Tax relief is an essential service for millions of Americans who carry a tax balance and owe money to the IRS. The IRS is the most significant collections agency in the world because they are responsible for collecting the revenue for the United States government. All government and federally funded programs receive their cash from the taxes collected by the IRS, which gives them immense responsibility.
Since the IRS is responsible for collecting so much money, they have the ability to garnish wages, levy assets, and place liens on your property if they do not receive the taxes owed to them.
Fortunately, many tax relief programs are available to taxpayers before the IRS resorts to their extreme collection tactics, but many consumers are unaware of how to utilize them.
Tax Relief companies provide a useful in-between for many Americans, especially those with large tax debt balances that are struggling with their cash flow. This guide will detail how tax relief companies operate and what you can expect from working with one.
Tax Debt Is A Serious Problem
Although many American taxpayers factor a tax refund into their annual budgets, millions of people end up owing more taxes than they paid or had withheld from their paychecks. In that case, they may not have enough cash on hand to cover their balance, or they may owe back taxes from previous years.
Each tax situation is unique, and the IRS has many tax relief programs that can mitigate overall tax liability. People who are currently up to date on their taxes can use tax deductions, tax credits, and tax exemptions to lower their taxable income and tax bill.
These credits and exemptions come from education and childcare expenses, business deductions, and more. People who are already behind on their taxes have other tax relief opportunities such as the IRS Fresh Start program, which can help consumers settle for less than what they originally owed to the IRS, and they can also get on a monthly payment plan that will end when their current balance is paid off.
Tax Relief Companies
Tax relief companies help taxpayers identify programs that can help mitigate some of the financial strain caused by tax debt and ultimately help improve their financial situation. Many of the most highly-rated tax relief companies follow a methodology that allows them to learn about your tax relief goals while building a blueprint to negotiate with the IRS on your behalf.
- Consultation
The first step in working with a tax relief company is a consultation. Most of the best tax relief companies offer their consultations for free, so they can understand your tax relief needs and ultimately decide on if they can help you or not.
If your tax bill is small enough, they may point you in the direction of a resource that you can work with independently, or if you have a considerable balance, they may recommend working with them immediately.
- In-Depth Review
Once you contract a tax relief company, they will thoroughly review your financial situation and tax liabilities. Since each tax situation is unique, the review portion of the tax relief process is critical since there are different strategies that can apply depending on how much you owe to the IRS.
Income changes and your ability to pay bills are some of the most dynamic metrics that the IRS uses to negotiate settlements. Your tax relief company will compile your financial data and do its best to paint an accurate financial picture for you and the IRS as they begin to help file for tax relief.
- File Documents and Apply For IRS Programs
If you have a large back tax bill and cannot pay it all due to your financial circumstances, you may be eligible for the IRS Fresh Start program. The Fresh Start program enables eligible taxpayers to settle their outstanding tax bills for less than they cumulatively owe. Tax relief companies can help you file the appropriate documents for this program, but they cannot guarantee approval.
People who are ineligible for the Fresh Start program can often settle for an affordable monthly payment to the IRS so that they do not garnish wages or seize assets.
How Much Do Tax Relief Companies Cost?
Tax relief companies have different payment methods depending on your tax bill and how intensive your situation is. Many tax relief companies charge an hourly rate plus a percentage of the taxes they reduce if they are successful.
If your tax situation is relatively straightforward, they may only charge a flat fee to file documents on your behalf.
Who Are Tax Relief Companies For?
Tax relief companies are designed to help taxpayers who feel trapped in their tax debt or want to get ahead on their taxes by proactively filing their taxes with certified tax professionals. Different tax relief companies specialize in different areas, including personal tax debt, business taxes, and even regular tax filing if they have accountants on staff.
How to Determine If a Tax Relief Company Is Right for You
If you are considering hiring a tax relief company, it’s best to have a rough estimate of your tax debt balance and utilize complimentary consultations to your advantage.
We have a library of guides and reviews that can help you understand how tax relief works and who some of the most reputable tax relief firms are.
* This content is not provided by the financial institution or the offer’s provider. Any opinions, analyses, reviews or recommendations expressed here are those of the author’s alone, and does not constitute a financial or expert advice.