This may be the most difficult question you face. After all, you are in a very vulnerable position. You owe taxes, you're scared of the IRS, you don't know what to do and now, someone wants your money to resolve your tax problem. The question is, how do you decide who to hire? Better yet, should you hire anyone at all or should you take care of the matter yourself?
If you follow these steps, you'll be in a better position to decide how to make the right choice:
1) Make certain that the person to whom you are speaking is a knowledgeable tax professional. The person that handles your case MUST be an EA (Enrolled Agent), CPA or attorney. No one else is legally able to represent taxpayers before the IRS;
2) Don't sign a contract or pay a retainer until and unless you have thoroughly discussed the matter with a tax professional. It is our policy to give free consultations (by phone or e-mail) to anyone with a tax problem. While other tax pros may not do that, be certain that they have a complete understanding of your case and your financial status before giving them money;
3) Find out whether they specialize in IRS collection division problems and if they have actually had Offers in Compromise accepted. *** We handle audits & complicated returns for non-filers and IRS collection division problems. The vast majority of tax pros do NOT handle IRS collection division matters. The vast majority of our clients Offers have been accepted. You wouldn't see a dermatologist for a heart problem. Hire someone that specializes in IRS collection division problems;
4) Several firms help you complete forms, but do not take Power of Attorney and CANNOT talk to the IRS on your behalf. In fact, most of them are not even licensed to talk to the IRS! While a few taxpayers may benefit from a service like that, if you have a serious IRS problem, hire a LICENSED tax pro only;
5) Don't listen to promises that "we'll get all the penalties and interest wiped out" or "we guarantee we'll get all levies and liens released". Anyone can say anything and often will to separate you from your money.
Be careful. There are many shady tax practitioners operating over the web. So, what's the truth? Penalties can be abated, but only if you have "reasonable cause" as defined by the IRS. I have been successful in getting penalties wiped out only because I submit those requests only when it is appropriate. Interest is virtually never abated. Liens are released only after the tax liability is satisfied, although new procedures just enacted into the law allow you to appeal a lien filing. Levies are usually released after you give the IRS what they are asking for such as a financial statement or delinquent returns. But, I never guarantee a levy release until I know the details of your case.
For your own sake, only do business with a licensed tax practitioner that is in compliance with IRS regulations. Be skeptical. Ask questions and if you don't like what you hear or if the promises sound too good to be true, keep searching. Finally, you can hire someone anywhere in the country. Any licensed tax professional can represent you in a Federal tax matter regardless of where you live.
***PLEASE UNDERSTAND THAT NO ONE CAN TELL YOU THAT YOU QUALIFY FOR AN OFFER IN COMPROMISE UNTIL AND UNLESS THEY HAVE REVIEWED A COMPLETED AND VERIFIED COLLECTION INFORMATION STATEMENT. THE VAST MAJORITY OF INDIVIDUALS DO NOT QUALIFY FOR AN OFFER. WHILE WE HAVE HAD PLENTY OF OFFERS ACCEPTED, MOST OF OUR CASES WILL BE RESOLVED WITH AN INSTALLMENT AGREEMENT OR PLACEMENT IN A TEMPORARY UNCOLLECTIBLE STATUS.***