1. They can't get a hold of their representative. Fly-by-night tax resolution companies have a high turnover rate for employees. For example, if a representative isn't effective at selling the service, he/she may get fired and the handling of your case is subsequently passed on to someone else. OR the company may be SALES oriented, in that they really do customer service only when they have some spare time.
2. They were PROMISED an Offer in Compromise, but didn't get one. Many of these companies use very aggressive sales tactics -- including the inflation of what kind of tax resolution the taxpayer can get. If someone is guaranteeing or promising you that you will get an Offer in Compromise -- that is a shoo-in that the company is NOT on the up and up. Eject quickly.
3. They charge your credit card or bank account without authorization. Yes, some of these companies, once they get this information, will charge your account without telling you. Now, these are the worst of the worst that do this, but it can happen. This will most commonly occur when you decide that you DON'T want to work with them -- yet they will still charge a monthly payment on your account, etc.
4. You can't talk to your representative or professional. It is very common for the CPA, Enrolled Agent or Tax Attorney to be buried very deeply in their office. In many offices, you are NOT allowed to talk to your representative. You usually only get to talk to the salesperson or customer service person.
5. Charging continuous reopening fees. You should only be charged a reopening fee when it is very clear that enough time has passed or a new procedure needs to be done. There are companies that will continue to invent reasons to charge you more money. These are the situations when I charge a reopening fee:
a. taxpayer owes money AGAIN on a new tax year and that will need to be incorporated in the resolution, and/or the resolution will need to be redone.
b. taxpayer wants to upgrade their case to giving us full power of attorney.
c. taxpayer has a new issue to resolve -- like state representation on top of IRS representation.
d. taxpayer's case is assigned to a field officer -- when originally case was dormant or assigned to an automated division of the IRS.
e. taxpayer wants us to redo their case -- due to their own neglect at providing us information previously.
