Why Your CPA May Not Be Able to Handle Your New York State Tax Problem
The New York Department of Taxation and Finance has reached out to you about an audit, a tax assessment, a collection action, or another very specific New York state tax problem. Your first instinct is probably to call your CPA – after all, they help with your taxes. But before reaching out, be aware that they might not have the experience you need.
Here's why CPAs can't always help and why you may need to bring in a specialist if you need tax help in New York.
Key takeaways
- Problem resolution is a specific part of the tax industry – and not everyone who does tax returns has the right experience.
- Reach out to your CPA to talk about your problem – but remember, you may need to reach out to a specialist for best results.
- A tax pro focused on resolution with experience in New York state can help you solve your tax problems.
Let's take a look at the top five reasons that you may need a tax resolution specialist instead of your CPA.
1. Your CPA focuses on a different niche.
The tax and accounting field has a lot of different specializations, and they all require different types of knowledge and varying skill sets. If you have a CPA who works for themselves preparing tax returns, they likely have experience with clients like you. For instance, if you're a small business owner or high-net-worth individual, your CPA likely specializes in preparing returns and/or doing tax planning for those types of clients.
In contrast, if you employ a CPA for your business, they focus on small business or corporate accounting. That varies from tax prep and planning, although there can be a lot of overlap. But that skill set certainly doesn't overlap with tax problem resolution.
Bottom line – a CPA may have extensive experience with tax planning, tax prep, and accounting, but may have very limited knowledge of tax problem resolution. Read more about CPAs.
2. Tax resolution services require the right knowledge.
To provide tax resolution services, a pro needs to understand the options, and unfortunately, if your CPA isn't experienced in this field, they may not have that knowledge. Or even if they're aware of a certain program, they may have never helped a client navigate it.
Options vary based on the type of problem you're facing, but here are some of the most common solutions to New York State tax problems:
- Installment agreements – setting up monthly payment plans on NYS tax debt.
- Innocent spouse relief – relief from NYS tax liabilities for spouses who incur tax debt due to the actions of their spouses; special rules apply.
- Offer in compromise – settle state taxes for less than owed, if you meet income/asset guidelines and other requirements.
- Hardship status – if you can't afford to pay, the DTF may give you a 12-month hardship exemption.
- Voluntary Disclosure – minimize penalties and lookback periods by filing a Voluntary Disclosure if you have unfiled taxes in New York; has very specific eligibility requirements.
- Audit representation – get a tax professional to deal with the DTF if you're selected for an audit or need to appeal the results of an audit. Applies to residency audits, income tax return audits, sales tax audits, and any other DTF or state agency audits.
- Help with tax warrants – find relief from tax warrants, through subordination, discharge, withdrawal, or release.
- Stopping income execution – avoid or stop NYS from garnishing your wages with an income execution.
- Levy appeals – appeal, dispute, or resolve tax levies before you lose your assets.
- License reinstatement – get your driving license reinstated if you lost it due to not paying NY state taxes.
When you contact a tax professional for your initial consultation, they'll learn about your situation, and they'll be able to give you an idea of the best resolution option for your situation.
3. Your CPA isn't familiar with the tax relief services that you need.
A lot of CPAs, especially if they're based in New York, may have experience with several of the programs listed above. It's very common, for example, for CPAs to provide audit representation on the returns they file for clients. If you use an unlicensed tax preparer, however, they may not have audit experience.
Similarly, CPAs may have experience with installment agreements – after all, they've most certainly filed returns for clients who couldn't afford to pay in full. But they may not have experience with hardship programs or offers in compromises. And they may not know the best way to respond to involuntary collection actions such as tax warrants, income executions, or asset levies.
If you know the solution you need, you may want to just reach out to your CPA and see if they have experience with that. However, if you're not sure, you may want to consult with a New York-based tax professional who focuses on tax resolution so that they can review the options with you. Keep in mind that you may end up hiring a CPA (the other options are tax attorneys and enrolled agents) – but if so, it will be a CPA experienced with NYS tax problems.
4. They don't have experience with New York tax problems.
Your CPA may not have experience with New York tax problems – especially if they are based in another state or if they focus on a different niche in the accounting industry. However, this point doesn't just apply to CPAs – it also applies to many nationwide firms that specialize in tax problem resolution.
These firms may be able to help with basic IRS tax problems like setting up payments or applying for offers in compromise, but they often lack experience for more complex problems. And unfortunately, even with the simplest solutions, these companies often mislead clients during the sales pitch and then fail to deliver when they actually start to negotiate a solution.
It's even worse when you're dealing with state tax problems. Most big tax relief firms don't have experience with state tax problems. That means they don't understand the options in New York State, don't know how collection processes work in this state, and don't know how to negotiate with the Department of Taxation and Finance.
That's why it's critical to look beyond your CPA and the big firms to find someone who:
- Focuses on tax resolution services.
- Has experience with your specific resolution option.
- Knows how to represent clients in New York.
Even when looking for a licensed tax professional, you need to ensure that they have state or solution-specific experience. TaxCure makes that process easy by letting you narrow down the search results to see pros with DTF experience. Additional filters let you focus on pros with experience with your specific problem or the solution you want. Learn more about how to use TaxCure.
5. Inexperience might make the situation worse.
You don't want to be a guinea pig for an inexperienced tax pro – especially when a significant amount of money is on the line. Applying for the wrong relief program, not filing forms correctly, missing deadlines, or not understanding the options can all make the situation worse.
When taxes and penalties are assessed against you, due to an audit or an adjustment to your return, you have a very limited amount of time to dispute or appeal. Missing the window can cause the assessment to become final, and then, the state will start adding penalties to your account.
Proposed collection actions also have strict response deadlines. If you don't contact the state in time, they will move forward with garnishing wages, freezing bank accounts, or seizing assets. Once these actions are underway, they can be extremely difficult to stop – if you've been working with an inexperienced CPA up to this point, you may want to jump ship and look for a seasoned tax relief professional who can help you stop the collection action and protect your financial future.
Red flags you should call someone else
You can ask your CPA to help you, and ideally, they should let you know if they have the right knowledge and experience to help. But in some cases, they may claim they can help simply because they're not aware of their own limitations. Even if your CPA has offered to help with your New York state tax problems, here are some red flags that you might want to reach out to a specialist:
- They told you upfront that they don't have much experience, but they'll try.
- You're receiving increasingly urgent collection notices.
- Your CPA has missed one or more deadlines.
- You have a gut feeling they don't know all the options.
- They've stopped communicating with you.
If you're not sure, consider setting up an initial consultation with a tax relief pro to talk about the situation.
FAQs about CPAs
Can a CPA help with tax problems?
Yes, CPAs can help with many tax problems, but sometimes, you need a specialist. Before committing to work with a CPA, talk with them to get a sense of their experience.
Do CPAs handle state tax disputes?
Yes, CPAs handle many state tax disputes, including audit representation, audit appeals, and dealing with unwanted tax assessments or collection actions. But again, you need to make sure the CPA has the right experience before you agree to work with them.
What if my CPA gave me incorrect advice on NY taxes?
Then, you may incur penalties or unexpected tax assessments or face unwanted collection actions. Unfortunately, you are responsible for the returns you file, even if they were prepared by someone else or you suffered a mistake due to incorrect advice from a tax professional.
The NY DTF may be willing to give you some relief if you relied on incorrect advice from a tax professional, but it's not guaranteed. The IRS takes the same approach. That's why it's critical to work with a seasoned professional.
Who can handle state tax problems?
CPAs, tax attorneys, and enrolled agents are all licensed to represent taxpayers, but they don't all have the same focus or experience. It's critical to look for a tax professional who has dedicated experience with your tax problem. TaxCure is the only online directory that lets you search for tax pros and narrow down the results based on their experience with specific tax problems.
What makes New York tax laws complicated?
The major complication is that these laws are unique to New York – they don't exist in any other state. That's why it's critical to look for a tax pro who has experience in New York. Taxes are also complicated in this state because, in addition to state taxes, you also have to deal with county, municipal, and special district taxes. Just like many other states, New York has individual income, corporate income, sales, withholding, and excise taxes, but its filing rules and requirements, as well as the consequences for failure to pay or file, vary based from other states.
Can a tax attorney help with New York State tax problems?
A tax attorney may be able to help with New York State tax problems, but only if they're experienced with the problem you're having. In short, they have the professional credentials to represent you, but the tax field is so broad that they may not have the right experience unless they specialize in New York tax problems.
Should I hire a CPA or tax lawyer?
Ultimately, the answer boils down to experience. However, you may want to focus on hiring a CPA if you're dealing with unfiled returns, forensic bookkeeping, or tax planning, and you may want to hire a tax attorney if you're facing legal issues or need representation in Tax Court. You can search for specific professionals on TaxCure when you use the site's advanced filters.
Should I hire a local expert for NYS tax issues?
Yes, you should hire a local expert if you're having state tax issues. And you're in the right place to do that. Start your search on TaxCure now and find licensed tax professionals based in New York. Don't wait, get the relief you need now. Check out the links to see NY tax pro's profiles: