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IRS to Begin Utilizing Private Collection Agencies

9/26/2016

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The IRS has announced its plans to begin utilizing private collection agencies to assist in collecting on overdue federal tax balances.  The new program has been authorized by a law enacted by Congress in December of 2015.  The IRS states that taxpayer rights will still be protected and accounts being sent to these agencies will receive written notice in advance.   The four contractors the IRS has selected are:

  • CBE Group, 1309 Technology Pkwy, Cedar Falls, IA 50613
  • Conserve, 200 CrossKeys Office park, Fairport, NY 14450
  • Performant, 333 N Canyons Pkwy, Livermore, CA 94551
  • Pioneer, 325 Daniel Zenker Dr., Horseheads, NY 14845

These private contractors will identify themselves as being contracted by the IRS to collect the taxes.  These companies must still abide by the Fair Debt Collection Practices Act and again, respect taxpayer rights. 
 
A large concern about this is that with rampant phone scams, one may be wary of receiving calls from an agency attempting to collect a tax debt.  The IRS has stated that they will do everything possible to help avoid confusion.
 
Remember that one of the taxpayer rights is your right to a representative.  If you are confused about your tax account and/or the representatives contacting you, it may benefit you to hire professional representation.  Please call Compass Tax Group for a free consultation to see how we can help at 720-420-7996.

​Amy Lee, EA
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IRS Notice E-mail Scam

9/22/2016

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The IRS has just announced a new scam that involves e-mails with falsified tax bill attachments.  These scams should be easy to spot because the IRS will never send you a statement via e-mail.  If the IRS does send you a tax bill, it will always be via mail.  Taxpayers or tax professionals who receive this scam email should forward it to phishing@irs.gov  and then delete it from their email account.

IRS Newswire Issue Number IR-2016-123 provides further information on this matter stating:
​Generally, the scam involves an email that includes the fake CP2000 as an attachment. The issue has been reported to the Treasury Inspector General for Tax Administration for investigation.

The CP2000 is a notice commonly mailed to taxpayers through the United States Postal Service. It is never sent as part of an email to taxpayers. The indicators are:
  • These notices are being sent electronically, even though the IRS does not initiate contact with taxpayers by email or through social media platforms;
  • The CP 2000 notices appear to be issued from an Austin, Texas, address;
  • The underreported issue is related to the Affordable Care Act (ACA) requesting information regarding 2014 coverage;
  • The payment voucher lists the letter number as 105C.
The fraudulent CP2000 notice included a payment request that taxpayers mail a check made out to “I.R.S.” to the “Austin Processing Center” at a Post Office Box address. This is in addition to a “payment” link within the email itself.

​IRS impersonation scams take many forms: threatening telephone calls, phishing emails and demanding letters. Learn more at Reporting Phishing and Online Scams.
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Let's Demystify Tax Resolution Company Fee Policies

9/21/2016

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Anyone looking to hire a tax resolution firm for help is going to be looking at price and fee structure when determining who to hire.  I’m hoping to shed some light on the common practices within our industry.  You may be talking to multiple people, all who tell you to, “Watch out for…”, but what should you really be looking for?
 
First, let’s start with the most common practice in the industry: hourly billing against the fee or retainer paid.  Before hiring anyone, you will be asked to sign a service agreement.  That agreement will most likely outline an hourly billing rate for the team handling your case.  They will be asked by the firm to bill against the fee you paid anytime they do any kind of work on your case.  This can range from opening mail, leaving messages, sending faxes, etc.  If you pay a fee of $1,750, it may take only 10 hours of work to completely use that fee.  That may sound like a lot, but it can add up quick when you consider letters to be faxed, phone calls to be made, financial statements to be prepared, and the sheer volume of mail the IRS likes to send.  10 hours can be used within a very short period of time.  In this circumstance, if things aren’t resolved very quickly (which, let’s face it, with the IRS is a rare circumstance), you will be asked to replenish your service fee account for the work remaining on your file. 
 
