Negotiating back taxes can turn out to be costly

Ina, a Silver Spring secretary, owed the IRS for three years of back taxes after she neglected to file her returns.

Meetings with Internal Revenue Service agents who demanded she file her returns and pay back taxes merely aggravated her, prompting her to seek the help of a tax negotiator.

“I thought because it was just a stupid error, I shouldn’t be penalized at all,” she said, blaming the problem on an accountant. “It didn’t matter: I was anyway.” She asked that her last name not be used to protect her privacy.

The IRS originally demanded that she pay about $6,500 in back taxes, penalties and interest in a year in which she earned $20,000.

“It almost gave me a nervous breakdown,” Ina said.

An Internet search led her to a tax negotiator, Steven Kassel, who filled out her missing tax returns so she could make the payments and clear up the dispute.

Tax negotiators can be lawyers, certified public accountants or “enrolled agents,” which means they are licensed by the IRS.

Negotiators are hired after IRS audits to help reach resolutions that can prevent the federal government from diverting money from their clients’ bank accounts or wages to pay taxes.

Ina’s experience with professional tax assistance ended amicably, but a report by the Treasury Department inspector general for tax administration told a different story.

The report said some tax preparers and negotiators have criminal convictions or other infractions that should disqualify them from practicing.

“Some tax practitioners who have been convicted of tax-related crimes or whose licenses have been suspended or revoked by state authorities have not been suspended from practice before the IRS,” the inspector general’s report said.

Even negotiators say taxpayers should be cautious.

“There are a lot of companies that will prey upon the fears of people who have tax problems,” Mr. Kassel said.

Many tax negotiators are competent and honest, he said. Others charge clients $5,000 to $7,000 for results that are questionable, he said.

“They’ve paid a whole lot of money to get absolutely nothing,” Mr. Kassel said.

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