| The tax relief industry has experienced significant | | | | At CPA firms, you will obviously find CPAs (i.e., |
| change over the past several years. As the economy | | | | certified accountants), but you may also find tax |
| worsened and Americans faced increased financial | | | | attorneys. Like law firms, it's nice to know that at CPA |
| pressures, many people and businesses sought relief | | | | firms, there is a professional behind the scenes who is |
| from the strain by not paying their taxes. In response, | | | | ultimately responsible for any tax work performed on |
| an enormous number of tax companies started | | | | your behalf. The pros and cons of CPA firms are |
| sprouting up to absorb the unprecedented demand for | | | | similar to those of law firms, except the method of |
| tax services. Tax gurus on late-night TV and radio | | | | reporting grievances with CPAs isn't as well defined |
| advertise, they'll "settle your tax debt for pennies on | | | | (but exists nonetheless) as it is for attorneys. CPA |
| the dollar." Despite being tax geeks ourselves, we | | | | firms are generally a little less expensive than law |
| couldn't make sense of which tax companies are | | | | firms. |
| good and which are bad. | | | | "Hybrid Firms" |
| Tax Relief Firms - Choosing the Right One For You | | | | The hybrid firms include tax relief firms that are not |
| Under the broad umbrella of "tax relief firms," there are | | | | law firms or CPA firms. Tax relief firms in this |
| three types of professional firms: Law firms, CPA | | | | category employ a mix of tax professionals, including |
| Firms, and Hybrids. The first two types are | | | | tax attorneys, CPAs, and so-called "Enrolled Agents." |
| self-explanatory, and since there's really no | | | | Enrolled Agents are tax professionals certified by the |
| industry-standard name for the latter category, calling | | | | IRS. They are neither attorneys nor CPAs, but are tax |
| them a "hybrid" is probably acceptable. But which of | | | | professionals that the IRS has concluded (either |
| the three categories is right for you? | | | | through examination or experience) that they are |
| Law Firms | | | | qualified to represent taxpayers before the IRS. |
| As you know, a law firm is made up of ONLY | | | | Many tax relief firms fit in the "hybrid" category. Lots |
| lawyers. A law firm may employ assistants, like | | | | of the tax firms that advertise on the internet and |
| paralegals, but a tax attorney is ALWAYS the person | | | | radio are made up of tax attorneys, CPAs and |
| ultimately responsible for any tax work performed. All | | | | enrolled agents and thus are hybrid tax relief firms. The |
| tax attorneys employed by a law firm are subject to | | | | pros are that these companies generally charge less |
| the ethics rules and disciplinary action of their state bar. | | | | for tax relief work and are very good at performing |
| A tax attorney may generally represent any client in | | | | tax services and working with IRS since tax |
| any state on any U.S. federal income tax matter. | | | | controversy work is their specialty. The cons are that |
| The pros to employing a law firm are that you can | | | | unlike law firms and CPA firms, these hybrid firms are |
| feel comfortable that (i) an attorney is the one | | | | largely unregulated, so there's no clear channel (like, for |
| ultimately responsible for your tax matter, (ii) you have | | | | example, the state bar for attorneys) to file |
| a clear method to file grievances (i.e., with the sate bar) | | | | grievances. Since they are unregulated, many of the |
| if the attorney screws up, and (iii) lawyers are subject | | | | hybrid firms are just plain bad and if they rip a client |
| to strict ethics rules so they should work according to | | | | off, there's little recourse, except the traditional routes |
| the highest of standards. The cons are that law firms | | | | of going to the BBB or other quasi-regulatory bodies. |
| generally are more expensive than the other two | | | | Tax Relief Firms - Is it a law firm, a CPA firm, or a |
| types of tax firms. Additionally, some law firms (or | | | | hybrid? |
| attorneys) do not focus solely (or even primarily) on | | | | Here's how you can determine whether a certain tax |
| tax related work, so they may lack some of the skill | | | | relief firm is a law firm, a CPA firm, or a hybrid firm. |
| and expertise needed to fight the IRS. Just ask your | | | | First, don't assume anything just because an attorney |
| attorney what other types of work he or she | | | | or CPA works at the tax firm. As explained above, |
| performs, and that will give you a sense of whether | | | | this is meaningless. Second (and the most obvious), |
| tax (and specifically, tax relief) is his or her specialty. | | | | just ask! A tax relief firm should have little problem |
| CPA Firms | | | | telling you how it's organized. |