Offering Tax Resolution Services to Grow Revenue
Guide to Offering Tax Resolution Services at Your Tax Firm
As a tax professional, you don't have to limit yourself to filing tax returns or offering bookkeeping/payroll services. Instead, you can vastly increase the potential of your business by offering tax resolution services. This is an umbrella term for all of the services people need when they have tax troubles.
Right now, this industry is unfortunately dominated by a handful of nationwide companies that are known for poor services and high prices. By throwing your hat into the ring, you position your firm to earn more money, but at the same time, you provide clients with a level of quality that's often hard to find in this industry.
Wondering if this is the right move for your firm? Looking for ideas on how to promote the new services you're offering? Looking for the best training? Then, keep reading. This tax pro guide outlines everything you need to know.
Increasing Off-Season Revenue
Tax resolution services are a great way to keep your firm busy during the off-season. Some accountants stay busy with extended returns or quarterly/monthly business returns, but that usually can't come near to the volume of work you do in the tax season. Others offer bookkeeping, but as you know, that generally doesn't pay anywhere near as well as tax prep.
When you offer tax resolution services, you can go beyond these traditional off-season activities. Even more importantly, you can watch your revenue grow because these are high-value services. The exact prices vary quite a bit from firm to firm, but the average case tends to be worth $3,000 to $4,000. This number can get a lot higher depending on the situation, but generally, there's not a lot of tax resolution work with lower price tags.
You can really see the earning potential when you compare it to bookkeeping, a traditional off-season mainstay. Unfortunately, you typically cannot charge a lot for these services because there are a lot of people who are willing to do bookkeeping at relatively low rates, and you don't need a lot of education to pop numbers into QuickBooks.
Tax debt resolution, in contrast, requires you to have a credential that allows you to represent taxpayers in front of the IRS. That instantly limits the competition to tax attorneys, CPAs, and enrolled agents. This field also requires specialized knowledge and experience, narrowing the competitive field even further. As an in-demand skilled professional, you can charge high rates. In most cases, the hourly rate even works out to be substantially better than preparing returns.
Providing In-Demand Services in an Ethical Way
When you can make money and know that you're helping people, that's a dream come true for a lot of people. You get the benefit of a comfortable income, while also knowing that you're making the world a better place. Tax resolution services sit right at this intersection.
When people need help with a tax problem, they usually hit the web and a quick Google search will generally bring up a handful of big tax debt relief firms. If they look at review sites, they'll see the same handful of firms — these firms actually pay to be on review sites that are considered to be trustworthy. This is very deceptive to the public.
If these taxpayers contact the big firms, they'll speak with a sales rep who will generally make big promises and use high-pressure sales tactics to get a big upfront payment. In fact, it's because of these sales tactics (and a long history of consumer abuse) that the Federal Trade Commission (FTC) warns consumers to avoid these companies.
The FTC advises people to handle their tax debt on their own. The FTC seems to feel pretty confident that this is possible, but as you know from working with the public, most people simply don't have this level of knowledge. Sure, they may be able to sit on hold for an hour and request relief from some small penalties. They may be able to follow the instructions in an IRS notice to set up a payment plan, but beyond that, most people can't self-navigate the IRS's relief options or paperwork requirements.
If someone can't deal with the issue on their own, the FTC advises them to avoid the big companies and find a local pro. That's where you can sweep in and get some extra business. But which services should you offer?
Most Common Tax Resolution Services
Tax resolution services boil down to untangling messes. People contact you when they're in a bind, and you help them deal with their unpaid taxes, unfiled returns, or other issues. Here are the main service areas that pros in this industry offer.
Tax Debt Resolution
You should be able to talk with a client about their situation to help them identify the best relief option for their needs. Then, you should be able to complete the application process for them. Ideally, you should understand the following programs:
- Installment Agreements — The IRS has several different installment agreements with different rules based on how much you owe, how quickly you can pay off the balance, and your history of compliance. There are also unique rules for individuals vs. businesses.
- Offer in Compromise — This is the IRS's classic tax settlement program, and it's what the big relief firms push in their marketing to get people through the door. Rather than telling anyone and everyone that they'll quality (like the big firms do), you'll need to understand the rules and the variations of this program.
- Penalty Abatement — Convincing the IRS to remove penalties can significantly reduce the amount that your client needs to pay. When people save a lot of money by working with your firm, they usually feel a sense of value that makes them happy to invest in your services.
- Hardship Status — If your client can't afford to pay, you can convince the IRS to give them hardship status. This stops collection actions on their account until their financial situation improves — usually, the IRS revisits these files every two years.
