Your payroll tax resolution case is unique. Given that its unique, not everyone needs professional help from a licensed tax practitioner.
However, there are a few general rules that we like to follow to determine if you should secure representation or not. Below we have outlined several specific scenarios. If you fall into one or more of these scenarios, we highly recommend that you hire a professional to help. For those that don’t, continue learning from our blog, The Tax Blueprint. It provides knowledge and information you need to represent yourself.
We recommend starting with our detailed article series, The 941 Payroll Tax Resolution Process.
As a bonus, we have added a free bonus special report: 5 Questions to Ask Any Tax Resolution Firm Before Paying Them a Dime.
Specific Scenarios Worth Hiring Payroll Tax Representation
Scenario 1. More than One Year of 941’s that Haven’t Been Filed
If you haven’t filed Form 941 for the last four quarters, your case is going to be more complex. That’s:
- Four 941’s that need to be back filed
- Four CSED and ASED periods that need to be accounted for individually based on quarter, and
- An entire years’ worth of taxes that need to be paid that now have compounding penalties and interest. You will likely want to pursue a Penalty Abatement and we always suggest a go-between representative for that process.
If you don’t want to handle the complexity of those three issues, hiring professional help likely will help you.
Scenario 2. You Will “Qualify” for the Trust Fund Recovery Penalty
The word “qualify” is misleading. The Trust Fund Recovery Penalty is not a good thing. If you are:
- a responsible person, and
regarding not sending employees’ tax withholdings to the IRS, then you will be slapped with a 100% penalty that is liable to you personally.
That means that the IRS can now come after your personal assets, cash, property, and so on. Don’t navigate those complex penalty waters without hiring professional help.
Scenario 3. A Levy or Lien Has Been Placed on Property
If you have a levy or lien filed on business property, a representative can help get things removed or paused. The bigger issue is a lien and levy indicate a higher phase of IRS collection enforcement. It’s only going to get worse.
The IRS can be bullies at time. You will want a tax representative to be on your side with these touchy situations.
Scenario 4. IRS Personnel are “Banging Down” Your Door
Finally, if the IRS is getting aggressive with your case you will probably want a third-party representative for your case. You will lose more time, stress, and have anxiety over the process if you are getting things done by yourself.
How to Select the Best Tax Consulting Firm
Hiring professional help is a tricky business. Here is a list of things to consider when picking the professional you want to work with:
Look for those that have years’ worth of experience in the industry. You do not want a novice firm or tax professional that has little to no experience dealing with the IRS.
More experience = better resolution outcomes in the end.
2. Length of Time in Business
In addition to experience, the length of time in business can also be an indicating factor. Firms that have good track records can provide evidence that they know what they are doing.
The caveat are those companies out there that have seasoned professionals but have only been in business for a short time.
Western Tax Alliance is one of those.
Officially, we got started in 2019. But our Founding Partner had been trained by one of the leading tax resolutions industry experts for a long time before starting his own company. He also hired direct staff members that also have experience with payroll tax
The focus here is the proof in the pudding.
Talk to the professional you are considering looking at and you will be able to tell that they have the experience and length of time in the industry to be successful.
3. Go Niche
Find a practitioner that has experience with your industry and business type. For example, here at Western Tax Alliance, we only work on 941 cases with construction and trade contractors. A niche team understands industry pains and will better support your case.
4. Transparent Pricing
A good tax resolution firm will be clear regarding pricing. You will know upfront how much to expect to pay for services. Firms that charge flat rates without giving a breakdown should be avoided.
In the industry, it is common for the big scammy firms to do “rewrites”. This means that after a firm quotes and charges you for a service, they come back later saying it is going to cost more to finish your case. Often, at that point you either must let them finish (because you are already invested) or you walk away losing your money in the process.
Here at Western Tax Alliance, we charge a small deposit upfront to get your Liability Investigation and Financial Analysis completed. By doing these two services first we can a custom action plan to get your case done. That action plan will have a custom flat rate and we never do rewrites.
Our pricing model is one that you should look for.
5. No Guarantee
Some firms offer guaranteed satisfaction. A tax resolution company cannot guarantee the outcome of your case at all. They also can’t guarantee you will get the resolution you want from the IRS.
A good firm will tell you upfront that the outcome of your case depends on a lot of factors, such as:
- how much you owe the IRS,
- the age of your debt,
- penalties and interest you own,
- where you are at with levies or liens,
- and so forth.
Every case is unique and slightly different. A guarantee of 100% success with the IRS is false information. Be careful of those that guarantee this.
6. Your Role in the Case
Finally, you want to find out what your role will be in your own tax resolution case. You should find out what the company expects from you from Day One so you can act and prepare accordingly.
You can find out these details by insisting on getting clear expectations on your involvement and how you can stay proactive in your IRS tax debt case.