You’re being hounded by the IRS or state tax authorities over delinquent tax debt and aren’t sure what to do next? Even if you can’t afford to pay what you owe, ignoring the issue will only make matters worse.
A better option: consider hiring a tax relief company to lend a helping hand. In this guide, you’ll learn more about how tax relief companies work and their services to distressed taxpayers.
What Is A Tax Relief Company?
Tax relief companies help individuals and businesses resolve unpaid federal and state tax debt. Most consist of a team of Enrolled Agents, tax attorneys and seasoned tax law experts who can help their clients explore effective remedies to find relief from the IRS and state tax authorities.
Services Offered By Tax Relief Companies
There are several services to choose from, depending on your specific needs.
Consultations
When you reach out to a tax relief company for assistance, they’ll generally offer a free consultation. In addition, a team member will review your situation during the call and discuss potential relief options.
Tax Filing Review
After the initial consultation, they will review your tax records if you hire the company. Then, based on their findings, the tax professional you’re working directly with will communicate the next steps to get relief from the unpaid tax debt.
Tax Relief Programs
Tax relief companies leverage programs offered by the IRS to help you minimize unpaid tax debt. They include installment agreements, offers in compromise, innocent spouse relief, currently not collectible status and penalty abatement. More on these shortly.
Tax Settlement
The tax relief company will negotiate directly with the IRS on your behalf to minimize your outstanding tax liability. This could be done through an offer in compromise, penalty abatement, or partial pay installment agreement. The company you hired could appeal penalties based on why you fell behind on the taxes, settle the debt based on you lack of income and assets to pay the debt, or maybe assist in showing the government that you can’t pay the debt before the statute of limitations runs out either by getting you classified as “currently not collectable,” or negotiating a partial-pay installment agreement on your behalf.
IRS Appeals
If the tax relief company believes the fees and penalties assessed to you are incorrect, they can file an appeal for you. They could also leverage certain appeals to buy you time, assert that the IRS hasn’t followed proper procedures, or to appeal the denial of a decision or audit.
Types Of Tax Relief Programs
Below is a breakdown of programs commonly used to help taxpayers find relief:
Offers In Compromise
An offer in compromise is an arrangement between the IRS and taxpayer to settle unpaid tax debt for less than what’s owed. It’s available to taxpayers experiencing financial hardship. However, the application process is quite complex and could warrant hiring a tax resolution company to increase your approval odds.
Innocent Spouse Relief
It’s possible to qualify for innocent spouse relief if the IRS finds that you aren’t responsible for tax debt owed by your current or former spouse. If your request for innocent spouse relief is approved, you’ll be absolved from any liability related to the unpaid debt.
Installment Agreement
Also known as short-term payment plans, installment agreements are an option for taxpayers who cannot pay their balances in full. They give you an extended period to pay what’s owed through monthly installments. The downside is you’ll accumulate interest on the outstanding balance, but it beats facing serious severe financial consequences from the IRS.
Penalty Abatement
If you’ve never been in debt with the IRS, you could qualify for “first-time” penalty abatement, which minimizes a portion or all of your unpaid tax debt.
What To Do If You Owe IRS Back Taxes
Even if you owe a large sum of back taxes to the IRS, there is still hope. Ignoring the collection notices is an option, but it could lead to tax liens, bank levies and wage garnishments, which mean bad news for your finances. Consider hiring a tax relief company to avoid aggressive collection activity and shield your finances from the IRS.
