Tax Resolution Fees Exposed
The inherent conflict of interest between your best interests and your tax representative at large national tax resolution firms may surprise you.
A major aspect of these businesses is actually getting to the people that might want their services (i.e. marketing). Some market by way of telephone, others by way of internet and television. However, they all share a common problem: what is the reasonable cost for their services?
Interestingly enough, there is no other business that combines the services of the three types of professionals that work for the tax resolution firms (attorneys, CPA's and enrolled agents). As such, the traditional pricing structures from these respective professions have not been adopted in full by all tax resolution businesses.
Some businesses use a "retainer" model where the taxpayer pays an initial fee and work is billed against that retainer until exhausted and then more fees are requested. This is a traditional attorney pricing structure. However, in the world of law, there are very strict guidelines regarding how much an attorney may charge and law firms are required to keep "trust accounts" where client funds are held until the work is done. State Bars across the country have made no attempt to force tax resolution businesses to adopt this strategy.
However, within the legal world, there are also many "flat fee" pricing structures, usually in areas where there is a high probability of not getting paid (i.e. bankruptcy and criminal law). This type of pricing structure is attractive to both the businesses and the clients because the client knows exactly how much it will cost and the business is happy to not chase fees. However, unlike the tax resolution field, where any number of contingencies may occur, thereby causing more work or unforeseen consequences, the fields of bankruptcy and criminal law are highly procedural. Those practices lend themselves to flat fee models.
There are many different pricing structures being used by tax resolution businesses right now and I could go on to explain every possible one, but there is one thing that is the same: these businesses, just like many businesses, are looking to make the most off of you that they can. Even the flat free pricing structures come with very strict caveats regarding what might cost you extra.
The key is to find a firm that also wants to give you what you pay for. If you are at odds with your representative, you have already paid a good amount of money and nothing has been done to resolve your case, you are getting ripped off. The person on the other end of that phone has been put into a position that they must take extra money from you to make money themselves. You would be very surprised that almost every firm in this industry does not pay any of the money you first give them to the person handling your case. It all goes to the owner and the sales people.
It is simple incentives. The representative has an incentive to take extra money from you. Further, it is what they must do to make a living. If the business is set up in this fashion, you as the customer are automatically put into a spot where you are destined to be ripped off. Unless your representative is a good Samaritan, or just someone who is willing to get paid trinkets to do a demanding job, your interests are not aligned. Even further, these businesses know that you are most likely over a barrel (they probably have your bank statements) and are acutely aware of the fact that you will not take any action against them. If you threaten to go to the BBB, you might get some of your money back, but, honestly, most clients are so busy and in such dire straits that taking any sort of action is unusual.
Ask the important questions. Who owns the business? Do they themselves practice? Are you talking to a licensed person or a sales guy? The more information you get about that business the better your chances are of sniffing out the frauds. And remember, there is not such thing as a magic wand. YOU have to own up to your problems and mistakes. If you truly have not made one, then you need to explain that to whomever you can and understand the work still needs to be done to fix the problem. As with most things in life, getting overly angry or aggressive gets you no where. If you need help, call a professional.
For flat fee services with no agents on commission, call Tax Help HQ at (970) 930-1040 for a free consultation, or visit them on the web at www.TaxHelpHQ.com.
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Tax Help HQ assists taxpayers in resolving IRS back taxes. Their services are rendered on a flat-fee basis, and your representative is a practicing owner of the company, not on commission. Visit http://www.TaxHelpHQ.com for more information or to request a case review.
Page Updated Last on: Dec 30, 2011