Reasons to Hire an Enrolled Agent for Tax Representation
Tax representation, defined as paying a Enrolled Agent to represent you before the IRS or other state agency, is not for everyone, and in many instances, may be an unnecessary waste of money. But when is it necessary?
- You are reluctant to deal with the IRS on your own. There is a "reluctance factor" to pay an Enrolled Agent for taxpayer representation. Reluctant people get themselves into deeper trouble by procrastinating. The objective of an Enrolled Agent, or Power of Attorney third party, is sometimes essential for resolving a tax case. Furthermore, you never underestimate the PEACE OF MIND of having a qualified individual handle your dealings with the IRS.
- You owe a lot of money to the IRS. The more you owe the IRS, the higher the stakes are, and the more aggressive the IRS will get. You will benefit by having an Enrolled Agent defuse the situation as well as negotiate and handle the matter for you.
- Your are being levied by the IRS or on the precipice of aggressive collection action. Levy release/reductions require a lot of work in a very short period of time. A Enrolled Agent will know the ropes to get the levy released quickly.
- You haven't filed for many years and/or the IRS filed returns for you (SFRs). The tendency of a non-filer is to overestimate the task of resolving their tax situation -- thinking it to be a monumental task -- due to information lost in their flooded basement. However; most non-filer situations are NOT as a bad as the taxpayer thinks. An Enrolled Agent can clear the air by researching the taxpayer's Individual Master File (IMF) transcript record and properly determining the MINIMUM needed to be done. Based upon my experience, "SFRs" do not always need to be fixed. In some cases, your representative will recommend that the returns STAND as they are while the debt is negotiated.
- Your case is assigned to ACS Revenue Officer. If your case is assigned to ACS, the situation is deemed serious and you are in jeopardy of aggressive collection actions such as levy or garnishment of wages. ACS workers are HUMAN and capable of error and OVERSTEPPING their powers. Tax examiners use judgement when working cases. This is the people part of the process. Correspondence exams and ACS tax examiners work on ten different campuses. One examiner may ask for different documentation. And no two cases have the exact same facts and circumstances. Having a representative automatically defuses the situation -- making sure your taxpayer rights are upheld, preventing unnecessary levy or distraint.
- You run a business that owes 941 - payroll tax or State withholding tax. Falling behind on 941 taxes is a "red flag" for any business' "going concern" and when more than two quarters delinquent pass you are guaranteed to have your case assigned to a field officer where a Trust Fund Recovery Penalty (TFRP) may be assessed for any balance due before or after business assets have been liquidated. The IRS can assess a Trust Fund Recovery Assessment—also known as a 100% penalty—against every “responsible person.” Under Section 6672, the penalty equals the entire amount of trust fund taxes. The IRS can seek to collect 100% from the business and 100% from each responsible person. Payroll taxes and TFRP (which is a "vestige" of the payroll tax) cannot be discharged in bankruptcy.
- You are being audited by the IRS on your 1040 or Business Tax returns. If your return has been selected for examination by a field agent or vis-a-vis a "correspondence" audit by the IRS -- you might benefit by having an Enrolled Agent utilize his/her skills and knowledge of the trade to insure that you are getting the best deal.
- Your case will be reviewed by an Enrolled Agent
- You compare the cost/benefit of tax relief, then decide what’s best
- With your approval, your case will be settled with the IRS
- You are kept up-to-date each step of the way
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