Small Office Home Office (SOHO) Tax Tips

Do I Need Tax Representation?

Aug 27, 2009 Tax Management, Tax Strategies

Bad things happen to everyone especially if they are self-employed and run their own small business. When financial problems grow beyond control, there are typically significant tax consequences. The best strategy is to hire a tax attorney, certified public accountant (CPA), or authorized tax advisor called enrolled agents (EA), to represent you in resolving tax issues you might have with the Internal Revenue Service (IRS) or other tax authorities. Details regarding standards and practices are available in IRS Circular 230. It is especially important to have a practiced tax professional handle tax disputes. Instead of causing more problems for yourself, let a third party present your side of a disputed issue. Select a tax representative that has experience dealing with your specific issues. A tax professional provides assistance by “removing” you from the stress of the immediate situation and presenting your “case” for you directly to the IRS. Choose a tax professionals that has practiced dealing directly with the IRS. They know all the legal and tax technicalities that could save you money. Regardless of how you feel or how serious the matter is, both you and the IRS want to resolve the dispute by finding a mutually agreeable solution. If you have received an inquiry regarding how you filed a return, an audit notice, or owe taxes to any tax authority, you need tax representation as soon as possible. Under many circumstances, it is better to NOT contact the tax authority on your own.

A tax professional is a representative who will focuses on successfully bringing about a fair solution to your tax issue. You don’t have to be a large corporation to need tax representation. In fact, now more the ever, individual taxpayers are best advised to hire tax professionals provide a resolution to their tax problems. Disputes can range from the simplest of late fees to IRS seizures, amendments, un-filed tax returns, wage garnishments, payroll tax problems, and especially IRS audits. Tax representation to satisfactorily resolve liens and levies is also important. Even though hiring a tax professional may seem excessive, you might actually save far more through representation by a specialist. Talking to the IRS yourself is not a good idea. Any tax authority is dedicated to collecting revenue that they believe you owe them; they will assume an adversarial role in all negotiations. A tax professional alternatively will focus on reaching a fair agreement that includes the best solution for you,

If you are in a complicated legal situation, consider retaining an attorney. A tax attorney who is also a practicing Certified Public Accountant is, of course, an ideal combination but obviously more expensive. A CPA or EA is equally qualified to handle disputes including those that must be resolved in tax court. Since lawyers are typically more expensive, a first step is to compare costs of attorney, CPA, and EA for their counsel. Attorneys charge hundreds dollars per hour and may not be immediately available to handle your case. A CPA or EA will typically charge less even if they represent you in court. If you need legal counsel, contact the American Bar Association or consult the Martindale-Hubble Law Directory. If you need referrals for CPAs or EAs, use a search engine to find the state-specific professional societies for CPAs or EAs. Alternatively, contact the American Institute of Certified Public Accountants or National Association of Enrolled Agents.