- Innocent Spouse Relief — This isn't as popular as the above programs, but if you have a client who qualifies, this can be an extremely valuable relief program. It separates your client's tax liability from their spouse or ex-spouse's liability. There are a few different subsections of this program with unique eligibility criteria.
Tax Assessment Appeals
You should also consider offering tax assessment appeals services to clients who disagree with their tax bills. This can happen if the IRS audits their return or makes changes to their return without an audit. People in this situation are dealing with an unexpected bill, and unfortunately, it isn't always correct.
You can help them appeal the assessment and/or set up payments on the remaining balance due. The appeals process is very particular, and you have to meet strict deadlines. While assessment appeals are challenging (and potentially impossible) for a layperson to do on their own, it's something that can become very easy for a tax pro after the first or second round.
Tax Audit Guidance
Additionally, you may want to help clients through tax audits. If you decide to offer this service, you should be ready to jump in at any point during the audit. That means that you should know how to answer an information document request, deal with auditors, and provide supporting documents during an audit. But you should also know how to help clients who've already received a proposed assessment or need to dispute the results of the audit.
Help With International Tax Issues
Beyond this, you may want to specialize in international tax issues such as FBAR reports and penalties or failure to report specified foreign assets on Form 8938. The United States is one of the few countries that requires citizens to file even if they live out of the country, and this can get very complicated for taxpayers. It can also get extremely intense if they incur penalties for not reporting foreign bank accounts or assets.
State Tax Issues
This is the practice area that almost always differentiates small accounting and legal firms from big resolution companies. Those companies tend to lack state-specific experience, and thus, they often cannot provide quality help to people who are dealing with personal or business state taxes.
To help as many clients as possible, learn how to amend sales and withholding returns. Learn about the relief options in your state, and get familiar with your state's collection processes. Then, branch out into the nearby states so that you can take in even more clients.
Which Resolution Services Should You Offer?
The above is a huge chunk of information, and new pros usually start with tax debt resolution — ie, they help clients set up payments or apply for settlements. Then, if desired, they expand their offerings to include help with unwanted tax assessments, audits, or international tax issues.
Some pros, instead, decide to focus on a single area like international tax problems. Then, once they've resolved the core issue, they help their clients set up payments or apply for relief options. In all cases, you will need to be familiar with the basic payment options if you want to offer any of these services. But how do you learn about all of this?
How to Find Training for Tax Resolution Services
Unfortunately, the CPA exam, the EA exam, and the bar exam don't really cover much if anything about tax debt resolution. You also don't see a lot of these topics when you're studying for an accounting or legal degree. So, here are your main options for learning about these programs:
- Self-study — The instructions for the IRS relief forms will help you learn the basics of the programs noted above. To learn even more, dig into the manuals that the IRS posts on its website for its employees. For instance, if you read up on how IRS employees should review requests for penalty abatement or how they should handle audits, you'll get a deeper understanding of their workflows and how to help a client navigate through the situation.
- Tax Rep Network (TRN) - TRN is founded by Eric Green. They provide training, tools, technology, and more for licensed tax professionals to learn and grow their tax representation business. They have a variety of offerings to join at different membership levels depending on the level of support you are looking for. The most popular training they offer allows you to get certified as a Certified Tax Representation Consultant (CTRC). This program gives you training in IRS representation to confidently handle cases. You can learn more about the CTRC designation and training program here, you claim a special offer that is only available here on TaxCure.
- American Society of Tax Problem Solvers (ASTPS) — This is a professional group with about 1,600 CPAs, EAs, and attorneys as members, and it's a great resource for people who want to get started or expand their knowledge about this part of the tax industry. It offers training sessions about tax resolution, and it creates networking opportunities between pros in similar areas.
- Low-Income Taxpayer Clinics (LITC) — This is a group of independent clinics located around the country that help taxpayers resolve tax issues. The clinics are funded by the IRS, but they are primarily staffed by volunteers. People can use the LITC if they're having a tax problem, their income is below a certain level, and they owe less than $50,000. By volunteering, you'll get experience with tax debt resolution, appeals, and audits.
Note that this is not the same as the Volunteer Income Tax Assistance (VITA) and Tax Counseling for the Elderly (TCE). Those programs help people file tax returns. Although it's still a worthy cause, volunteering there won't give you the hands-on experience that you need.
- Tax Resolution Institute — The TRI can be a powerful resource for tax professionals who want to offer resolution services. It offers courses, and members can also access forums, webinars, case studies, a proprietary article database, and consultations with experienced professionals.
