Tax resolution or as it is also referred to as, IRS representation and tax controversy, is the process of resolving issues with the IRS or State on behalf of your client.
Why Should You Consider a Career in Tax Resolution?
Who can represent before the IRS?
If you want to start a tax resolution business or add it on as a service to your existing business you must be licensed. That means you need to be a Certified Public Accountant, an IRS Enrolled Agent, or an Attorney. If you are not licensed yet the fastest path to becoming a tax resolution practitioner is by becoming an Enrolled Agent.
The opportunity of tax resolution
The IRS is the most powerful collection agency in the world. Every year they attempt to collect back taxes from millions of taxpayers across the country. To do this they are equipped with an arsenal of tools such as liens, levies, wage garnishments, seizures, and more.
They also have a set of rules they have to follow known as the Internal Revenue Manual (IRM) and the Internal Revenue Code (IRC). Because these rules and procedures can get very complicated the government allows taxpayers to retain professional representation. This is where you come in, so let’s take a look at just how much work there is out there:
Taxpayer accounts in collections: 11,230,082*
Every year the IRS completes and adds 4-5 million new cases.
Unfiled Returns: 14,373,309*
Roughly 5% of the population does not file their taxes every year. It is very common to run into a taxpayer with 5-6 years of unfiled returns!
Number of new delinquency investigations: 2,257,180*
These are investigations into non-filers. Right now the IRS is focusing these investigations on high income taxpayers.
Number of notices of Federal tax liens filed 291,081*
Typically places on the homes of taxpayers that are being uncooperative or unresponsive. You will likely see taxpayers coming to you after they receive notice of the lien.
Number of notices of levy requested on third parties 396,269*
Levies are typically placed on the bank accounts of deliquient taxpayers. This is the ultimate attention getter that the IRS has to work with.
Over the last decade the IRS funding has been drastically reduced. On top of that hiring freezes over the years has put the IRS in a position where they are projected to lose 52,000 employees in the next six years. There are currently bills in congress that would drastically increase the IRS budget.
If these bills pass the IRS would be able to rapidly increase its number of staff as well as replace those that are scheduled for retirement. Of course more staff also means the potential for more enforcement activities!
The enormous turnover at the IRS is underway. Right now it is critical that if you are representing before the IRS you know the rules as well, if not better, than the personnel you’re dealing with. You cannot rely on everything you’re told and you need to know the processes and procedures like the back of your hand in order to defend your taxpayers rights.
How much revenue can tax resolution generate in your business?
This question depends on how much time, energy, and money you’re going to put into marketing your new services. Below you will find a case example with fees.
Let’s say a client comes to you and tells you that they haven’t filed Tax Returns for the last 3 years and the IRS says they owe $45,000. ASTPS always recommends billing in 2 phases. Phase 1 being the investigation & compliance and Phase 2 is the resolution.
Phase 1 Example:
Power of Attorney – $100
Pull Transcripts (3 Years) – $300
Tax Returns (3 Years) – 1,050
Evaluation of Alternatives – $1,325
Total for Phase 1: $2,775
Your financial analysis reveals the client has recently started a good paying job and is able to pay the amount due so you are going to get them into an installment agreement. As they do not have an RO on their case you will have to call ACS to to set up the IA.
Phase 2 Example:
Installment Agreement – ACS under $50,000 liability – $1,200
Total Fee for Case: $3,975
Other benefits of tax resolution work
Besides the great fees that can be earned, tax resolution pros enjoy the challenge of IRS representation. Every case is unique, unlike the grind of tax preparation, bookkeeping, or payroll services. If you currently offer tax preparation adding tax resolution can help bring in revenue year round. This revenue can help take the pressure off your preparation business and even allow you to remove difficult clients from your practice making tax season more tolerable.
Last but not least – the clients love you. More often than not your clients will be great people who just made a mistake. Then they got caught up in the incredibly confusing world of the IRS. When you are able to navigate that maze for them and bring a resolution to their issue – you are their hero.
You can get started right now!
If tax resolution is something you can see as a potential career path for yourself click the button below and begin watching module 1 of our best selling Intro to Tax Resolution course for free!
Module 1 is IRS Personnel & Access to Information. After attending this training you will have a clear understanding of the job functions of Revenue Officers, Revenue Agents, and Offer Examiners. You will know how to access your client’s information from the IRS, and know how and when to use form 2848 and form 8821