I am going to explain in more detail today although I have written on this subject before -Reopening Fees: Omni how the tax resolution business model often works for sales-driven tax resolution companies. The process I am going to describe seems to have originated with Omni Financial in Colorado. Yet it seems to be a practice that has carried over from Omni to new companies that have sprouted up in Colorado, including Clear Creek (I can verify that) yet may very well be practiced by other companies in that state and around the country for that matter.
First and foremost, the two companies I mention are staffed by sales forces, distinct from licensed tax professionals on the front end. In both these companies' defense, they have superb BBB records, so the fact that these practices exist seems to defy their BBB record. (But the legitimacy of the BBB ratings in Colorado is another matter and the subject for another posting). According to what their ex-employees have said, these salespeople are managed aggressively to maximize what they can get out of their clients. Salespeople have goals of getting $30,000 a month thru fees and continuation fees or reopening fees. I have known of this in the last decade, as I received several calls from Omni orphan cases who stopped working with them after they were quoted another fee on top of sizable fees. This is an abhorrent practice. You can read more detail about this here: http://www.complaintsboard.com/complaints/omni-financial-c130137.html
For example, I had a client who paid Clear Creek $3500.00 in September, a sizable and respectable fee. They were quoted another $3500.00 out of the blue in November after they received a notice from the IRS. Folks, this is NOT standard practice. I can't think of a better word for it than "blackmail." $3500.00 should be sufficient to cover all of your representation needs for your tax problem.
When working with a legitimate tax professional, you should expect extra fees when:
1. You are negligent at getting information to your tax professional after a long time has elapsed - like 6 months to a year down the line.
2. You have a new tax problem completely unrelated to your original tax problem.
3. You need tax returns done.
This scavenging for reopen fees, done by Colorado companies like Omni and Clear Creek, is troubling. Yet, I have been dealing with Omni orphans overwhelmed by reopening fees for YEARS. Nearly Ten years ago, I conference-called a client of theirs to their office -- he had paid them $10,000 to date -- and told them -- "Please take care of this guy." I truly didn't feel right taking his money after what he had invested in them.
One other practice these companies are unique for is COLD CALLING about their tax liens. This is a pretty harmless practice as long as they are NOT making stuff up --which they often do. Buyer beware, as always, folks.
Here are some other articles I've written about the practice of reopening fees and other issues among Colorado companies:
Reopening Fees: Omni
Also, here are great comments from legitimate Colorado firms/professionals at the bottom of the list here:
A Survey of 60 Tax Resolution Companies
Practice of Cold Calling: