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So, a lot of the problems that we’ve been having recently are with some of these identity thefts scams where people will make unsolicited phone calls to individuals and say, “We are with the State of California” or in some cases, “We are with the IRS and we have a warrant out for your arrest.” State collection agents don’t do that. What I tell my clients when I get a panic phone call that’s just saying, “You told me that you were supposed to represent me” is I tell them that, “If they really want to come out an arrest you, they don’t give you the common courtesy of giving you a phone call, where ins what they do instead is they send the guys with windbreakers and handcuffs to your door and just go ahead and pick you up.

So you may have seen those ads on TV where a company will offer to solve your tax liabilities and you’ll pay pennies on the dollar or they’ll announce the start of a new fresh start program for taxpayers and make all these wow promises. And I don’t want to call out everybody in an industry by saying that they’re illegitimate, because there are a couple of them that are really good at tax relief.

But unfortunately, most of the big ones, and most of the ones you see on TV, in fact, almost all of the ones you see on TV, are not that legitimate. The biggest problem that they have is a lot of the people in those industries aren’t attorneys.

So, in order to practice in front of the IRS, you either need to be an attorney, you need to be a CPA, or you need to be what’s called an enrolled agent. And an enrolled agent sounds like you’re sworn into the government, but the reality of the situation is all you have to do is take a test, and once you take the test and you get your certification, then you’re free to practice.

The biggest problem with a lot of these tax debt relief companies is although they claim that they’re supervised by attorneys, there’s usually one attorney and they’re usually working all of these cases without any real oversight and without really doing anything. And I say that not to despair the industry, I say that from experience, because a lot of the clients that we get in here that come from tax debt relief companies, They get charged like 10 grand and the company doesn’t actually do anything for them, but just makes the situation worse.

So the biggest problem with tax debt relief companies is you don’t know who you’re dealing with. You talk to one person, that person usually is a salesperson. They’re trying to get you to do something. They’ll break down things in stages. They’ll promise to do an investigation and they’ll give you a small fee and then they quote some extraordinarily high price to get the thing resolved, which is called sucker pricing in the industry. And they’re just not scrupulous. And a lot of them operate with these huge advertising budgets, and they just prey on people.

So when you’re hiring someone to solve your tax problems, number one, you actually want somebody who’s knowledgeable and who’s an expert. You want to make sure that the person that you hire is the person that is actually going to solve the problem for you.

Number two is, why not have somebody with a professional license? Why not have somebody who is beholden to the State Bar Association or the Board of Accountancy or something where there’s an actual level of oversight. We still get clients who do this occasionally, some people will look me up on the State bar website, check my bar license, which I don’t have any problem with. But you can’t do that with a tax resolution company. You don’t know who you’re dealing with. You don’t know what qualifications they have. You don’t know if they have a background in tax resolution. All they have to do is pass a test.

So the long and short of it is there are some good ones that exist out there, but you need to be really careful whom you’re dealing with and about who you’re engaging. Be careful about promises and be careful about pricing that sounds too good to be true.

So we get asked this question a lot and a lot of taxpayers struggle in understanding what I do versus what a CPA does. In our firm we have tax attorneys who are both. We have tax attorneys who are attorneys and they are CPAs as well. Just to highlight why somebody would do that I want to draw the distinctions between what a CPA is and what a tax attorney is. So let’s start with a CPA. CPA stands for certified public accountant and what a certified public accountant is by definition is they’re somebody who is certified to provide financial statements and to the public that is what the term CPA stands for. When you go to accountant school and when you go through the process of getting your CPA license, the focus of your CPA license is naturally on reporting and preparing financial statements. It’s taking information, translating it to a financial statement and having the public have confidence in that statement. So within that process the focus is really on compliance. Accountants make sure that things are filled out and that they’re compliant so that’s why you go to an accountant to prepare your taxes every year. The accountant is charged with taking your information, putting it on a tax return, making sure that tax return is accurate and turning it in and that’s the basic function of what an accountant does. On the other side of things attorneys are focused on advocacy. When we go to law school, we learn about the law. We learn about how to argue, then learn about how to apply facts along and so there’s more of a back-and-forth with an attorney then there is in a compliance setting. With compliance, you are just focused on getting the right answer. On the advocacy side, oftentimes there’s not always a right answer so the two schools of thought are different between compliance and advocacy. Now that’s not to say that CPAs don’t advocate for their clients, although it’s a very rare characteristic.

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