Do I need to be a CPA, Enrolled Agent, or attorney in order to do tax resolution work?

This is a very common question that I get from unenrolled preparers, particularly those from states like Oregon , California, Maryland, and New York that have their own state-level tax preparer licensing in place.

Short answer: Unequivocally YES, you need to be an EA, CPA, or attorney in order to represent taxpayers in IRS Collections.

In order to sign a Form 2848 and represent somebody in front of IRS Collections and/or Appeals, an individual must be an EA, CPA, or attorney. Under current IRS regulations, this is non-negotiable. The IRS does not recognize any of the state-level preparer licensing programs for representation purposes.

Connecting with an EA, CPA, or attorney is a great way to be engaged in this work, but the unenrolled preparerer is limited to the tax prep and bookkeeping in support of the case. We have plenty of preparers that attend our classes in order to better understand the process that they’re supporting when working with an EA/CPA/JD on IRS Collections representation cases. In fact, many CPAs and attorneys send their admin staff to our classes in order to learn how to work cases.

But never forget that the tax prep and bookkeeping is the lower dollar value work, compared to the actual representation component. It’s the most labor intensive component of tax debt resolution, but it’s the lowest value work for the client case.

I personally encourage all unenrolled preparers to simply go take the Special Enrollment Exam (SEE) to become an Enrolled Agent. Most preparers can pass Parts 1 and 3 with limited or even zero study, and Part 2 is passable by most folks with a few weeks of intense study. Becoming an EA literally doubles your earning potential overnight, plus it’s also a hedge against the inevitable passage of a bill by Congress to give IRS authority to regulate preparers. Become an EA now, and you’ll bypass any impact of future legislation in this arena.… Continue reading

Pitbull vs Canopy: Battle of the Tax Resolution Software Titans

“Should I use Pitbull or Canopy?”

“What’s the best tax resolution software?”

…and other variations on this same question have become the #1 thing I get asked on the “Ask Me Anything” webinars that I occasionally host.

Since it’s a question that inevitably turns into a 15-20 minute conversation about features, pricing, and user interfaces, I’ve decided to create this page to have a place to send all the folks that ask the question. So if I sent you here because you asked the question, please don’t be offended — I’ve simply gotten tired of repeating myself over and over and over and…

To cut straight to the chase…

1). There are only four full-service tax resolution software programs that I’m aware of. One of them is really old and archaic, one of them is too new and behind the 8-ball. That leaves Pitbull and Canopy.

2). What about Audit Detective from Tax Help Software? Yes, it’s a great tool — I used it myself when I was in practice. If you want a stand-alone transcript analysis tool without all the other features of a full-service tax resolution software package, then by all means get Audit Detective and don’t even bother looking elsewhere. But if you want a full package suite, that’s not what they do.

3). Don’t be a cheapskate on this. The price difference between Pitbull and Canopy is insignificant. Both platforms offer the exact same core features, such as client portal, document management, 433 questionnaire, resolution options determination, etc. They both offer additional features for additional fees. How they break out those features and fees is very different. For example, transcript service is included at no cost with Canopy, but Pitbull charges an extra $250/yr for it. They also both charge extra for practice management features, such as time tracking, billing, payment processing, etc. With Pitbull, you’re going to be in about $1500 per year for a single user license for the important stuff, at Canopy it’s $2000. You should ambivalent about that $500 difference, as one tax resolution case pays for your entire year of software.

4). In terms of overall features, there’s very little difference between what the two platforms actually do, which is the important part. Some people will argue that Pitbull’s fee quote generator pushes that platform in their favor, but hold the phone. I have long held strong opinions regarding how the big, national fly-by-night tax resolution … Continue reading

If they’re broke, how can a tax resolution client afford my fee?

This is the inevitable question.

On every webinar, every Tax Resolution Fast Start Boot Camp, every open Q&A call, and via numerous emails, this is the #1 most frequently asked question in the tax resolution universe.

As such, I figure it’s about high time that I write out a formal response that I can refer folks to in the future.

So if you sent me an email or otherwise posed this question, and I sent you here, welcome, and know that you are not alone. 🙂

First, I’ll give you the short answer: People find the money to pay for what’s important to them.

Here in the United States, the wealthiest nation in human history, there is no shortage of money. Money is literally everywhere. Compared to most other countries, and most other times in history, money is also relatively easy to get.

“Pfttt!” I hear some readers saying. But statistically speaking, it’s true. Here in America, even our lowest income earners make more money in a year than billions of people around the world make in 5 or 10 years.

But money here doesn’t just come from earned income. We also have one of the greatest credit facilities in the world (be that for good or bad). Many people (not everybody, but most), can tap into credit almost at will, and many people do exactly that in order to obtain the money to pay for what matters most to them.

Starting to make sense?

What you’ll find when you start doing tax resolution work is a very simple truth: People had the money to pay their taxes, they simply chose to do something else with the money instead. This is where tax debts come from in the first place.

Many times, people are using their tax money to support a lifestyle that is more grandiose than they should be. This applies equally across the socioeconomic spectrum, by the way. People making $25,000 per year can wind up with a tax debt just as easily as people making $250,000 per year.

So, the money is flowing through them, they’re just not doing with it what they’re supposed to be doing with it (in the eyes of the IRS, that is).

By the way, if you don’t believe me in regards to this matter, I’d encourage you to take the Trailer Park Challenge. This challenge doesn’t involve a bucket of ice water or … Continue reading