The Guarantee Red Flag
No legitimate tax professional can guarantee a specific outcome. If someone guarantees they will settle your tax debt for pennies on the dollar before reviewing your financial information, walk away. The IRS makes the final decision on offers in compromise, not the tax professional. Anyone who guarantees a result is either lying or does not understand how the process works.
The Upfront Fee Trap
Some firms charge large upfront fees of $5,000 to $15,000 and then do little or no work. They collect the money, file a power of attorney, and disappear. Months go by with no progress. When you call, you get transferred to a different person every time. Nobody knows your case. Meanwhile, interest and penalties are accruing and the IRS is still coming after you.
The Bait and Switch
The salesperson tells you that you qualify for an offer in compromise to settle your $100,000 debt for $5,000. You pay the fee. Then the actual tax professional reviews your case and tells you that you do not qualify for an offer. They put you in an installment agreement, which you could have set up yourself for free. The fee was for nothing.
How to Protect Yourself
Verify credentials. Tax attorneys should have an active bar license. CPAs should have an active CPA license. Enrolled agents should have an active enrollment with the IRS. Check disciplinary records. Read the fee agreement carefully before signing. Ask specifically what services are included and what happens if the initial strategy does not work.
Ask the firm who will actually work on your case. At many large firms, the person you talk to during the sales call is not the person who handles your case. You may never talk to the person doing the actual work. A reputable attorney handles your case personally or supervises it closely with regular updates.