Until recently, it has been difficult for tax professionals to enter into the tax resolution world. Many have been put off by the idea of having to learn a completely new area of practice and procedure, let alone having to delve into the gory morass of the Internal Revenue Manual. However, new training options have put tax resolution certification within reach of more tax professionals. This means that there are more ways to expand your practice.
What Is a Tax Resolution Specialist?
A tax resolution specialist is someone who helps people resolve any open debt that they may owe to the IRS. Along with tax resolution specialists, those who receive this type of training are also referred to as:
• Taxpayer representatives
• Tax relief specialists
• Tax controversy professionals
• Tax problem recovery experts
More tax professionals are starting to offer tax resolution services. If you decide to expand into tax assistance, it will give you a way to increase your income, as these cases tend to pay well. They also give you greater flexibility in how you run your business. This makes it a service that you can offer your clients year-round, giving you a way to earn a steady income instead of focusing on making most of your income when tax season rolls around.
Tax Resolution Services
Tax resolution training includes teaching you how to deal with tax issues such as:
• Examination representation
• Offers in Compromise
• Liens and levies
• Installment Agreements
• Innocent and injured spouse relief
• Penalty abatements
• Trust Fund Recovery Penalties
…and, of course, the proverbial “much, much more!”
If you decide to offer examination representation services, then you’ll be standing in for a client during a tax audit performed by state officials or the IRS.
Offers in Compromise
During your taxpayer representation program, you’ll learn how to submit an offer in compromise to the IRS when it is appropriate to do so. This is the area of the tax law that allows your clients to settle their tax debt for a lower amount than what is owed. During your training course, you’ll learn when this is the best option for your clients, who qualifies, and how to get the best possible “deal” for your client.
Liens and Levies
When one of your clients owes unpaid taxes, the IRS may issue a levy. This will allow the agency to seize your client’s assets or income to satisfy the debt. You can help your clients avoid a levy by coming to an arrangement with the government to pay the debt.
If you have a client who owes taxes to the federal government, then the IRS may also issue a federal tax lien. This action gives the agency a claim to your client’s property. Helping clients deal with federal tax liens is a bit trickier, but with diligence, you can do it. On your way to becoming a Certified Taxpayer Representative™, you’ll learn the ins and outs of lien withdrawals, obtaining certificates of subordination and discharge, and more, in order to help your client with lien issues.
An installment agreement is a payment arrangement in which a debt is paid via monthly payments. To qualify, your client will have to agree to pay their taxes on time going forward, catch up on any unfiled returns, and remain in compliance throughout the term of the payment plan.
The biggest advantage of arranging an installment agreement is that the IRS won’t file a levy against your client.
Innocent & Injured Spouse Relief
Filing errors can impact taxpayers when they file jointly with their spouse. To resolve the issue, the IRS provides innocent spouse relief. You may have a married client whose spouse attempted to claim items against their taxes improperly or failed to include items that should have been claimed. Once you’ve expanded your practice by obtaining certification as a tax resolution specialist, you’ll have the training you need to request innocent spouse relief on behalf of your client.
In most cases, the innocent spouse can be relieved of the tax, interest or tax penalties owed because of the actions, or lack of action, of the responsible spouse.
Once you’re equipped with a greater knowledge of tax laws, you’ll know when to seek penalty abatement for your clients. The IRS may approve relief for a client if it’s a first-time infraction. Other qualifiers include not having any delinquent (unfiled) tax returns, no tax penalties for the previous three years, and making arrangements to pay any tax that they owe for the current year. In addition to this administrative relief, taxpayers may also be eligible for penalty relief when they have a good excuse for not having paid or filed their taxes. These reasonable cause penalty abatements are a fascinating world unto themselves. All of this is covered in the CTR™ tax resolution training program.
Trust Fund Recovery Penalty
The IRS is often more aggressive about collecting some types of taxes and penalties than it is about going after others. Trust funds fall into the aggressive collection category most of the time. You’ll receive significant training in representing clients with this unique tax problem.
