How Much Do Tax Relief Companies Charge?

A tax relief or tax resolution service acts as the middleman between you and the IRS to secure an affordable installment plan or alternative way to settle your debt, including irs refund with child tax credit 2023. Occasionally, the relief service can substantially reduce your debt. What do tax relief companies do? Any reputable company will offer you a free consultation to review your tax issues, explain your options, answer any questions, and present their fee structure.

Below are some ways they may be able to assist in clearing your tax debt to avoid tax liens or wage garnishment.

Negotiate with the IRS on your behalf

The tax relief company will work with the IRS to establish an Offer in Compromise, installment agreement, or penalty or interest abatement. Note that it’s extremely rare to get an Offer in Compromise approved, and any company that guarantees they will get you one is a scam.

File appeals

If you’ve applied for an Offer in Compromise or other settlement option, but the IRS has denied your application, a tax relief service can intervene on your behalf to appeal the ruling.

Tax audit representation

You have the legal right to represent yourself before the IRS. However, a tax relief firm usually has a tax attorney on staff who can represent you instead.

Years behind on tax filing? Bench can get you caught up and in the clear with the IRS.

If your business is behind on taxes and bookkeeping, Bench can help you reduce your tax liability. Our specialized team will get you caught up and ready to file back taxes.

The costs of hiring a tax resolution company

Some companies charge a flat fee and may even require the full amount up front.

Others may allow monthly payments until the case is closed. There are also tax relief firms that charge an hourly rate for their services, and some will have minimums in terms of the amount of debt a taxpayer needs to have.

An important note: Before you make any payments or agree to any terms, make sure you do your due diligence on the company to find out whether they’ve had complaints to the Better Business Bureau or other consumer watchdog organizations. Because most taxpayers who owe a lot of money to the IRS are extremely stressed and fearful, the tax resolution industry is rife with scammers who capitalize on these fears. If you come across a disreputable company, you can report it to the IRS Office of Professional Responsibility using Form 14157.

In general, the average case can cost between $3,500 to $4,500 and run as high as $7,000, depending on your tax situation. If billed hourly, fees can range from $200 to as much as $1,000.

A general rule of thumb is that the more complex your case is, the higher the fees. For example, securing an Offer in Compromise carries a higher resolution fee than negotiating a simple installment plan.

Any additional documentation and information required by the IRS will also increase the fees since more time is needed to compile these items. The costs may be higher if your business is structured as a C corp or S corp.

The unpaid tax amount also plays a role in determining the cost of tax relief. A higher liability amount often requires more details and documentation to be sufficiently addressed. For example, a business owner who owes more than $50,000 to the IRS would fall at the higher end of the fee structure due to the amount of financial information needed. Conversely, one that owes less than $50,000 would likely carry a lower fee since it requires less documentation to resolve their case.

Below are average fees for tax relief options offered by resolution companies.

Tax preparation for unfiled taxes– Partnerships and corporations can run from $500 to $2,000, based on the complexity of the return.
Installment agreement – Roughly $2,500 to $3,500. This may run higher for business tax payment agreements.
Partial payment installment agreement – $3,500 to $5,000. This is higher than a regular installment agreement since more work is required.
Penalty abatement – This agreement requires proof of financial hardship. While often added to other services, it is also offered as a single solution for fees ranging from $250 to $1,000. There may also be a baseline fee of a percentage of the penalties reduced.
Offer in Compromise (OIC) – $4,000 to $7,500
Current Not Collectable (CNC) – $2,500 to $4,000
Innocent Spouse Relief – $3,500 to $5,000.

Years behind on tax filing? Bench can get you caught up and in the clear with the IRS.

If your business is behind on taxes and bookkeeping, Bench can help you reduce your tax liability. Our specialized team will get you caught up and ready to file back taxes.

Should you hire a tax resolution company?

Now that you have a general idea of the price tag associated with tax debt relief, should you still hire them to help you with your tax obligations? Below are a few reasons to consider using a reputable, fully vetted tax resolution service.

You don’t have to communicate with the IRS. This reason alone can be a game changer, since dealing with the IRS can be a frustrating and intimidating experience.

