Key Takeaway in Choosing Tax Professionals
If you owe a substantial tax debt to the IRS, haven't filed for one or more years, or are facing a garnishment, lien, or levy – you may want to seriously consider the services of tax relief professionals, However, before making your decision, make sure the company you choose has the following:
- A BBB A+ rating and accreditation
- A free tax debt consultation and case review that allows the company to 100% verify your actual tax debt and any IRS documentation without charging any upfront fees whatsoever
- If they do propose to negotiate with the IRS and be given "power of attorney" – make sure that you pre-approve any and all fees or fee structures and have a clear expectations on the desired outcome
Again, be wary if any company attempts to collect an upfront fee based on the promise of settling with the IRS for "pennies on the dollar".
Fact Sheet: How Much Do Tax Relief Services Cost?
There are a variety of professional tax relief organizations and the fee structures that apply vary as noted below. While some tax professionals are thorough, reputable and do an outstanding job of helping taxpayers get relief from IRS tax debt, others collect exhorbitant fees for simply "filing" IRS Offers in Compromise. In many cases, these offers should not have been filed in the first place, will not be accepted by the IRS, and may lead to additional fees being charged because the offer wasn't successful.
In addition to professional tax representation, there is a free IRS taxpayer advocate service (TAS) which may be able to help taxpayers resolve tax debt. The IRS states that
The Taxpayer Advocate Service is an independent organization within the IRS and is your voice within the IRS
Fees for Tax Relief Companies
Tax relief professionals charge fees for their services. The way they calculate and assess these fees vary widely by organization as noted below
- Time-based tax professional fee structure: These are fees charged by tax relief companies based on the time it takes them to represent a taxpayer and resolve a tax debtor's case with the IRS. Prior to engagement, these fees should be clearly understood as well as client goals and expectations.
- Tax liability or tax debt-based fee structure: These are fees charged by companies that base their total fees according to the amount of tax debt a person owes to the IRS.
- Upfront fee structure: Some tax relief organizations require that clients pay "flat fees" in advance of services.
Regarding contracts, some tax relief organizations require that clients, prior to engagement, sign a contract and pay a fee prior to any casework being done. Others do not require a contract, which allows for work to start and stop at any time. Still other companies use a contract that clearly states the services that will be provided, the flat-fee that will be charged for those services, and the terms for paying the fees assessed.