10 Tips for Hiring a Tax Representative
Tax representation is becoming like the condiments aisle at your local grocery store.
There are too many choices and no way to tell what’s best.
Well, that’s what this post is for.
Here are 10 do’s and don’ts to follow before hiring someone to represent you before the IRS:
1. Do ask for a free consultation - You should not be required to pay anything to a Tax Lawyer, Enrolled Agent or CPA just to find out whether you need to hire that Tax Lawyer, Enrolled Agent or CPA. The purpose of the initial consultation is to help each party decide whether or not he or she wants to accept the engagement.
The initial consultation benefits the lawyer as much as it does the potential client.
No lawyer or tax professional worth his salt would charge you to determine if he wants to take your case.
2. Don’t hire anyone who tries to scare you into “acting now” - We have heard of many cases where the “would be” tax representative told a potential client that he or she could go to jail if they didn’t hire them immediately.
This is immoral.
A good tax representative will make you feel less, not more, anxiety about your stressful IRS problems.
He does this by telling you the truth: There is light at the end of the tunnel and if you are truly committed to getting back on track with your taxes and accounting you can do so and the IRS will be appreciative of it.
Remember, it is extremely rare for the IRS to pursue criminal charges against everyday taxpayers who for one reason or another find themselves behind in their taxes.
3. Don’t hire anyone who uses sales gimmicks to try to get you to hire him - Remember, you aren’t buying a used car or cheap furniture and you shouldn’t be treated as if you were.
You want to hire a serious professional to handle this critically important matter for you, not “Dan’s Discount House of Tax Representation.”
4. Do hire a Lawyer - Many CPAs and IRS Enrolled Agents (as an Enrolled Agent working with a CPA I will be shooting myself in the foot here) are experienced and competent in the area of IRS disputes, but only statements you make to a lawyer are protected from disclosure under the attorney-client privilege. If you “Know” you did something wrong a lawyer will be your best bet. But not all tax lawyers are the same, be sure the one you hire has experience in you situation.
Non-lawyers can be forced to disclose in a hearing or trial everything you tell them.
5. Don’t hire someone who’s advertisements or promotional materials offer “pennies on the dollar” IRS settlements - This is a scam.
These unscrupulous con men are telling you they can do something that they know you wish they could do. In other words, these individuals are trying to manipulate you by telling you what you want to hear, not what you need to hear. It is preposterous that any honest tax professional would or could tell you what she could do for you without first analyzing your case.
In truth, they MAY be able to settle your case through an offer in compromise, but you will have to pay them retainers, and are not guaranteed success. If you fail, they do not give you a refund.
6. Don’t hire anyone who sends you an unsolicited letter in the mail after you’ve been served with an IRS lien - These people scour the newspapers and public records looking for anyone who has had a tax lien filed against them. Then they send mass mailings to them offering - you guessed it - “pennies on the dollar” settlements.
A good and reputable IRS representative doesn’t need to do cold calls to get clients.
7. Do contact the local bar association or BBB to find out if the representative has been sanctioned for misconduct- This is another reason to hire a lawyer/CPA/Enrolled Agent. Non-lawyers and non-CPAs and unenrolled tax professionals are not regulated and, therefore, it is impossible for you to find out their disciplinary history.
Given a choice, isn’t it just common sense to hire a tax professional who actually belongs to a profession that closely monitors his or her ethical behavior and competence?
8. Do ask detailed questions about the representative’s background and experience - You have a right to know everything about a potential tax advisor before you give them any money (see number 1, above).
Ask the representative the following questions:
a. Have you ever tried a case in United States Tax Court? - If the answer is no, it tells you that if your tax dispute doesn’t get resolved at the administrative level you will have to hire another representative to take the matter to Court.
b. Can the IRS or the Courts make you disclose what I say to you? - Only a tax lawyer can say “no” to this question. (See number 4, above)
c. Have you ever been reprimanded or sanctioned by any state bar association or department of professional regulation? - You can check this out yourself, but it’s a good idea to ask the potential representative to gauge his reaction. If he gets defensive, you’ve got your answer.
9. Do ask to meet with the person who will be working on your case - The person you have the initial consultation with may be an attorney, but the person he or she delegates the work to might not be. There is nothing wrong with a lawyer who has non-lawyers assist him or her in handling case files, but you have the right to meet the person who will be doing either all or part of the work in your case.
10. Don’t hire the first person you speak with unless you are certain it is the right person for you - Tax matters are simply too important for you to hire the first person you speak with merely because it’s more work to speak with several candidates.
It’s always a good idea to get a second opinion.