By – The Washington Times – Sunday, April 16, 2006
Ina, a Silver Spring secretary, owed the IRS for three years of back taxes after she neglected to file her returns.
Meetings with Internal Revenue Service agents who demanded she file her returns and pay back taxes merely aggravated her, prompting her to seek the help of a tax negotiator.
“I thought because it was just a stupid error, I shouldn’t be penalized at all,” she said, blaming the problem on an accountant. “It didn’t matter: I was anyway.” She asked that her last name not be used to protect her privacy.
The IRS originally demanded that she pay about $6,500 in back taxes, penalties and interest in a year in which she earned $20,000.
“It almost gave me a nervous breakdown,” Ina said.
An Internet search led her to a tax negotiator, Steven Kassel, who filled out her missing tax returns so she could make the payments and clear up the dispute.
Tax negotiators can be lawyers, certified public accountants or “enrolled agents,” which means they are licensed by the IRS.
Negotiators are hired after IRS audits to help reach resolutions that can prevent the federal government from diverting money from their clients’ bank accounts or wages to pay taxes.
Ina’s experience with professional tax assistance ended amicably, but a report by the Treasury Department inspector general for tax administration told a different story.
The report said some tax preparers and negotiators have criminal convictions or other infractions that should disqualify them from practicing.
“Some tax practitioners who have been convicted of tax-related crimes or whose licenses have been suspended or revoked by state authorities have not been suspended from practice before the IRS,” the inspector general’s report said.
Even negotiators say taxpayers should be cautious.
“There are a lot of companies that will prey upon the fears of people who have tax problems,” Mr. Kassel said.
Many tax negotiators are competent and honest, he said. Others charge clients $5,000 to $7,000 for results that are questionable, he said.
“They’ve paid a whole lot of money to get absolutely nothing,” Mr. Kassel said.
Like many of the nation’s 46,000 enrolled agents, Mr. Kassel is a former IRS employee, which he acknowledges is no guarantee of quality.
Former IRS agents provide the best service when they perform private-sector jobs similar to the ones they did for the government, said Jim Dougherty, director of tax-controversy services for the D.C. office of Deloitte Tax LLP, a tax-services company. He previously worked for the IRS handling taxpayer appeals.
“I think the advantage is that when you’ve worked for an organization for a number of years, you get to know the processes, you get to know the procedures,” Mr. Dougherty said. The IRS has “a very good tax-training program,” he said.
But Jim Dupree, IRS spokesman for the D.C. area, said former agents have no special advantage for tax negotiation.
“There are standards or regulations for anyone who practices before the Internal Revenue Service,” Mr. Dupree said.
J.K. Harris & Co., the nation’s largest tax-resolution firm, employs former IRS agents. The company has been running television ads during tax season. It also is being investigated by 15 state attorneys general.
“J.K. Harris’ track record is fraught with complaints from consumers who paid sizable upfront fees to resolve their IRS problems only to discover that the company had no intent of delivering these services,” said Nancy Hersh, a San Francisco lawyer who is suing the company on charges of “deceptive business practices” on behalf of a group of clients.
J.K. Harris officials say any complaints represent a small minority of customers.
“We’ve had over 160,0000 people come to us for relief, and we’ve helped an awful lot of them save millions of dollars,” spokesman Josh Baker said. “I feel we help the vast majority of our clients with the problems they have.”