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Key Points:
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There isn't a one-size-fits-all pricing model for these services as the cost can vary.
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The more complex your tax issue, the higher the potential cost.
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If you're considering tax relief services, assess the costs and benefits and talk to a tax expert to understand your choices
We understand that managing tax issues can be overwhelming, so it's no surprise people want to know what to expect regarding expenses. Let us help! This guide will break down the costs associated with tax relief services and help you understand whether they are worth it.
Hiring a tax relief company offers peace of mind, with experts working to find the best solution for your tax problems.
What Are Tax Relief Companies?
Tax resolution firms help individuals and businesses with substantial tax debt negotiate with the IRS to alleviate their financial burden. These companies offer services like:
- Negotiating installment plans
- Appealing IRS decisions
- Providing tax audit representation
They can assist with different tax issues that can come up, including unpaid taxes, tax audits, tax liens, and wage garnishments. However, they charge fees for their services, which can vary based on the complexity of the case and the amount of debt owed.
Many people with tax debts wonder how much it will cost to employ these services. These fees differ depending on many things, but we’re setting out today to give you a better idea of the cost of professional tax help and relief services.
Read this post next to find out why you should settle your tax debt before the end of the year.
Top Tax Relief Providers
Average Cost of Tax Relief Services
There isn't a one-size-fits-all pricing model for these services—but here are some of the different ways tax debt settlement companies might bill their clients.
Flat Fees
For starters, some tax relief companies offer flat fees. If you have a simple case involving a straightforward installment agreement, you might pay around $250. However, as cases become more complex (such as needing representation for a dispute with the IRS), your fees could be $5000 or more.
Tiered Pricing
Some tax relief companies also offer tiered pricing based on your tax debt amount.
That might look something like this:
- Owing under $10,000: $750 to $1,500
- Debts between $10,000 and $25,000: $1,500 to $2,500
- Debts over $25,000: $2,500 to $5,000 or more
Hourly Rates
Tax attorneys and CPAs often charge hourly rates. These usually land somewhere between $200 to $500 per hour.
Retainer Fees
Sometimes, you might also pay retainer fees for tax relief services, ranging from $1,000 to $5,000. Again, this will depend on the complexity of the case.
Contingency Fees
Contingency fees (where the company charges a percentage of the tax savings achieved) aren’t as common. These work a bit differently, and you’re charged for what they help you save rather than a flat fee or hourly rate. Usually, this charge is between 10% to 30% of the money saved.
Costs for Other Tax Relief Services
We know more about some of the different pricing structures, but what does that look like regarding the specific services you might need?
Here are some of the actual tax debt settlement fees you might need and what they could cost you depending on the pricing structure used to charge you:
- Discovery/investigation fee: Often ranges from $250 to $750
- Offer in compromise: Typically costs between $2,000 and $7,500
- Installment agreements: Generally priced between $1,500 and $5,000
- Penalty abatement: Usually falls in the range of $250 to $1,000
- Innocent spouse relief: Typically ranges from $3,500 to $5,000
- Currently not collectible: Generally costs between $1,500 and $4,000
Additional Costs
Along with these different tax relief fee types, anticipate paying some additional costs which might include filing fees (which can be a few hundred dollars), document preparation fees, and charges for additional services.
Tax Relief Related Articles
How Much Do You Have to Make to File Taxes? Income Guidelines Explained
How to Open an Account With The IRS
Tax Season 2024: It’s Time to File
Tax Season Is Here: Learn Savvy Ways to Use Your Tax Refund
Factors that Influence Tax Debt Settlement Fees
Next, let’s look at some factors that will affect how much you pay for these services.
Complexity of Your Tax Problem
The more complex your tax issue, the higher the potential cost. For example, resolving a simple tax debt may be less expensive than dealing with multiple years of unfiled tax returns or facing a tax audit.
Type of Tax Relief Service
Tax relief companies offer a range of services. Each of these services may have different pricing structures:
- Tax Debt Settlement: Negotiating with tax authorities to reduce the total amount you owe.
- Tax Penalty Abatement: Seeking forgiveness of penalties and interest on unpaid taxes.
- Offer in Compromise: Settling your tax debt for less than the total amount owed.
- Installment Agreements: Establishing a payment plan to pay off your tax debt over time.
- Tax Audit Representation: Assisting IRS or state tax audits.
Here's another article you don't want to miss next: The Top Tax Apps and Software for Hassle-Free Filing.
Company Reputation and Expertise
Reputable tax relief companies with experienced tax professionals may charge higher fees. However, they may also more effectively resolve your tax issues efficiently.
Location
Your location can also influence the cost of tax relief services. Prices may vary from region to region, so getting quotes from multiple companies is a good idea.
Haven't filed your tax return yet? Read this article next to find out what to do.
Are Tax Relief Programs Worth It?
Whether tax relief programs are worth the cost depends on your circumstances.
There are several factors to consider before going down this path, including:
- Financial Distress: If you're facing severe financial hardship due to tax debt, it may justify the cost of hiring a tax relief company to prevent further penalties and legal actions.
- Complexity: Is your tax issue complex and you’re not experienced in dealing with tax matters? Then professional help can save you time, stress, and potentially more money in the long run.
- Peace of Mind: Hiring a tax relief service can provide peace of mind, knowing experts are handling your tax problems and working to find the best possible solution.
So, if you are in financial distress, dealing with a complex tax issue, or seeking peace of mind, hiring a tax relief company may be a valuable investment. However, we encourage you to carefully evaluate your needs, explore your options, the potential cost of services, and the reputation of the company you choose to ensure it aligns with your financial goals and circumstances.
Calculating Tax Relief Costs
Request quotes from multiple reputable companies to better understand the cost of tax relief services in your specific situation.
Be sure to inquire about:
- Their fees
- Payment options
- Any additional costs
Bottom Line: Tax Debt Resolution Fees
Tax relief companies charge varying fees based on the complexity of your tax issue, the services you need, their reputation, and your location. While professional tax help can be costly, it can also provide invaluable assistance in resolving tax problems and relieving financial stress.
Ultimately, hiring a tax relief company should be based on your circumstances and its potential benefits. If you're considering tax relief services, assess the costs and benefits and talk to a tax expert to understand your choices. Remember, it's about finding the best solution for your tax situation.
FAQ
What services are typically included in the fee?
Tax relief companies may offer a variety of services. The specific services included in the fee will vary depending on your needs and the company's offerings.
Are there any hidden tax debt settlement fees or additional charges?
Carefully review the terms and conditions of any tax relief company before hiring them because, in some cases, yes, companies may charge extra fees for certain services or add-ons.
Can I negotiate the fee with the tax relief company?
Some tax relief companies may be open to negotiating fees; remember, their services are valuable and must cover costs. Discussing the fee upfront and agreeing before signing any contracts is best. Be aware of companies who promise unrealistic low fees or make guarantees about specific outcomes - these could be red flags for potential scams.
Article Topics
Taxes
Kelly is an accountant, college accounting and finance instructor, entrepreneur, and freelance finance and business writer. He has a Bachelor of Management, an MBA, and a CPA. In his free time, he enjoys endurance cycling, and his only claim to fame is that he once rode his bicycle across Canada – 7,000+ km over 64 days.
