Ask who will handle your case, and whether what you tell them is privileged.

Who is allowed to represent you

Practice before the IRS is governed by Treasury Department Circular 230. It authorizes three main groups to represent taxpayers without limitation: attorneys, certified public accountants, and enrolled agents. Each is licensed by a body that can discipline them: a state bar, a state board of accountancy, or the IRS itself. The name on your Form 2848 power of attorney must be an individual from one of those groups, not a company.

A tax resolution company is a marketing and intake organization built around such individuals. The person who answers your first call is usually a salesperson, often paid on commission, who is not authorized to represent anyone before the IRS and whose conversations with you carry no privilege at all.

Privilege, in plain terms

What you tell an attorney for the purpose of getting legal advice is confidential and privileged. The government cannot compel your attorney to disclose it, in a civil case or a criminal one, in federal or state proceedings.

Congress created a narrower protection for other federally authorized tax practitioners in section 7525 of the Internal Revenue Code. It has three limits that matter:

• It applies only to tax advice. Courts have held that information given for the purpose of preparing a return is not privileged.
• It applies only in noncriminal tax matters. If a civil case turns into a criminal investigation, a CPA or enrolled agent can be summoned to testify about what you said.
• It applies only to federal tax matters. It gives no protection in a Texas Comptroller proceeding or any other state matter.

Accountability

A Texas attorney answers to the State Bar of Texas under the Texas Disciplinary Rules of Professional Conduct. Those rules govern fees, require that client funds be held in trust, require communication with the client, and prohibit misleading advertising. You can look up any Texas lawyer's license status and disciplinary history on the State Bar's website in under a minute.

With a national company, find out where it is located, which state's law governs the contract, and whether the practitioner assigned to you is licensed anywhere near you. The Federal Trade Commission and state attorneys general have brought repeated actions against tax relief companies for taking large upfront fees and delivering little. That history does not describe every company. It is a reason to ask direct questions.

Questions to ask before you hire anyone

• Who, by name and license, will sign my Form 2848 and speak to the IRS for me?
• Will I talk with that person before I pay, and can I reach them afterward?
• What exactly does the fee cover, and what happens to it if my case turns out not to qualify for the program you described?
• Have you reviewed my IRS transcripts, or are you quoting from what I said on the phone?
• Are you telling me what result to expect? No one can know the result of an offer in compromise before a full financial analysis, and the IRS says the same.
• If my case needs to go to court, who handles that?

When a CPA or enrolled agent is the right choice

Often. If you need several years of returns prepared, books reconstructed, or a routine payment plan set up, a good CPA or enrolled agent is usually the efficient choice, and many are excellent at collection work. An attorney and an accountant also work well together: the attorney can engage the accountant so that the accountant's work falls under the attorney's privilege, an arrangement courts have recognized since United States v. Kovel.

When you need an attorney

• There is any chance the matter is or could become criminal.
• The dispute is headed to court, or a court deadline is running, as with a notice of deficiency.
• You are personally exposed for a business's payroll or sales taxes.
• The problem involves both the IRS and the Texas Comptroller.
• Legal questions drive the outcome: community property, innocent spouse relief, liens on real estate, bankruptcy timing, or the collection statute of limitations.
• You want the person you hired to be the person who does the work.

How this office works

You deal with Patrick Smith, a Texas-licensed attorney, from the first conversation through the last letter. There is no sales staff and no handoff. The scope of work and the fee are put in a written agreement before anything begins, and client funds paid in advance are held in a trust account until they are earned. If your problem is one that a CPA or enrolled agent can solve for less, you will be told that.