- On-the-Job Experience — You may also want to get hands-on experience by working with an experienced tax pro. This could mean working for one of the big firms for a bit so that you can see how they do things, or it may include working with a local professional who offers these types of services.
Once you learn how how to do tax resolution services, you need to let people know that you're offering these services.
Marketing Your Tax Resolution Services
The "if you build it, they will come" mentality doesn't work for tax relief services. You need to let people know about your services if you want to attract new business. Here are 10 marketing ideas for new tax resolution pros. You can read further about marketing tactics in our guide on how to acquire new tax resolution clients consistently.
- Word of Mouth
Start with your existing clients. Let them know that you can help if they have a tax problem. In a lot of cases, accountants outsource these services because they aren't familiar with the processes, but once you learn about tax debt resolution, you can keep those leads in-house. Additionally, even if your clients don't need help, they may recommend you to their friends and colleagues.
- Email Campaigns
If you have a list of email contacts, let them all know that you now offer these services. Consider sending out press releases to local media or posting in social media groups as well. Also, make sure that you promote your new services on your websites or any other marketing materials that you use.
To draw more traffic to your website, consider investing in search engine optimization (SEO) services, but vet the company you hire carefully — there are a lot of different ways to approach SEO, and you want to ensure that you're working with someone who's going to make an impact.
Ideally, you want to post content about tax resolution services so that your site attracts the people who are searching for these services. Avoid working with SEO companies that churn out subpar content that isn't related to your mission or just do "secret" off-site link-building.
- PPC Ads
Along with your SEO campaign, you may also want to invest in Pay Per Click (PPC). This is where you buy ads that target certain keywords. Then, when someone clicks on the ad you pay a fee. This can be very effective, but it can get very expensive if you don't know which KPIs you should be measuring or how to write your ads for maximum impact.
- Content Marketing
Even if you don't do SEO, write blogs, and then, share them on your social media channels or repurpose them into email or snail mail newsletters. Even if this content doesn't draw organic searches, it can still create buzz about your business and be used to position you as a thought leader on social media.
- TaxCure Profile
TaxCure is the only website that is exclusively devoted to marketing local tax professionals who focus on tax debt resolution. There are other websites that have marketing opportunities for general accounting or legal services, but if you want to grow the resolution side of your business, in particular, this can be an invaluable resource.
This online marketplace is especially helpful because it allows you to create a profile that shows the exact services you offer. Then, when someone does a search for a tax pro in your area and filters the results by that specific service, they'll see your name, profile, and ratings.
- Lien Lists
Tax liens are public documents. You can look up liens in the LexisNexis database. You may also be able to find IRS or state tax liens that have been recorded in county offices in your area. The liens will show you who's in tax debt, and then, you can direct some marketing their way.
- Buying Leads
There are companies that sell tax leads. They all have different price points and various quality levels. Unfortunately, a lot of these companies just churn and burn their clients so move forward cautiously. Before you agree to buy leads, make sure you understand exactly how the information is being collected and how likely the lead is to convert into a sale.
- Social Media
With social media, you have two different marketing options: organic and paid. Organic is where you ask people to follow your firm, and you share posts with tax tips or links to your blog. Then, you hope that people share your posts so that you get more followers, more web traffic, and ultimately more clients.
Paid social media advertising is when you pay for an ad or create an ad and pay for the clicks that it gets. The main advantage of doing this on social media is that you can customize who sees your ad. You can narrow it down based on a lot of different demographics, and often, the social site will prioritize users who've recently searched for something related to tax problems, giving you even more bang for your buck.
Get to know other tax professionals, and let them know what you do. If you know a bunch of CPAs or EAs who handle tax prep, they will refer your customers to you when they need help with tax problems. Similarly, if you're a tax attorney who's networked with divorce or immigration attorneys, they will refer clients to you when their clients need help with the tax issues that tend to pop up during divorces or immigration.
The professional groups noted above can be a great launching point for networking. Local groups can also help. Even doing things that aren't necessarily related to your business can help with networking. For instance, if you volunteer somewhere, it heightens your profile in the community.
Regardless of which marketing tactics you try, it's important to track your costs. You should know the differences in your customer acquisition costs based on different marketing efforts. Then, when you plug in how much you earn from your clients, you can calculate your marketing ROI. Those numbers will let you know where you should put in additional effort and/or where you should reduce the budget.
Sign Up for TaxCure Today
Tax resolution is a great service to add to your business. If you are a pro and offer tax resolution, consider signing up for TaxCure. We are the largest network of tax resolution professionals, and our missing is to make it easy for taxpayers to find local pros like yourself. We also offer webinars and exclusive content to pro members on helping to grow your tax resolution business.