Sam Brotman, J.D., LL.M.

Tax Attorney · California Bar #274966 · Brotman Law · San Diego

What Tax Relief Companies Are

A tax relief company is a firm that markets IRS resolution services — Offers in Compromise, installment agreements, penalty abatement, Currently Not Collectible status — typically using heavy advertising. The people doing the work may be enrolled agents (licensed by the IRS), CPAs, or unlicensed staff working under their supervision.

The IRS allows enrolled agents and CPAs to represent taxpayers in examinations, appeals, and collection matters. Within that scope, a competent enrolled agent can handle a lot. The limitation is what they cannot do.

The tax resolution industry is large and heterogeneous. Some firms employ experienced enrolled agents who handle routine IRS collections work competently. Others are lead-generation operations that charge large upfront fees, do minimal work, and disappear. The FTC has taken action against a number of prominent tax relief firms — Optima Tax Relief, Tax Masters, American Tax Relief — for deceptive practices including false claims about OIC success rates and fee misrepresentation.

None of this means every enrolled agent firm is disreputable. The point is that the credential and accountability framework differs from an attorney, and those differences matter in specific situations.

What They Cannot Do

Invoke attorney-client privilege. Communications between a taxpayer and their CPA or enrolled agent are not protected by attorney-client privilege. If the IRS issues a summons for your representative’s files — their notes, your communications, their analysis — those documents can be compelled. An attorney’s files and communications are protected; a tax relief company’s files are not.

Provide a formal legal opinion. An attorney can issue an opinion letter stating their professional legal conclusion about a tax position. That opinion, if qualified, can establish a reasonable cause defense to accuracy-related penalties under IRC §6662. An enrolled agent or non-attorney cannot issue a qualifying legal opinion.

Represent you in Tax Court as counsel. Non-attorney enrolled agents are not admitted to the Tax Court bar. If your case goes to Tax Court — and some disputed audits do — you need an attorney. A tax relief company cannot get you there.

Handle criminal exposure. If the IRS has referred your matter to Criminal Investigation, or if there’s any possibility that civil proceedings could become criminal, you need an attorney. This is not a scenario where enrolled agent representation is appropriate.

The common thread is that each of these limitations matters most when the stakes are highest. For a straightforward collections matter on an undisputed balance, an enrolled agent’s inability to go to Tax Court is irrelevant — the case isn’t going there. But for a disputed audit with legal uncertainty, or an examination that has criminal characteristics, or a situation where you need the advice to be privileged, those limitations become significant.

The Privilege Gap in Practice

Consider the scenario: you’re in an audit with some aggressive positions on your return. You’ve been communicating with a tax relief company. The IRS issues a summons for your representative’s files.

With a tax relief company: your communications, their analysis, their notes about your case — all potentially compellable.

With an attorney: the communications are privileged. The IRS cannot compel them.

The difference isn’t theoretical. It shapes what you can say to your representative, what they can write down, and what the IRS can see.

This plays out in practice in eggshell audit situations, where civil and criminal exposure coexist. The enrolled agent helping you navigate the audit is building a record — notes, communications, analysis — that could be summoned by the IRS if the civil examination turns criminal. An attorney’s record is protected. The decision to engage an attorney versus a non-attorney representative is also a decision about what the IRS will be able to see later.

The Kovel doctrine offers a partial bridge: an attorney can retain an accountant or enrolled agent under their supervision, extending attorney-client privilege to the accountant’s work performed in that context. But this requires intentional structure from the beginning, not a retrofit after the summons arrives.

The Accountability Difference

Tax attorneys are subject to state bar discipline. A formal complaint, finding of misconduct, or suspension is a public record. The state bar can revoke the ability to practice.

Tax relief companies operate under a patchwork of FTC oversight and state consumer protection law. The FTC has taken action against a number of large tax relief firms for misleading claims, but the consequences are typically fines and consent orders, not license revocation.

This isn’t to say all tax relief companies are disreputable — many employ competent enrolled agents who handle routine IRS matters appropriately. It’s to say the accountability mechanisms are different.

Enrolled agents are subject to IRS Circular 230, which governs practice before the IRS. Violations can result in censure, suspension, or disbarment from practice before the IRS. CPAs are subject to state board of accountancy discipline. Both are real accountability frameworks. The difference is that bar discipline for attorneys is a broader and more established regime with a longer track record of enforcement and public transparency.

For a taxpayer evaluating who to hire, the practical implication is: verify credentials directly. For attorneys, the state bar website shows license status, admission date, and any disciplinary history. For enrolled agents, the IRS PTIN directory confirms active status. For CPAs, the state board of accountancy maintains similar records. Don’t rely on what the firm tells you about itself.

When Each Is Appropriate

A tax relief company (or enrolled agent firm) may be appropriate for: routine installment agreement negotiations on undisputed balances, straightforward Currently Not Collectible determinations, penalty abatement requests on simple matters, and routine correspondence audits on clear issues.

A tax attorney is appropriate for: anything with criminal exposure, audits with legal uncertainty or significant amounts in dispute, appeals and Tax Court proceedings, transactions requiring a legal opinion, matters where attorney-client privilege is important, multi-year audits with complex issues, and any situation where the consequences of the wrong outcome are significant.

The dividing line isn’t primarily about the dollar amount, though larger amounts generally warrant more sophisticated representation. It’s about the nature of the problem: is it primarily a factual and documentation issue, or does it involve legal position, privilege, or potential criminal exposure? The former can often be handled by an enrolled agent. The latter requires an attorney.