Best Tax Relief Companies

What is tax relief?

Tax relief is a reduction in taxes owed by an individual or entity, including write-offs, tax breaks and credits. Tax relief companies that specialize in tax debt relief offer programs designed to help consumers reduce the burden of taxes owed.

How does tax relief work?

Tax relief companies have experts who serve as intermediaries between consumers and the IRS. These experts attempt to persuade the IRS to allow the consumers to pay less in taxes. These experts can also help consumers achieve debt tax relief by lowering their debt, forming an agreement on future payments to the IRS and guiding them through audits.

Tax relief companies may use different types of contracts. Some tax relief companies require customers to sign a contract that requires the customer to pay a certain amount of money and complete work with that company. Other tax relief companies require customers to sign paperwork agreeing on an upfront fee but do not require them to complete the work with the company. Some tax relief companies do not require customers to sign any paperwork and allow them to start and stop work at their own discretion.

How much does tax relief cost?

Tax relief costs vary based on the complexity of the case. Tax relief companies might charge as little as $250 for penalty abatement or upwards of $10,000 for an offer in compromise (OIC) case. A case of average complexity will likely range from $2,000 to $5,000, but more complex cases will require more work from the tax relief companies and therefore will cost more. The IRS requires more documentation for debts more than $50,000 than under $50,000. Tax relief cases with high complexity are likely to cost $5,000 to $7,000.

Tax relief companies also vary in how they charge fees. Fees can be time-based, debt-based or upfront. Time-based fees are charged based on the time it takes the company to handle a consumer's case. Some tax relief companies charge fees based on the amount of tax debt a person owes. Other tax relief companies ask customers to pay an upfront flat fee for their services before starting the tax relief process.

Do I qualify for tax relief?

If you fall behind on tax payments and are unable to pay your taxes in full, then you may qualify for tax relief. These unpaid taxes are known as back taxes. Several tax relief companies have minimum required debts before they will help with back taxes. $10,000 is a common minimum debt requirement. It’s best to call several tax relief companies and speak to a representative to learn more about whether you qualify for back tax help.

How long does tax relief take?

Tax relief companies generally try to work as quickly as possible. A typical tax relief case takes two to six months to resolve. The time varies depending on the complexity of the case. If you owe more than $50,000 or have several requests with complex moving parts, expect it to take longer. Simpler cases, like tax penalty abatements, will not take as long.

Are tax relief companies legitimate?

While there are plenty of legitimate tax relief companies, there are also many fraudulent organizations posing as tax relief companies. When considering whether a tax relief company is legitimate, look at its credentials and reputation.

First, check the credentials of all the tax relief companies you consider. Make sure the staff is certified and specializes in tax relief. In order to represent a consumer to the IRS, a tax relief company must have a properly licensed staff member on board, such as a licensed attorney, certified public accountant (CPA) or enrolled agent. EAs, CPAs and tax attorneys are the only tax professionals who have been licensed to practice before the IRS. Any reputable tax relief company will have EAs, CPAs and/or tax attorneys on staff to legally represent you before the IRS. If they don’t have any of the above, they are likely a scam.

Tax relief companies provide a wide variety of tax relief services to help people with unpaid taxes. It’s important to resolve these unpaid taxes as quickly as possible. If they remain unresolved, the IRS might seize your assets using a federal tax lien, also known as an IRS tax lien.

When you work with a tax relief company, the company creates a tax relief program for you. Legitimate tax relief companies employ trained professionals who negotiate tax debt and support your interests in tax disputes. Certain services, like innocent spouse relief, remove tax liability that was unfairly passed to you. Other services, like release of wage garnishment, may reduce your tax liability if you show financial hardship. Types of tax relief services include:

Installment agreement

A tax relief company can help you set up an installment agreement. An installment agreement is a program run by the IRS that allows consumers to pay their unpaid taxes in monthly installments. Typically, taxpayers who owe more than $50,000 to the IRS are not eligible for installment agreements. Interest and penalties are applied to these payments. Combined, these can be equivalent to anywhere from 8 to 10 percent a year, so prompt payment is encouraged.

Offer in compromise

An offer in compromise (OIC) is reserved for people who are either unable to pay their taxes or will experience financial hardship if they do pay their taxes. An OIC is an agreement between a taxpayer and the IRS. An OIC will often be agreed to if there is legitimate doubt over whether the taxpayer is liable for the taxes owed or if there is doubt that the amount owed can be collected. If a taxpayer is able to pay their taxes through an installment agreement, then they generally will not be considered for an OIC. An OIC is paid off through a single lump sum or ongoing payments. A tax relief company can help you set up an OIC.

Innocent spouse relief

Innocent spouse relief is for individuals who have filed a joint tax return with someone who has incurred a tax penalty. That means the individual is liable despite being innocent of any wrongdoing. Tax penalties might have arisen from reporting income improperly or claiming credits or deductions that were not legitimate. Innocent spouses can work with tax relief companies to help them avoid paying hefty penalties they did not bring upon themselves and cannot afford.

Tax penalty abatement

Tax penalty abatement waives a penalty previously issued to a taxpayer by the IRS. These penalties are given for reasons such as failing to file taxes on time or missing a tax payment. You may qualify for penalty abatement if you had no penalties for the three years prior to receiving the penalty you’re attempting to have waived. You might also be eligible if you filed an extension request or if you paid or plan to pay the amount due. Because failure-to-pay penalties grow over time, it makes sense to pay off the penalty before requesting the penalty abatement. If it is granted, you will receive a rebate.

IRS appeals

An IRS appeal is an informal appeal to the Office of Appeals, an organization within the IRS.

IRS appeals can take several months and up to a year to complete. These appeals are considered informal because an IRS representative contacts you over telephone, mail or email to discuss your appeal. Before speaking with the IRS representative, you must be prepared to list the reasons you are objecting to the IRS’s previously made decision. The appeal is faster and less expensive because it does not involve going to court.

Release of wage garnishment

Individuals with garnished wages have all or part of their paychecks sent to the government to pay off a tax debt. These people often have other financial obligations on their plates that prohibit them from meeting their tax repayment goals, and having wages garnished can severely disrupt a healthy and normal lifestyle. To qualify for release of wage garnishment, you will need to provide proof of income and expenses and show the wage garnishment creates financial hardship for you. Ask a tax relief company for help if you need assistance.

Business payroll tax relief

Payroll tax negotiation is a common service requested by small businesses. Some tax relief companies work with businesses owners who owe taxes to the government but cannot pay them. These might be payroll taxes, including deductions from employee wages, that have not been paid. Many of these business owners are at the helm of companies struggling to stay financially solvent. It’s very important to have this issue resolved to avoid having the IRS seize assets to fulfill the debt.