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What to Ask and What to Know

Just as it’s true that not every physician is suited to address every medical need, not every tax pro is suited to tax problems resolution. In fact, the vast majority of tax professionals work in the area of tax return preparation. This field, while challenging in its own right, has little to do with problems resolution. The worlds of tax preparation and tax resolution are a universe apart.

That’s why Tax Freedom Institute professionals spend substantial time, effort and energy leaning the nuances and intricacies of dealing with the IRS and state tax enforcement agencies in the area of problems resolution and taxpayers’ rights issues. Our TFI Consulting Members are uniquely equipped to help you resolve any tax problem you might have.

Hire the Right Professional
Questions for a Prospective Representative

Here are some questions to ask a prospective representative to find out whether he can provide the level of service you need.

Tax Planning

How much experience do you have? Look for a pro with at least three to five years experience dealing with IRS in the areas of audit, appeals and collections work. When searching for a tax preparer, look for one with experience preparing returns for your particular business, job or profession. And always look for a full-time professional, not merely a part-timer preparer.

What percentage of your tax preparation clients get audited? If more than 2 percent of one’s clients get audited, that may indicate a problem in the pro’s tax preparation practices. If the ratio is much higher, you might ask whether the pro was ever the subject of an IRS examination into his preparation practices.

What is Form 8275 and should it be filed with my tax return? Form 8275, Disclosure Statement, is the audit-proof form. It allows you to provide information with your tax return that answers questions in the return. This way, your return is both audit-proofed and penalty-proofed. For more information, see Dan Pilla’s books, The IRS Problem Solver and How to Double Your Tax Refund.

If I lost records for an expense, can I still claim the deduction? Yes. You have the right to reconstruct lost records and claim the deduction. In fact, the law actually requires reconstruction in some cases. See Dan’s book, IRS, Taxes and the Beast.

How do affidavits help audit-proof a tax return? Affidavits are sworn statements providing information on issues for which there is no receipt, such as business miles or a home office. Notarized statements provide “testimony” on deductions that help solidify your claim. See The IRS Problem Solver and How to Double Your Tax Refund .

Can I get an extension of time to pay taxes if I can’t pay by April 15? Yes. IRS Form 1127, Application for Extension of Time to Pay, can get you up to six additional months to pay, without penalties (though interest accrues). See Dan’s book, How to Get Tax Amnesty.

Problems Resolution

What is the best way to prevent a wage or bank levy? Form 9465, Installment Agreement Request, can establish either an installment agreement or uncollectible status, both of which eliminate the potential for levies. See How to Get Tax Amnesty.

Can federal income taxes ever be discharged in bankruptcy? Yes. The ability to discharge tax debts is dependent upon their age, your equity in assets and certain other “timing” elements. See How to Get Tax Amnesty.

How can an Offer in Compromise help my problem? The OIC is a means of negotiating a reduction of your tax bill. Most tax pros do not realize that there are three different variations of the OIC. The best one for you depends on the facts of your case. See How to Get Tax Amnesty.

Is there a means to get emergency relief if IRS action is causing hardship? Yes. The Taxpayer Advocate Service can order the IRS to stop action that is or will cause “significant hardship.” See How to Get Tax Amnesty.

Working with Your Tax Pro

Now that you’ve hired a tax pro, here’s how to optimize your relationship.

Be accurate and specific. You’ll be asked to provide financial and other information. Be detailed, specific and accurate. Don’t leave anything out. Let your tax pro determine whether a given fact is relevant. Bear in mind that the forms you submit to the IRS must generally be signed under the penalties of perjury.

Be punctual. Your representative will be working under deadlines. Provide all requested information in a timely manner.

If you don’t understand, ask. Don’t assume anything. If you don’t understand something, ask questions until you do. It’s best to have a list of question in hand when visiting your representative to cover all your concerns. Don’t be intimidated by your representative. His job is to help you.

Have a clear fee agreement. Make sure you understand your obligation for fees and costs. Don’t be afraid to ask for this in writing. The agreement should also state the tasks your representative will perform.

Always maintain your original documents. Do not give your original documents to your tax pro. Provide clear photocopies only unless originals are needed for trial. Even then, make sure you retain clear photocopies of all your original documents.

Know what you’re signing. You’ll be asked to sign numerous documents, including a Power of Attorney, settlement documents and perhaps various waiver forms. Be sure you understand all the implications of every document you sign, especially settlement documents and waiver forms.

Obtain copies of all documents. Make sure you have an agreement with your pro to get copies of all documents he submits on your behalf. Also get copies of all documents he receives from the IRS.

Don’t expect miracles. Problems resolution takes time, mostly because the IRS moves slowly. But it is reasonable to obtain updates on your case as it progresses.

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