How Much Should I Pay For Expert Tax Relief Help?
Getting your unpaid or unfiled taxes taken care of as quickly and correctly as possible is important in making the IRS happy.
Without correcting your back tax issues, you face a whole host of penalties and problems, including constantly accruing fees, bad marks on your credit report, and even the possibility that you won’t be able to renew your passport.
Do You Need A Tax Expert For Your Back Taxes?
While you can certainly handle your unfiled or unpaid taxes on your own, many taxpayers find that working with a tax relief professional makes the process less frightening and stressful. They feel that “letting go” of the problem into the capable hands of a tax professional frees them up to worry about other things in life so everything doesn’t come to a screeching halt while they deal with their problem.
Of course, this kind of expert tax relief help is going to cost you, much like any other professional service.
With a wide range of potential prices, it can be difficult to determine how much you should pay for tax relief help, especially if you have no experience with rectifying unpaid or unfiled taxes in the past.
In this guide, we’ll break down exactly what you get for the fees tax relief services charge, and give you an idea of how much you can expect to pay to have someone help you take care of your unpaid or unfiled taxes.
What Do Tax Relief Professionals Do?
Tax relief companies assist taxpayers with a variety of tax-related difficulties. The exact services an individual group offers differs from service to service, but some common offerings include:
- Tax preparation
- Back taxes representation
- Payroll tax liability representation
- Research of IRS tax record and analysis
- Penalty abatement
- State tax representation
- Audit representation
- Appeal of audit
In most cases, tax relief services begin their relationship with you by conducting an analysis of your IRS records to determine exactly what problems you’re facing and how much the IRS says you owe. Often, these analyses begin with a free initial consultation where you have the opportunity to discuss your case with a representative.
The tax relief company then gets your permission to investigate further with the IRS and your state taxing body.
Once all the information has been gathered, you are presented with the best options to resolve your situation. Some resolutions, depending on your individual situation, include:
- Preparation and filing of tax returns
- Offers in Compromise
- Installment agreements
Your tax relief company uses their professional expertise and knowledge of your situation to recommend the best option for your individual case.
After you have chosen the option you want to pursue, the tax relief company works directly with the IRS to come to some agreement, or with you to gather all the necessary information.
What Does The Tax Relief Company Use My Fees For?
The amount you’ll pay to get your individual case taken care of is dependent upon all the individual quirks of your situation.
If you have one year's worth of unfiled taxes, for example, it will cost you a lot less than if you owe thousands of dollars to the IRS.
When you first contact a tax relief company, their investigation and analysis into your situation will make up the bulk of their reasoning for the fees you will be charged. Sometimes, additional complications or problems can crop up during the course of working on your case and you may be charged more than you were quoted, but these situations don’t happen often.
What Do I Get For My Fees?
For the fee you pay your tax relief company, you’re getting individual representation and guidance through your case with the IRS or your state taxing agency.
While the actual services rendered depend greatly on your situation, some common things your tax relief company does for you include:
- Investigation of your records with the IRS and/or your state taxing agency
- Review of your past tax returns
- Analysis of your situation and recommendation of the best course of action
- Personal telephone conferences and email support
- Tax return preparation
- Tax return filing
- Negotiating with the IRS and/or your state taxing agency to come to a settlement agreement
- Preparation of settlement agreements or paperwork
- Filing of settlement agreements or paperwork
How Tax Relief Companies Structure Their Fees
The way that each individual company structures their fees, and how you’re expected to pay those fees, differs from company to company.
There are two main ways that companies structure their fees: Flat fee and hourly rate.
Flat Fee Structure
When talking about a “flat fee structure,” this can mean a couple of different things.
In one case, a “flat fee” can mean that the company charges one fee for the total service. For example, you receive a quote of $2,000 to handle your case, start to finish, and that fee covers every item that your case needs.
If you have multiple cases or cases before both the IRS and state taxing agencies, you likely will be charged a separate flat fee for each case.
A flat fee structure also can mean that the company charges fees based on a sliding scale that goes by how much debt you owe. In other words, the more you owe to the IRS or your state taxing agency, the more you’ll pay the company.
Hourly Rate Structure
As with many professional services, some tax relief professionals charge an hourly rate for services rendered.
The hourly rate varies greatly based on the location of your tax professional and their level of expertise, but you can expect to pay between $100 and $500 per hour.
