Background of recent tax problem case:
Personal or 1040 taxes expire 10 years after they are assessed. This important fact is why it is an important FIRST STEP for your tax professional to research your account with the IRS before doing anything else. Your taxes might very well expire and no action is necessary.
We came across a person in Mississippi who hired a "professional" to handle his case. The professional very competently prepared his paperwork for an Offer in Compromise. However, the client couldn't afford the $40,000 Offer that the IRS approved on his $100,000 of debt. This is beside the point. The most important thing the professional overlooked is that the taxes were old -- 1995, 1996 and 1997. As we soon learned, after taking on the case, all of the taxes (with the exception of a more recent year) were slated to expire in May of this year! To make matters worse, the Offer extended the statute of limitations on these taxes another 9 months. (The law states that the expiration date is extended by the amount of time it takes to investigate the Offer.) So, instead of expiring in May, as they should have, they won't expire until February of 2010 -- all due to an incompetent "professional".
We later the learned that this "professional" did NOT have a license to practice before the IRS. In other words, he was NOT: 1. an Enrolled Agent (like me); 2. a C.P.A.; or 3. an attorney.
Here are the basic rules we give people who are shopping around for someone to handle their tax case:
1. Have your case evaluated by a tax professional -- NOT a salesman.
2. Make sure that professional has experience in IRS collection and/or examination cases.
3. Make sure that the tax professional is LICENSED to practice.