Finding the Right Tax Advisor at the Right Price
Where to Find a Tax Professional
There are several ways to find a good tax professional. Asking the IRS is not one of them. What works?
Personal referrals. This is frequently the best source. Ask friends, relatives, and acquaintances whose judgment you trust for the names of tax professionals who helped them. If their tax professionals can’t help, ask for a referral.
If you already have one, your tax preparer or accountant might be the right person, or maybe not. They know someone who can help you deal with an IRS problem beyond their expertise.
Prepaid legal plans. Prepaid legal plans offer basic services for a low monthly fee and discounted fees for additional work. Few lawyers in prepaid legal plans have tax or IRS experience, however. Tax attorneys rarely participate because of relatively low fees paid by the plans.
Chain tax services. Some national outfits offer audit assistance free with their tax return preparation service. One chain says they will go with you to the IRS to explain how a return was prepared. This service may fall short of actual representation. And there is no guarantee the person going with you prepared your return or is a tax expert. Not all tax preparers are created equal-not by a long shot. These folks may know how to prepare simple tax returns, but I wouldn’t rely on them to help with an IRS problem.
Advertising. Various directories, including phone books and newspapers, carry lists of tax professionals. Look under Accountants, Tax Return Preparers, Tax Consultants, and Attorneys-Tax. Some tax professionals offer a first consultation by phone or in their office at no charge. Bear in mind, however, that anyone heavily advertising or giving away her time may be new to the game.
Professional associations and referral panels. Most local bar associations will give out the names of tax attorneys who practice in your area. But bar associations don’t meaningfully screen the attorneys listed; those who are listed may not be experienced or competent. To find an EA in your area, call the National Association of Enrolled Agents referral line at 800-424-4339. To find a CPA, try calling a local or state CPA society.
Direct solicitation. If the IRS has filed a Notice of Federal Tax Lien against you, you may receive a call or letter from a tax professional. Be wary. In general, good tax professionals are too busy to do this.
What to Look for in a Tax Professional
Once you have the name of a tax professional, call and ask to speak with him directly. If he is too busy to talk to you-and your call isn’t transferred to another tax specialist-assume the office is too busy to handle your case. Call the next person on your list.
When you speak to a tax professional, try to develop a rapport. Mention how you got his name, especially if it was a personal referral. Then get to the point-tell him your tax problem. If he isn’t experienced in your type of case, ask for the names of professionals who do.
Here are some other suggestions for making a good match:
- Don’t rush to hire the first tax professional you speak to. Your decision is important, and rarely is there only one person for the job. Talk to a few. Choose the one you communicate with best-do you understand her advice and answers to your questions?
- Question the tax professional carefully about her IRS ¬experience. No matter how well she knows the tax code, prior IRS dealings are key. Previous IRS employment is not always a plus; it may have forever impressed the IRS point of view on her. Also, be skeptical if she hasn’t been in practice at least five years.
- Does the tax professional seem to be aggressive or timid in discussing your case? If she seems awed by the IRS, find someone else.
- Does the tax professional give you a feeling of confidence? Ask her the likely outcome of your case. While no one can predict the future, her answer should create trust. Look for an honest response, not necessarily a rosy picture.
TIP: If you lose faith in your tax professional, find another one fast. But don’t dismiss the first one until you get a second opinion on her work. And don’t fire a tax professional simply because nothing is happening. Frequently, inaction is because the IRS is dragging its feet. Be patient-delay often works to your advantage in dealing with the IRS.
Tax Professionals’ Fees
Get an understanding about the tax professional’s fees at your first meeting. Does she charge by the hour or a flat fee? Professionals can charge anything from $35 to $350 per hour, depending on where you live, the type of case, and the tax professional. To some extent, you can control costs. Tax professionals can be hired either as consultants, meaning you handle your own case and ask for advice as needed, or hired to represent you from start to finish. In other words, hiring a tax professional need not be an all or nothing affair.
Although uncertainty about open-ended fee arrangements leaves most folks uncomfortable, many good tax professionals won’t quote a flat fee. But they should be able to ballpark a range of hours necessary for your case. For example, I usually figure five to 15 hours of my time for full representation in an office audit or a collection matter. For appeals, field audits, and tax court cases, I put in ten to 40 hours.