Qualifying to Provide Tax Resolution
To become qualified to offer tax resolution services to your clients, you first need to be an attorney (any state/territory will do), a CPA, or an Enrolled Agent. If you have not gone to law school or are not eligible to sit for the CPA exam, becoming an Enrolled Agent is the best choice. There are several ways to become an Enrolled Agent. One way involves:
• Applying for a Personal Tax Identification Number, or PTIN, through the federal government
• Passing the Special Enrollment Examination, or SEE, assessment offered by the IRS
• Requesting enrollment
• Agreeing to and passing the government’s background check
The other way to become an Enrolled Agent includes:
• Obtaining the proper work experience as an IRS employee for at least 5 years
• Sending in a request to be an Enrolled Agent
• Passing the needed background check
If you’ve taken the proper steps to become an Enrolled Agent, attorney, or a CPA, then you’ll be ready to request a Centralized Authorization File, or CAF, number. This is a code that the IRS provides that all taxpayer representatives must place on Powers of Attorney (Form 2848) or Tax Information Authorizations (Form 8821). The agency assigns you the code to track your client data requests. For instance, you may need a client transcript or past tax return information.
The Benefits of Expanding Into Tax Resolution
Anyone can find themselves facing tax problems whether they owe a tax bill or not. State and federal tax levies may bring about significant financial hardships. Along with these challenges, can you think of anything scarier coming in the mail than a notice from the IRS? Think about how the average American consumer feels when this happens.
Working with the IRS is intimidating and tough, which is why people who are facing tax problems often hire a trained tax resolution specialist. Those who specialize in tax resolution often have increased insight into government regulations and solutions, allowing them to develop effective strategies to help people resolve their tax issues.
Why Clients Hire a Certified Taxpayer Representative™
While some people prefer to contact the IRS personally to work out their tax problems, many individuals would rather have you reach out to the federal agency for them. There are several situations in which expert resolution help is needed for the best tax outcome. Clients will hire you to assist them with:
• Failing to file multiple tax returns
• Large tax bills
• Owing both personal and business taxes
Failing to File
The IRS will often forgive taxpayers who don’t file their tax return the first time they miss it. The agency even offers a first-time fee dismissal for not filing or for paying late. However, if a person is a frequent tax avoider, the agency will not continue to be as forgiving. People who fail to file their taxes several times will be charged the full interest and penalties owed for the infraction.
A professional who has completed tax resolution CPE courses will know how to bring requests to the IRS on behalf of frequent non-filers to arrive at a fair resolution. This may include offering a compromise or arranging a payment plan that may feature penalty reductions.
Big Tax Bill
When one of your clients owes a big tax bill, they’ll likely need to repay the balance in installments. High debt amounts come with more interest, but you’ll have the technical training to negotiate the best possible deal with the IRS.
Keep in mind that the IRS will not agree to interest forgiveness, but the agency will permit people and companies to offer a reasonable repayment agreement to pay the taxes that they owe.
Owing Different Types of Taxes
When people are self-employed or own a small business, they often blend their personal and business finances. This is particularly common when they are first starting a company or turning to self-employment. Doing this may result in federal and state tax filing mistakes, which may significantly affect the amount that they owe the IRS.
Individuals who have received word from the IRS that they have a tax problem due to combining different kinds of finances may contact you for help. In this situation, a CPA will probably need to separate the different money sources, but if you are a CPA who is also a tax resolution specialist, you’ll have the training to handle both problems.
Tax Resolution Specialist Training
Expanding your practice to include tax resolution is a good move. Tax problem solvers help everyday people handle their issues with the IRS and state tax authorities. When you become a Certified Taxpayer Representative™, you’ll be well equipped to help clients with a variety of tax problems while earning a significant income.
When asked what their biggest fear in life is, it’s common for survey respondents to mention death, divorce, public speaking, and dealing with the IRS all in the same sentence. This is why a taxpayer would prefer to hire a highly trained, licensed, certified professional to assist them. That’s where a comprehensive training and certification program, such as our CTR™ program, comes into play for you as the tax professional. The Certified Taxpayer Representative™, or CTR™, tax resolution training program will help you gain the skills that you need to offer this additional service to your clients. The program requires you to complete 120 training hours, participate in hands-on learning, and pass an exam to make sure that you understand the ins and outs of tax resolution. Learn more about certification.