When taxpayers face both IRS and state tax problems, they often wonder whether to address each issue separately or bundle everything together with a single representative. While there is no one-size-fits-all answer, bundling your federal and state tax resolution typically produces better outcomes and costs less than hiring separate professionals for each matter.
Here is why bundling makes sense for most taxpayers.
Consistency Across Agencies
The most important reason to bundle your resolution services is consistency. As discussed in our article on federal and state coordination, the information you provide to one tax agency can affect your negotiations with another. Financial disclosures, payment capacity calculations, and hardship claims must be consistent across jurisdictions.
When separate representatives handle your federal and state matters, maintaining consistency requires significant communication between them. Each representative needs to know what the other has disclosed, what positions have been taken, and what agreements have been reached. In practice, this coordination often falls short. Representatives are busy with their own caseloads and may not communicate as frequently or thoroughly as needed.
A single representative managing both matters has complete visibility into all disclosures and negotiations. There is no risk of conflicting statements or inconsistent financial information. Your representative can ensure that every submission to every agency tells the same story.
Strategic Sequencing
Bundled representation allows for strategic sequencing of your resolution efforts. Your representative can evaluate which agency to approach first, how to time requests for collection holds, and when to leverage progress with one agency in negotiations with another.
For example, if you reach an installment agreement with the IRS that accounts for a significant monthly payment, your representative can immediately present that obligation to the state as part of your expense budget. This may reduce the payment amount the state expects from you. If separate representatives handled each matter, this coordination would require one representative to wait for the other to complete negotiations, then communicate the terms, then incorporate them into the state negotiation. The process takes longer and the timing advantages may be lost.
Cost Efficiency
Hiring separate representatives for federal and state matters means paying two professionals to learn your financial situation, review your tax history, and understand your goals. Much of this work overlaps. Both representatives need the same bank statements, the same income documentation, and the same understanding of your overall financial picture.
Bundled representation eliminates this duplication. Your representative gathers your information once and applies it across all jurisdictions. The time savings translate directly into cost savings for you.
Additionally, many tax resolution firms offer discounted rates for bundled services. Handling both federal and state matters for a single client is more efficient than handling separate matters for separate clients, and reputable firms pass some of those efficiencies along in their pricing.
Simplified Communication
When you have multiple representatives, you become the communication hub. You receive updates from your IRS representative and must relay relevant information to your state representative, and vice versa. You field questions from both, provide documents to both, and try to keep track of which representative is handling which issue.
With bundled representation, you have a single point of contact. All updates come from one source. All questions go to one place. You always know who is handling your case and where things stand. This simplicity reduces stress during an already stressful process.
When Separate Representation Makes Sense
Bundled representation is not always the right choice. If you have a straightforward federal issue but a complex state matter that requires specialized expertise, you might benefit from working with a state tax specialist who focuses exclusively on that jurisdiction. Similarly, if your federal matter involves potential criminal exposure while your state matter is purely civil, you may need an attorney with specific federal criminal tax experience for the federal side.
The key is evaluating your specific situation. For most taxpayers facing both federal and state tax debt, collection issues, or audit defense, a representative who handles both provides the best combination of coordination, efficiency, and cost savings.
What to Look for in Bundled Representation
If you decide to bundle your federal and state resolution services, look for a representative with genuine experience in all relevant jurisdictions. Some firms claim to handle state tax matters but lack deep expertise in specific state procedures. Ask about the representative’s experience with your particular state agency and their familiarity with that state’s resolution programs.
Confirm that a single professional or tightly coordinated team will manage both matters. Some firms technically offer bundled services but assign federal and state work to different departments that do not communicate well internally. The benefits of bundling only materialize when there is true coordination.
Finally, get clear pricing upfront. Bundled services should cost less than the sum of separate engagements. If a firm’s bundled quote equals or exceeds what you would pay for separate representation, the bundling provides no financial benefit.
Moving Forward
If you owe back taxes to both the IRS and a state tax agency, bundled resolution services likely offer the best path forward. You will benefit from consistent representation, strategic coordination, streamlined communication, and cost savings.
Contact us for a free consultation to discuss your federal and state tax problems. We will evaluate your situation across all jurisdictions and provide a clear plan for resolution.
