The IRS released an informative You Tube video last week which helps taxpayers recognize the red flags of an unscrupulous tax return preparer. While most preparers are ethical and professional, you need to be aware of the warning signs of a disreputable preparer because ultimately, you are responsible for what is reported on your tax return.
What about Back Taxes?
Many taxpayers owe prior year taxes, penalties and interest to the IRS. The IRS can garnish wages and freeze bank accounts in an effort to collect moneys owed the Treasury. We have all seen the television commercials, first for Roni Deutch, promising to represent you before the IRS and reduce your tax liability to pennies on the dollar. In 2010, Roni Duetch was found guilty of defrauding the public and, as a result, has relinquished her law license and has declared bankruptcy. Next were the advertisements from Tax Masters, promising basically the same thing, reducing your tax liability. Tax Masters was found guilty of violating the Texas deceptive trade practices act, given $195 million in civil penalties and has filed bankruptcy.
Lesson to learn from this?
There is no magic formula for reducing your tax debt. These entities took advantage of desperate taxpayers and were unable to deliver on their promises. The IRS has an “offer in compromise” program, which allows certain taxpayers to reduce their tax debt; however, it is very difficult to qualify for the offer in compromise program. The IRS also offers installment plans with generous terms. Best practice, don’t get behind on your federal taxes.
Lisa the Tax Lady 