JK Harris, a company which calls itself “the nation’s largest tax resolution company,” recently settled agreements with state officials in 18 states after receiving numerous complaints that the company did not live up to its advertised claims. Most of the complaints came as a result of consumers paying thousands of dollars up-front to have their IRS problem resolved for “pennies on the dollar to the IRS” through the IRS Offer-in-Compromise (OIC) program, yet not getting the results. As of 2006, only 12,000 OIC offers were accepted, down from 20,000 in 2004.
The IRS Restructuring and Reform Act of 1998 opened the door for taxpayers to potentially have crushing tax debt forgiven by allowing a taxpayer to make settlement proposals to the IRS and “plead their case” that they could not pay the debt through an OIC. It seems, however, that the Act was signed into law, “Pandora’s Box” was opened. All of the sudden, late night TV was filled with commercials from “OIC mills” promising troubled taxpayers the chance to “pay
pennies on the dollar to the IRS.”
Although an OIC is one option for paying off IRS debt, there’s no sense in pursuing a payment option if there’s little hope that it will be accepted. A true professional will tell the client the best course of action based on their knowledge of the tax law, even if it’s not necessarily what the client wants to hear. Legally, a tax professional can represent a client before the IRS from thousands of miles away, but in a situation as stressful as IRS problem, it is advisable to work with someone to whom the client can speak with face-to-face, who lives in their area and has a reputation to uphold in their community. Finding a trustworthy company to present a case before the IRS may take more than watching a late-night TV infomercial.