CPA vs. Tax Relief Company: Who Should Handle Your IRS Problem
When you have a serious IRS problem, you will likely encounter advertisements from tax relief companies promising to settle your debt for pennies on the dollar. Some are legitimate. Many are not. Understanding who can actually help — and who to avoid — could save you thousands.
Types of Tax Professionals Who Can Help
Only three types of professionals are licensed to represent taxpayers before the IRS: CPAs (Certified Public Accountants), Enrolled Agents (licensed by the IRS), and Tax Attorneys. Each can negotiate installment agreements, submit OICs, represent at audits, and handle CDP hearings. Unlicensed tax relief companies often employ these professionals but add layers of overhead and marketing costs.
What Tax Relief Companies Actually Do
Many large tax relief companies are lead generation and sales organizations that collect large upfront fees ($3,000–$10,000+), then hand your case off to staff enrolled agents or CPAs. The initial sales representative who takes your money is often not a licensed professional. The FTC has taken action against many tax relief companies for deceptive practices.
Red Flags in Tax Relief Companies
Watch for: guarantees of specific outcomes (the IRS approves less than 30% of OICs — nobody can guarantee approval); large upfront fees before analysis; no licensed professional assigned to your case; pressure to act immediately; promises that you definitely qualify for the OIC program; and inability to answer specific questions about the resolution process.
Advantages of a Licensed CPA or EA
A CPA or Enrolled Agent with tax resolution experience provides direct representation, transparent billing, and professional accountability. They are regulated by licensing boards and subject to professional ethics rules. They handle your case personally rather than passing it through a sales team. And their fees are typically lower than large tax relief company fees for the same work.
How to Vet a Tax Professional
Verify the professional's license at the IRS Return Preparer lookup or your state's CPA board. Ask specifically about their experience with your type of case. Ask for a clear fee structure in writing. Ask how your case will be handled — by the professional you meet with or by a staff member. Ask for references from similar cases.
Frequently Asked Questions
Are tax relief companies legitimate?
Some are. Companies that employ licensed CPAs, EAs, or tax attorneys and have transparent fee structures can be legitimate. The key is vetting the specific professionals handling your case.
Can I represent myself before the IRS?
Yes. You have the right to represent yourself in all IRS matters. For simple cases (small balance, good records), self-representation may be appropriate. For complex cases, professional representation generally produces better outcomes.
What should a tax professional charge for OIC representation?
Total fees for OIC preparation and representation typically range from $3,000–$8,000 depending on complexity. Be wary of fees above $10,000 for standard cases or of unusually low fees that suggest minimal actual work.
What is an enrolled agent?
An enrolled agent is a tax professional licensed by the IRS to represent taxpayers in all IRS matters. They must pass a rigorous three-part exam covering individual taxes, business taxes, and representation ethics. Many enrolled agents specialize in tax resolution.
Should I hire a tax attorney for my IRS problem?
Tax attorneys are most useful for criminal tax issues, complex litigation, or cases involving substantial legal questions. For most administrative resolution cases (installment agreements, OICs, audits), a CPA or enrolled agent with resolution experience is equally effective and typically less expensive.
What questions should I ask before hiring a tax professional?
Ask: Are you a licensed CPA, EA, or attorney? Have you handled cases like mine? What is your full fee? Who will handle my case day-to-day? What is the realistic range of outcomes? What is your timeline?
CPA vs. Tax Relief Company: Who Should Handle Your IRS Problem Services in Los Angeles
Calculus Tax, Inc. provides cpa vs. tax relief company: who should handle your irs problem services to individuals and businesses throughout Los Angeles County. Our licensed CPAs are based in Burbank and serve clients in Burbank and surrounding communities.
Our Burbank office serves clients throughout Los Angeles County including Los Angeles, Long Beach, Santa Monica, Glendale, Burbank, and more.
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Calculus Tax, Inc. has helped hundreds of Los Angeles individuals and businesses resolve IRS debt, audits, and collection actions. Our licensed CPAs fight for the best possible outcome.