When working with an hourly rate structure, you will be billed for every full and partial hour that your tax professional works on your case. This includes talking with you, working with the IRS, reviewing your files, and preparing paperwork.
How Tax Relief Companies Charge Their Fees
Not only do tax relief companies differ on how they structure their fees, but they also differ on how they accept payment.
Before signing on with any tax relief company, be sure you are clear on how you are expected to pay their fees, and whether there are penalties for any late payments or interest charged on your account.
There are four major ways that tax relief agencies accept payment: Monthly payments, up front, partial payment up front, and retainer.
Some tax relief firms (like Anthem Tax Services and Victory Tax Lawyers) allow you to pay their fees in monthly payments. This model is used by companies that offer flat fee pricing as well as those that offer hourly billing.
Some organizations require you to pay the entire amount for representation upfront.
Other companies that offer monthly payments as an option may give you a discount for paying in full up front, so be sure to ask if that’s something that’s open to you.
Partial Payment Upfront
In these cases, you’re expected to pay a portion - often half - of the total fees before representation begins. You then pay the remainder either in a lump sum some weeks later, or in monthly payments as agreed.
This model is common amongst companies that charge an hourly rate for work.
When you first begin representation in your case, you are asked to pay a retainer fee that’s “banked” for work on your case. These retainer fees can range from a few hundred to a few thousand dollars depending on the company.
As your tax professional works on your case, all work is billed against that retainer amount. Once the amount of work billed on your case has exceeded the amount in your retainer, you are asked to pay another lump sum retainer.
This process continues until your case is finished. Any money left over in your retainer account is then returned to you.
What Can I Expect to Pay My Tax Relief Company?
As with any professional service, the amount you’re expected to pay your tax relief company depends on the area where you live, the level of expertise of your tax professional, and the complexity of your individual situation.
On average, you can expect to pay between $1,000 and $5,000 to get your unpaid or unfiled tax problems resolved, but that number can increase if you owe more.
Let’s break down some of the common situations where tax relief professionals’ help is needed, and what you can expect to pay in each of them:
The type of tax return you need filed, and how many returns need filing, greatly determines the price.
A single year’s individual tax return with minimum complications can run you between $150 and $375 per year, with higher fees if you’re self-employed.
Tax preparation for partnerships and corporations is more expensive, usually between $500 and $2,000. Any bookkeeping services you need to help with the preparation of the tax return are extra and typically billed at an hourly rate.
If you’re looking to set up an installment agreement with the IRS to get your tax debt taken care of, you can expect to pay between $2,500 and $3,000 for an individual. Setting up a payment plan or installment agreement for corporate back taxes is likely to cost you more.
Partial Payment Installment Agreement
With a partial payment installment agreement, you’re paying the IRS less than you actually owe. That means this process takes more time and more back and forth with the IRS than a standard installment agreement.
You can expect to pay between $3,500 and $5,000 for a partial payment installment agreement.
In most cases, penalty abatement is an add-on service to an installment agreement. However, some firms do offer it as an individual service.
Pricing for this service ranges from $250 to $1,000 and can be structured so you’re paying a flat setup fee plus a portion of the penalties you want to be abated.
Offers in Compromise
Because this tax relief type requires the IRS to agree to take less money than they’re owed and getting an Offer in Compromise is fairly rare, you can expect to pay more for this service than many others.
Fees for Offers in Compromise usually range from $4,000 to $7,500. Be sure there are no extra fees to appeal or place your case in the next most agreeable situation should the IRS or state agency deny your request for an Offer in Compromise.
Currently Not Collectible Status
Getting your account placed in this hardship status due to financial troubles can run you from $2,500 to $4,000.
Innocent Spouse Relief
Protecting yourself from the tax fraud of your spouse can range from $3,500 to $5,000.
Tax-Related Identity Theft
If you’re the victim of tax-related identity theft, you can expect to pay from $2,500 to $5,000 on average. This amount can go up if your case is more severe and requires more repair work.
Find Your Right Tax Relief Professional
Dealing with unpaid or unfiled taxes with the IRS or your state taxing agency can be stressful. You want to get the situation taken care of as quickly and professionally as possible to avoid further damage, but you don’t know where to start.
At the Credit Review, we’ve collected all the highest-rated tax relief professionals in one place so you can compare every detail, choosing the right firm to meet your needs. Find your tax relief professional today!
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