Learn How To Distinguish Tax Relief Providers
The tax relief industry has undergone lots of change over the past few years. Americans have faced increased financial pressures. Lots of individuals and businesses failed to pay their taxes as a result. In response, countless numbers of tax companies began popping up to absorb the unprecedented demand for tax services. Late-night TV and radio advertise, that they can "settle your tax debt for pennies on the dollar." We couldn't make sense of which tax companies are good and which are bad, so we wrote this review
Tax Relief Companies - Choosing the Right One for You
Professional tax firms come in three sizes: Law firms, CPA Firms, and Hybrids. The first two types are self-explanatory. Most people know what a CPA is and what an attorney is. And since there's really no industry-standard name for the latter category, let's just call them hybrids. Which of the three categories is the best fit for you? Let's review one by one.
Law Firms
A law firm is made up of ONLY lawyers. A law firm may employ assistants, like paralegals, but a tax attorney is always the person ultimately responsible for any tax work he or she performs. This can be a real advantage. All attorneys are subject to the ethics rules and disciplinary action by their state bar association..
The advantages to retaining a law firm or attorney are that (i) the attorney is the one ultimately responsible for your tax work, (ii) you may file grievances with the sate bar if the attorney screws up, and (iii) lawyers must abide by strict ethics rules. Theoretically, they should work according to the highest of standards. The disadvantages include that law firms and attorneys may be more expensive than the other two types of tax firms (discussed below). Moreover, most law firms (or attorneys, for that matter) do not focus exclusively (or even primarily) on tax relief work, so these attorneys often lack some of the skill and expertise needed to fight the IRS.
CPA Firms and CPAs
At CPA firms, you will find CPAs (i.e., certified public accountants). That seems obvious enough. But you may also find tax attorneys too. Like law firms, there is a professional behind the scenes at CPA firms who is the one ultimately responsible for tax work performed on your behalf. The advantages and disadvantages of CPA firms are similar to those of law firms, except the method of reporting grievances with CPAs isn't as well defined as it is for attorneys. CPAs are typically less expensive than attorneys.
"Hybrid Firms"
The hybrid firms include tax relief firms that are not law firms and are not CPA firms. Tax relief firms may employ tax attorneys, CPAs, and so-called "Enrolled Agents." Enrolled Agents are tax professionals certified by the IRS. They are not attorneys or CPAs, but they may represent taxpayers before the IRS.
Most tax relief firms fit in the "hybrid" category. Tax firms that advertise on the internet and radio are made up of tax attorneys, CPAs and enrolled agents and thus are hybrid tax relief firms. With few exceptions, they control the market. The advantages are that these companies generally charge less in their fees than CPAs or tax attorneys generally do. Enrolled agents are very good at representing clients in tax matters since it is often their specialty. The disadvantages are that unlike law firms and CPA firms, these hybrid firms are largely unregulated, so there's no clear channel to file grievances. Since they are unregulated, many of the hybrid firms are bad and if they rip off a client off, there's little the client can do, except the traditional routes of going to the BBB or other quasi-regulatory bodies.
Tax Relief Firms - Is it a law firm, a CPA firm, or a hybrid?
Determine whether a certain tax firm is a law firm, a CPA firm, or a hybrid firm! It should really be that easy. Don't assume that just because an attorney or CPA works at the tax firm, it must be a CPA firm or law firm. As explained above, attorney can work at any of the above firms, as can a CPA. Second (and the most obvious), just ask! They will tell you how they are organized.
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