Mistake number one – Ignoring the problem, hoping it will go away.

There is no statute of limitations on unfilled tax returns. The IRS can assess you taxes, penalties, and interest at any time based on information they receive for every year that you have unfilled tax returns. Additionally, filings, assessments, and appeals are all time sensitive. By ignoring deadlines, you may lose the opportunity to reduce or compromise your debt. Every year the IRS computers get more sophisticated and gather more information. If you are required to file a federal tax return and you fail to do so, or if you have unpaid tax debt, it’s only a matter of time before the IRS will catch up to you. Your tax problems will not go away by ignoring them, they will get worse.

Mistake number two – Trying to resolve your tax problems on your own.

You are not required to hire a CPA, attorney, or EA to represent you before a federal or state taxing authority. As a taxpayer, you are entitled to represent yourself. But there is an old saying “an attorney who represents himself, has a fool for a client”. The job of IRS agents and state revenue officers is to collect as much money from you as possible. It is their duty to assess and collect the maximum amount of taxes, penalties, and interest allowed by law. They are under no obligation to mitigate your debt or negotiate a resolution that benefits you. In fact, the opposite is true; they are obligated to negotiate the best deal possible for the taxing authority. In order to protect your rights and get you (not the government) the best deal possible, you should have a qualified, experienced representative on your side.

Mistake number three – Contracting with a nationally advertised tax resolution firm that promises to settle your debt for “pennies on the dollar”.

You should beware of any firm or practitioner who claims to settle tax debt for “pennies on the dollar”. While it is possible in certain instances to settle tax debt for “a small fraction of what is owed”, to imply that this type of settlement is common practice is deceptive. In fact, many states have sued nationally advertised firms for deceptive advertising and fraudulent business practices. Far too often taxpayers have hired national resolution firms only to end up worse off than when they started, paying large sums for representation and getting virtually nothing in return. To avoid getting ripped off, you should work with a reputable local firm that can give you an honest assessment of your situation and offer realistic, cost effective solutions.