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Tax Resolutions Strategies

Managing Partner

Tax resolutions are a common area of practice for today’s tax firms.  You can see television advertisements promoting major discounts in their resolution strategies.  The firms make all types of promises and make it appear that significant tax reduction resolutions are common place.  This just isn’t true.  We at Fragnoli & Company CPAs in Brentwood, TN have performed a number of resolution plans for clients with tax liability issues.  I personally spent nearly a year working for a tax resolution firm doing nothing but putting together resolution strategies.  The firm I worked for was one of those making these ridiculous promises and setting unrealistic objectives.  I could go on and on about all the ethical issues that I witnessed while working as a senior associate for the company which is why I left after ten months.  The Internal Revenue Service has basically three options to remedying an agreed to tax liability balance:  pay in full, an installment plan or an Offer in Compromise.  The last option is the one that is advertised regularly on television and radio.  In simple terms, an offer in compromise is an agreement between the taxpayer and the IRS to resolve the debt for reduced amount in one lump sum payment or a series of payments over twenty-four months.

The issue that I have repeatedly encountered is one where the taxpayer wants to submit an offer in compromise but does not qualify.  I have seen where these high volume resolution firms take a large deposit from a taxpayer, make them some absurd promise about a huge discount to the liability without even reviewing the financial condition of the taxpayer and their ability to earn, don’t reach any true resolution and somehow bill out the retainer leaving the client with no resolution plan.  Readers please understand this, resolutions are complicated and difficult.  The IRS (and other tax agencies) do not resolve a liability to a discount easily.  However, when done properly the degree of success in reaching an offer in compromise can be high.

We recently resolved a tax liability in excess of $65,000, including penalties and interest, for about $22,000, a $43,000 discount.  It was a lot of work but we detailed the file completely and asked for a reasonable settlement.  It can be done. I urge anyone reading this article who has a tax liability issue and is seeking a tax resolutions firm to help them devise a resolution strategy to research the firm closely.  Seek out enrolled agents or CPAs who have extensive experience in these matters.  If they promise you the world and want a retainer before they even inquire about your financial position, run away as fast as you can.  No true professional will give an opinion without asking you about your financial situation and ability to earn over the next few years.  If you are in need of these services, we at Fragnoli & Company, CPAs in Brentwood, TN would love to speak with you about this service.  Give us a call at (615) 377-0705 at let’s talk.