the money. The fact that an offer in a settlement will even be submitted to IRS in the taxpayer’s stead is uncertain.
The people working for the tax resolution firm send a letter with artificial deadlines to the taxpayer asking for details. The tax resolution firm does not care anymore when the taxpayer gives no response to the letter. The tax resolution firm instead closes its file and considers the proceeding dissolved, the taxpayer realizing no relief. If the taxpayer begs for reimbursement of the payment handed over to the tax resolution firm, the firm persistently refuses. All of this is in accordance with the terms and conditions in fine print that the taxpayer was required to sign during the retainer agreement. Also, an undeniable language that exculpates the tax resolution firm from accountability to its client is in that fine print.
The taxpayer remained in debt to the IRS. As a matter of fact, the remaining debt now is now higher added with gathered fines and interests.
The fees are paid to the tax resolution scam and the taxpayer is out of it.
The fact that there are many cases against tax resolution first comes out as no surprise. The largest of such firm with 325 local offices and $100 million in yearly income is the J.K Harris & Co., of Charleston, South Carolina. The founder of the firm is John K. Harris, CPA. He founded the firm in 1997.
Throughout the country, the firm has been charged countless times. A class action presented in Charleston County, South Carolina Circuit Court was settled by the firm for $6.2 million in 2007. It settled a suit presented by the attorneys general of 18 states for $1.5 million in 2008.
In 1991, Attorney Roni Deutch, of North Highlands, California, launched her tax resolution firm in her condo. Today it luxuriates in a yearly income of $25 million. Especially in California where she is known as “the tax Lady”, Deutch utilizes TV advertisements heavily. Deutch has become a target of many lawsuits. She compromised a case that the New York City Department of Consumer Affairs brought in 2007 agreeing to pay $200,000 restitution to consumers and in penalties to the City for $100,000. Deutch was prosecuted in Sacramento County Superior Court by the California Attorney General looking for $33.9 million in reimbursement, Civil Penalties and a permanent injunction on August 25, 2010. It was eye-opening pleadings and exhibits.
Houston’s TaxMasters, Inc. which was founded by CPA Patrick Cox just a few years back, sold its stock in a public offering in 2009. Without doubting the money gained from the stock offering fund national advertising campaign of TaxMaster. In over 1,000 consumers’ stead, the Texas Attorney General sued TaxMasters.
JK Harris, Deutch, and TaxMasters were given the most minimal rating of “F” by the Better Business Bureau. the California Attorney General's Complaint affirms that, by August 2010, 69% of customers who held the Deutch firm in 2006, 67% of customers who held the Deutch firm in 2007, 63% of customers who held the Deutch firm in 2008, and 51% of customers who held the Deutch firm in 2009 had either dropped the association's administrations or been ended as a customer of the firm. A serious plan of action.
It is unexplainable and embarrassing that the IRS has been quiet about the tax resolution firms. These firms make themselves rich with the money that had to be used for paying taxes, to the damage of citizens and the Government treasury.
Citizens are best served by a respectable lawyer of tax - the best group of credentials in tax law is CPA, JD, and LLM. Lawyers have knowledge about law, and how to investigate it and testify it. The art of advocacy is what they studied. Lawyers are dependent upon the disciplinary power of their state bar.
A privilege is granted to the conversations between a client and his lawyer, which means that never can both the client or the lawyer be forced to leak their conversations, except if the privilege has been renounced. The federal rules for conversations of a client between an accountant or a tax consultant are not privileged.
An offer in compromise is pretty seldom in a taxpayer’s best interests, as already noted. Only when the taxpayer is forever crippled to do any work is the time the IRS acknowledges one. The creation of a proposal in compromise imposes the 10-year regulation of limitations on tax accumulation. If the taxpayer’s income is above what IRS deems the impoverishment stage and the offer is for a lump sum, the taxpayer has to pay a retainer of 20% with the offer. It keeps the retainer when the IRS refuses the offer.
The taxpayer’s representative should call IRS collections when the IRS sends out an announcement to impose or a notice of imposition and let them know that the taxpayer wishes to come into an installment deal with the IRS or that the taxpayer is qualified for paying nothing to the IRS (this is what is known being posted as “currently not collectible” or “CNC”). It is the duty of the representative to hold on collection action to provide the representative time to hand in form 433-A to the IRS for the taxpayer. Generally, the IRS will give two weeks for this reason. If it necessarily requires more time a request can be made.
The collection staff of the IRS is generally sensible individuals. If the taxpayer’s representative thinks that the installment payment amount set by an IRS collection employee is too high, the representative can have a discussion with the manager of the collection employee. But if talking to the collection employee’s manager doesn’t resolve the cost of the employee’s installment payment, the matter can be appealed to the IRS appeals officer.
The IRS removes the taxpayer’s account from collecting status the moment IRS and the taxpayer enter into an installment agreement or the taxpayer’s account is posted as CNC. In some cases that a notice of impost against the property of the taxpayer has already been issued, the IRS will publish a dismissal for it. But there is a prospective-only effect of a dismissal of the impost. Thus, a dismissal will cease an ongoing wage impost. But if an impost is linked to a bank account, the IRS then is the owner of the balance in the account, regardless of a dismissal of the impost which was issued by the IRS later.
While an installment agreement is being arranged and while it is effective, the 10-year regulation of limitations on tax accumulation continues to run, and also as while an account’s status is CNC. The IRS will grasp any federal tax reimbursements due during that time, and it may document notice of federal tax lien against the taxpayer in the local register of deeds office, however, any other collection action against the taxpayer will not be taken.
It is important that the taxpayer promptly file all his federal income tax returns and pay all tax reported on those returns as soon as the IRS enters into an installment agreement with a taxpayer. The client being noncompliant will make his installment agreement or CNC posting void, and return his federal tax account to collection statues.
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