• Tax relief staff are experienced negotiators. The IRS won’t have your best interests in mind when directly negotiating a tax settlement with them. However, the Enrolled Agents and tax attorneys on staff at a tax relief company should choose the right solution for you based on your ability to pay.
• Agents are tax code experts. Tax professionals at tax resolution companies are deeply familiar with the tax codes, which give them the upper hand in settling your tax debt with the IRS.
• Tax relief staff can resolve your debt more quickly than you could alone. Since they are experienced and knowledgeable in tax liability issues, tax relief agents should be able to get faster results than if you were to do it yourself.

Since the decision to hire a tax relief service depends on your tax obligation amount, up-to-date and accurate bookkeeping is crucial. If you’re over two years behind on your books, Bench Retro’s specialized team of historical bookkeepers will get you caught up, so you know where you stand with the IRS.

How to find a reputable tax relief company

While there are many reputable tax resolution companies to choose from, there are just as many unscrupulous ones scamming many people out of thousands of dollars. The Federal Trade Commission (FTC)has received many complaints of scams from victims who had unauthorized credit card charges and bank withdrawals to pay for services they never received.

When seeking out a trustworthy tax relief company, consider the following:

1. Many tax relief companies advertise on TV, radio, and online. Don’t select a company based solely on its sales pitch.
2. Be wary of companies promising to give you complete relief from your tax liability, and those that misrepresent the time it will take to resolve your case.
3. Choose a company with a good reputation and several years of experience assisting other clients and businesses. Obtain references from other business owners who may have used the service.

Conclusion

While it’s certainly possible to negotiate a payment plan with the IRS on your own, hiring a tax relief service can give you peace of mind and ensure that your best interests are represented. If you’re considering hiring a tax relief service, research your options and choose the best company with experience dealing with the IRS. If you need recommendations, Bench partners with quality, highly vetted tax resolution firms who help our Retro clients get back on track with their finances. You can find out more on our Retro page.

After meeting your past due tax obligations, Bench’s year-round tax support can keep your tax returns current, so you’ll never miss another deadline. That means no more costly interest and penalties plus you’ll have peace of mind that you’re compliant with the IRS.

Glossary:

1. Tax Relief: A reduction in the amount of tax that an individual or business owes to the state, federal, or local government.
2. Tax Relief Companies: They are professional services that help taxpayers reduce their tax debt.
3. Tax Debt: The unpaid tax owed by an individual or business to the government.
4. IRS (Internal Revenue Service): The U.S. government agency responsible for tax collection and tax law enforcement.
5. Tax Resolution: The act of finding a way to pay off or reduce tax debt.
6. Flat Fee: A standard charge that a tax relief company may require for its services, regardless of the time or effort involved.
7. Installment Agreement: A payment plan set up with the IRS to help a taxpayer pay off their debt over time.
8. Offer in Compromise: A program where the IRS agrees to accept less than the full amount a taxpayer owes.
9. Tax Lien: A claim made by the government on a taxpayer’s property due to unpaid tax debts.
10. Tax Levy: The legal seizure of a taxpayer’s property to satisfy a tax debt.
11. Consultation Fee: A charge for an initial meeting to discuss and assess a client’s tax situation.
12. Retainer Fee: An upfront cost paid to a tax relief company for the services they will provide.
13. Contingency Fee: A fee charged by some tax relief companies only if they successfully reduce your tax debt.
14. Penalty Abatement: A reduction or removal of penalties charged on a tax debt due to late payment or failure to file.
15. Tax Audit: A review conducted by the IRS to verify the accuracy of a tax return.
16. Tax Attorney: A lawyer who specializes in the complex and technical field of tax laws.
17. Certified Public Accountant (CPA): A financial advisor who helps businesses and individuals plan and reach their financial goals.
18. Tax bill: A tax bill is a written statement specifying the amount of taxes a taxpayer is required to pay to the government.
19. Paid leave credit: Paid leave credit refers to a type of tax credit given to businesses that provide paid leave to their employees under certain conditions, such as during a pandemic or for family and medical reasons.
20. Tax credits: Tax credits are government incentives that reduce the amount of tax an individual or business owes by giving them a credit against their tax liability.