The IRS is increasing its efforts to collect delinquent taxes from both individual taxpayers and businesses. If the IRS has contacted you, you may have also received calls from national debt relief companies. These companies promise to settle your tax debt with the IRS if you pay them a hefty retainer – sometimes thousands of dollars. You may wonder if hiring one of these companies will solve your tax issues, or if you should hire a Maryland tax attorney to negotiate directly with the IRS.
At Gabaie & Associates, LLC, we protect your best interests while creating an effective strategy to solve your problems with the IRS.
National debt relief companies advertise that they can help people in financial distress, often claiming they can settle your debt with the IRS for pennies on the dollar. They demand an up-front fee to secure their services to reduce or eliminate your tax debt by applying to IRS hardship programs for you. They may also require you to make monthly payments to them.
The Federal Trade Commission (FTC) issued a Fraud Alert regarding tax relief companies, warning consumers not to use these companies to settle their IRS tax debt. Consumers have reported to the FTC that, even after they paid significant up-front fees, some of these companies made unauthorized charges to their credit cards or withdrew money from their bank accounts.
Debt relief companies use the Notices of Federal Tax Lien list to obtain your contact information. Then, they have one of their sales people contact you, implying they can solve your tax problem and you will only have to pay a fraction of what the IRS says you owe. The sales person's primary goal is to get you to pay the retainer, not to provide any real solution.
The FTC further warns that many of these companies never file any paperwork with the IRS requesting participation in any of the IRS's programs. These companies do not offer refunds if they cannot or do not settle your tax debt, leaving you in a more precarious financial position than you were before you contacted them.
The Difference Between an EA, a CPA, and a Tax Attorney
The IRS allows an Enrolled Agent (EA), a Certified Public Accountant (CPA), or a tax attorney to represent you. However, you will not receive equal representation from each of these professionals.
An EA is a federally-licensed tax practitioner who can prepare tax returns for individuals and other entities. Although the IRS gives them the right to represent taxpayers, their services best serve you for filing your annual taxes.
A CPA has a higher education degree, often a Bachelor's degree in business administration with an accounting major. They can handle your tax return, accounting needs, and IRS audits.
Unlike an EA or a CPA, when you speak to a tax attorney, you are covered by the attorney-client privilege, so you can disclose confidential information, allowing your attorney to find the best solution for you. An EA or CPA may be subpoenaed to testify against you in court, so anything you disclose to them could potentially be used against you.
National debt relief companies may have EAs or CPAs on staff, but they do not have tax attorneys to represent you. Some national debt relief companies masquerade as law firms, and one indicator that this is occurring is if you cannot meet face-to-face with the attorney representing you.
The Benefits of Hiring a Tax Attorney
A tax attorney can provide you with expert guidance on your unique tax issue, no matter how complex. Negotiating with the IRS requires successfully navigating through the bureaucracy. An experienced tax attorney knows what information to provide to the IRS, which allows you to promptly reach a resolution to your tax issue.
Once you hire a tax attorney, they are bound by professional ethics to act in your best interests. A national debt relief company is working for profit and is not bound by any ethics to act in your best interests.
If the IRS questions you, your attorney can object to any inappropriate questions, again protecting your best interests. A national debt relief company cannot do this for you. You cannot ignore the IRS and expect them to go away. Without effective legal representation, you may inadvertently give the IRS information that hurts your case.
In some cases, in addition to your delinquent taxes, you could be facing criminal charges from the IRS, such as for income tax fraud or tax evasion. These crimes are punished with significant jail time and hefty fines that can irreparably alter your life. A tax attorney can build a strong defense for you, protecting your future. A national debt relief company has no interest in protecting your future. Additionally, if you have other debts and are sued by a creditor, a tax attorney can litigate for you. A national debt relief company will not represent you or defend you in a lawsuit.
Although some tax debts are not discharged by filing for bankruptcy, your tax attorney can discuss this option with you if it is in your best interests. Income tax debt can be discharged with Chapter 7 bankruptcy if:
- you filed a tax return;
- you did not commit any tax evasion or fraud; and
- the tax debt is at least three years old.
A tax attorney can represent you in bankruptcy proceedings, while national debt relief companies cannot. Because bankruptcy does not benefit these companies at all, they likely will not mention that this is an option.
Hire an Experienced Maryland Tax Attorney Today
If you have tax debt, a tax attorney can negotiate with the IRS while protecting your best interests. National debt relief companies make promises they cannot keep, such as settling your back taxes for pennies on the dollar. Hiring these companies puts you at risk of becoming a victim of fraud, placing your already precarious finances in jeopardy.
IRS tax attorney Juda Gabaie has experience building a relationship with the IRS agent assigned to your case while effectively working towards a mutually agreeable solution to your tax issue. If you have unpaid taxes with the IRS, contact us today for a free consultation online or at (443) 345-8291.