Please know, that I have nothing inherently against hourly billing.  Many view this as the fair way to work on a case since no one can know exactly what it will take to resolve a balance until they begin to get involved.  A lot of times, it does take a lot more work to resolve an account than anyone can be prepared for.  Everyone’s circumstances vary and I believe that the associates who work hard on your case should be compensated for their time and knowledge.  However, this can be stressful from a client’s perspective when their finances are already very tight.  A surprise bill from the Attorney or EA working your case who says they won’t move forward until your account is replenished can add a lot more stress to an already stressful situation.
 
That brings me to the second type of practice; a specific and straight forward fee for a certain job.  Some call this a “flat fee."  However, it is important to understand how this fee structure works.   An associate will quote you a fee based on the job you are hiring them for.  Many factors go into the fee quote, so it is important to be as honest with the associate you are speaking with as possible.  Someone who owes $50,000 and wants an Installment Agreement may be quoted a lesser fee than someone who owes $50,000 and qualifies for an Offer in Compromise.  Also, amount of liability can be a factor, so be truthful when advising your associate of the amount that you owe.  If you hire a company using a straight forward fee for negotiation of an Installment Agreement on a $50,000 and you pay $3,000 for that service, that company will not bill against your fee, but will instead work until they receive a determination on their Installment Agreement proposal and negotiations, regardless of how long it takes, as long as you continue to work diligently with your firm’s team to help them move the case forward.  This means you need to stay in compliance, meet deadlines, and keep in communication with the team working for you.
 
Please note, though, that even if you hear the term “flat fee”, it does not necessarily mean that circumstances won’t arise that can add work, and thereby require additional funding.  A “flat fee” does not mean that you’ve hired them for life, for any matter that may arise for you.  You wouldn’t pay a mechanic to fix your transmission and then expect them to change your oil for free.  On that same note,  if additional work is added for your team, you will be expected to fund them for that work.  For example, if your team is working diligently towards a resolution, but you, as a client, continue to grow liability and/or miss multiple deadlines (thereby hindering their ability to resolve the account), this can be considered additional work and you will be asked for additional funds for that.  This should be clearly outlined in your agreement.  Another example is if you hire your team specifically to handle your IRS case work, but then you ask them to also take on State tax representation.  This is added work above and beyond what was in your contact, and you will be asked for additional funding.  You may hire a company for business representation, and then add personal representation down the road.  That is also considered additional work.  However, you will likely be quoted another straight forward service fee for the added job.  That being said, as long as you maintain the terms of any agreement you have, no additional funds should be asked for to complete the specific job for which you hired that company.   
 
Compass Tax Group has opted to use the straight forward service fee policy.  Our view is that our client, who is doing everything they can to help bring their account to resolution, should not be put in more of a financial hardship by being asked for more funding simply because the job is taking longer than expected.  You may have an unresponsive Revenue Officer, or your account may be in queue to be assigned to someone which can take anywhere from 30 days to 1 year.  In these circumstances, we won’t ask for additional funding where someone who bills on an hourly basis probably will, simply because of the amount of time it is taking to resolve your case.  Some companies who do practice hourly billing may try to sell you their services by stating that companies who sell a straight forward fee policy have hidden agendas, or will come up with ridiculous reasons to ask for additional funding.  I can't speak for all companies who practice this policy, but Compass Tax Group will always be clear about what our fee covers and will only discuss additional funding if the subject of additional work has arisen (such as for the reasons outlined above).
 
Ultimately, it is up to you as the consumer to determine which fee policy you are more comfortable with.  Are you someone who truly wants to get the job done and are willing to work hand in hand with your representative to make sure that happens?  If so, you should probably opt for the straight forward service fee policy and work with a company who will not bill against that fee.  Regardless, I am not saying that there aren’t good companies out there who will do good work for you that bill hourly for their time; I know they are out there.  You will just want to diligently research these companies to make sure you will be getting the results you want for the fee(s) you will be paying. 

​Amy Lee, EA
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    Amy Lee is an enrolled agent for Compass Tax Group, LLC.

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