Dealing with Tax Services

momtotwo__2May 7, 2008

Regarding a previous message regarding my friend who is in IRS trouble, he is now trying to decide to use a tax service with accountants and attorneys available to get his mess straight or to use just a tax attorney OR just a good independent accountant. Does anyone have any advice from your knowledge or personal experience with any of these? He has owned a small business and is about 5 years negligent in filing, PLUS I doubt that his records are very well kept.

I also doubt if he kept receipts which he could use to get deductions such gasoline, etc. Major ADD person! Phew! What a mess. I wish I could help him, and sure do wish him luck.

From what I understand, though, this is not real uncommon. For his sake I hope it is simpler than I'm thinking.

Also, does anyone know if the tax services such as the ones advertised on TV are very expensive? This person doesn't have a lot of money and has been barely surviving which is one of the reasons he didn't file to begin with... fear of having to pay what he couldn't.

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lucy

I would just go to a well recommended accountant and try to relax. This does not sound like major felonious evil, and he probably has loads of company (but who will talk about it after all). I'm sure an accountant can work out a program for him to make restitution and not have to get particularly 'legal' about it all, whereas an attorney may see a chance to bill more, taklng advantage of his fears, but not necessarily working with him as closely.

    Bookmark   May 7, 2008 at 2:13PM
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duluthinbloomz4

There are several avenues you can try. First, look in your phone book to see if there's a local branch of the Internal Revenue Service. If there is, I'd go that route because it would no doubt be free.

If no local IRS office, look under "Accountants" to see if some of the ads mention Back Tax solutions, Tax problem resolution. Can also look under "Tax" for firms advertising help with tax problems. Avoid H&R Block type places - they're fine for tax preparation, but I wouldn't entrust them with something like this.

You're a good person for wanting to help - but you yourself can't go down in flames over it. It's unfortunate, but your friend has to play an active role, it is his situation. Make an inquiry phone call on your friend's behalf to places that you find; they don't need to know who you are or who he is, just a general description of the situation. The person answering the phone can advise if they can they help and at what cost. Armed with some information, talk to your friend and tell him he has to make a decision and an appointment with someone.

If his papers are in a mess or nonexistant, no he's not going to be able to claim deductions or get too many breaks. The taxes themselves, plus penalties are mounting so delaying taking action is only going to add to the misery.

It's hard, but you have to consider what kind of position you want to put yourself in - certainly not an enabler for someone who is either not being adequately treated for ADD or who is merely irresponsible. Help in getting the ball rolling; then stand back providing your continued friendship and moral support.

    Bookmark   May 7, 2008 at 4:08PM
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jlhug

Your friend needs to find someone who is experienced in dealing with back taxes and solutions for someone who has gotten behind.

Ask friends for references, call the tax pros whose names you are given. The more experience in this type of return and situation the better.

You might want to consider an EA (enrolled agent) who can represent your friend before the IRS.

The IRS might do returns for free, but I doubt that they would tackle a Schedule C or any other type business.

Do not go to a free service such as AARP or VITA, even if you can find them this time of year.

    Bookmark   May 7, 2008 at 4:27PM
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joyfulguy

I don't recommend going directly to I R S ... they're not going to find reductions.

Ask around among your acquaintances in the various circles in which you move: civic, social, sport, religious, etc. to find whether someone has had experience with a tax professional who has been able to work out a deal with the I R S and arranging as many deductions as possible for a delinquent.

Or whether they may know of someone else whom you can approach, who might have had such experience.

Far better that he approach the I R S than waiting for them to come chasing him.

Good wishes for success with your quest.

And thanks for the help that you are offering to your friend. Such friends are as precious as rubies (I might say, "diamonds", if I were a shareholder of de Beers, who have done a great propaganda job of making rocks appear as precious as ... diamonds ... in the past 100 years or so).

ole joyful

    Bookmark   May 7, 2008 at 9:51PM
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kec01

In the spring of 1997, I had to file 1994,95,96 and 97 taxes. I had a slightly more complicated situation in that I had my personal return, along with a business return that had to be included in my personal.

I worked with a CPA at a respected accounting firm. I had the necessary paperwork to support each return, but it was a chore gathering it.

I wrote a letter to the IRS explaining what happened/why I was filing late (medical reasons) and a copy of that letter was attached to each year's return (this was before e-filing). In 2 of the 4 years, I had taxes due and I enclosed my check for just the balance due. The IRS waived all late filing penalties for me - that was a blessing. The other 2 refund years balances were paid to me without penalties being subtracted.

I would not use a service - get recommendations for a CPA who can walk your friend through this. It'll be tedious, but it can be done.

    Bookmark   May 8, 2008 at 8:01AM
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momtotwo__2

I knew I could get some good advice here. Thanks so much.
Anyone else, please chime in.

    Bookmark   May 8, 2008 at 5:30PM
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duluthinbloomz4

One thing more, and then I'm at the end of any possible help or advice. Except for wishing you good luck.

When asking friends, acquaintances or relatives for a recommendation on who or what to turn this situation over onto - be mindful that everyone will pledge their undying faith in the person or firm they use. Ask five people and you'll get five different recommendations. So you're still left with making a choice and possibly having to make some phone inquiries - going on the assumption that your friend won't do it on his own behalf.

    Bookmark   May 9, 2008 at 5:50PM
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