Why and How to Work in Tax Resolution
Tax resolution —the process of helping taxpayers solve their tax debt— is probably the most overlooked opportunity in the American tax business. We have been working in this field way before we began PitBullTax in 2010, so we can vouch for that.
Every tax professional may have his or her reasons to not have entered the world of tax representation yet, but we wanted to make sure it is not because of lack of information. Here you have all the introductory knowledge you may need to decide if working in tax resolution is the right choice for your practice —or, at least our point of view about this topic.
Why work in tax resolution
We believe there are three main reasons to work in this business, and they are the following:
Tax resolution is lucrative. It is not uncommon to learn about tax professionals who make six figures a year only from this service. As a matter of fact, it is becoming a standard.
It is quite gratifying too. Unlike tax preparation, internal, audit or other specialties in the accounting field, tax resolution allows you to go beyond forms or balance sheets to focus on people. You see your clients smile and give you a sincere thank you every time a job is done. Now and then you get a hug too! It is a good, meaningful and honest way to help people out.
There is a huge market to serve and, moreover, it is currently underserved. It you take a look at IRS' "Tax Gap" reports, you will notice that, when we talk about a tax debt market we are really talking about millions of American individuals and businesses owing hundreds of billions (yes, with a B) of dollars in taxes. Read that as millions of Americans needing your expertise and help, because those who do not work with a tax resolution professional will probably end up paying IRS more than they should have.
As we see it, the question is not whether or not you should start working in tax resolution. The question could be closer to "what are you waiting for!?"
Still, no pressure. Let us will give you more information first.
How to start working in tax resolution
The short answer is this: To start working in tax resolution, you need to meet a requirement, some training and a tax resolution software.
Meet the requirement
The requirement is that you must be a Certified Public Accountant (CPA), an Enrolled Agent or an attorney, preferably a tax attorney. If you are not, you cannot legally work in this field until you become one. Do not let this discourage you if you do not fulfill the requirement yet. Just set yourself the goal of becoming an Enrolled Agent. It is the only among those three that does not require going back to college.
Get tax resolution training
You need training because tax resolution is complex. A case may take months to solve. Despite the fact that software like PitBullTax has made tax representation easier over the years, you still need to know how to analyze and proceed in each tax resolution case.
Here you have an overview of what working in tax resolution implies, so you can get a clearer picture:
The main idea is that every time a taxpayer fails to file or pay his or her taxes in full, he also receives penalties and interests over that debt. If the debt remains unpaid enough time, tax authorities start their collection engine against that taxpayer. This starts with letters in the mail, but may end up with levies on the debtor's assets in the future.
Your job, as a tax resolution professional, is to help your clients pay their debt under the best possible conditions, considering all the alternatives both the Tax Code and the Law provides.
In fact:
- Some penalties can be abated
- Most collection procedures can be paused or stopped
- You can help an indebted taxpayer's spouse not to be held responsible for the debt, relieving him or her from the obligation to pay a share
- A few tax debt cases can be sorted out filing for bankruptcy
- Under certain circumstances, you can make Uncle Sam a settlement offer for the whole tax debt
- There are ways to communicate IRS that the taxpayer is not currently able to pay anything, so they can pause the collection and retake it in the future
- Most tax debt cases can be arranged to be paid in installments, but there are a few installment agreement options to choose from, and a tax professional needs to know which one serves his client best
- Last, but not least, there will be many cases in which more than one of the above-mentioned solutions could apply at the same time.
Receiving training will, in addition, help you get rid of some misconceptions about this job, like believing that you can sit down with a Revenue Officer to "negotiate" a debt for "pennies on the dollar." Truth is that IRS will rarely settle, if ever, for less than your client's Reasonable Collection Potential amount.
Back on topic, there are many places where you can get training, including PitBullTax Institute's workshops. Feel free to choose the one that suits you best.
Get tax resolution software
Getting a tax resolution software like PitBullTax, in theory is optional, but in practice it is a standard in the field.
With PitBullTax...
- You work with a proven method. In a nutshell, each case receives its own workflow on the software so you can easily know what you need to do first and what you need to do next for each client. Taking into account that a tax resolution case often takes months, this is an extraordinary help.
- You offer a standard, smooth experience that works for you and for your clients. Once you give each of your clients a profile on the software and access to your Client Portal, you can chat, exchange documents and keep them updated about their cases in an ongoing basis. You will look extremely professional to their eyes, and they do not need to download anything to their computers or mobile phones.
- You gather the information you need to work a case fast and securely. This includes sending your clients a questionnaire, downloading their tax transcripts and requesting their signatures when time comes to do that.
- You can easily assess the case and find all its possible resolution paths. PitBullTax uses all the information you gather about a case to run its calculations and offer you transcripts reports, a resolution evaluation, and even the ability to compare different tax representation scenarios. We build the software so you can easily examine the information and make your decision on how to proceed.
- You can carry out a confident representation of your clients. Once your analysis is complete, you will know exactly what forms you will need to use, and you will find them pre-populated to the greatest extent possible by the software. You should only need to review, double-check the information, fill in any missing information and ask your client to sign, if needed. That should leave you ready to send the documents to IRS and wait for the next step.
- You control your tax resolution practice. It does not matter whether you charge per hour, per case, per service or a combination, PitBullTax can help you keep control of your fees so you can charge what you are due, delegate tasks to members of your staff, prepare your invoices and charge your money, just to name the most important practice-oriented features of the software.
Request a demo or take a seven-day free trial so you can see with your own eyes what PitBullTax can do for you. That is more important for your tax practice.
What a day in tax resolution looks like
Last but not least, you may want to know what a tax resolution professional's day look like, and it is a short answer. We usually divide our day in four areas:
- Marketing to try to get new clients
- Communicating with current clients, as needed
- Switching between cases; and,
- Collecting fees and commissions (because, yes, some tax resolution work can be charged by commission)
