You’re drowning in tax debt. You don’t know what to do.
The IRS is sending you letters. Your stress levels are through the roof. You don’t know where to turn.
It’s easy to feel that way. Tax problems suck. They can also be complex and overwhelming.
But you’re not alone. In fiscal year 2024, the IRS collected nearly $77.6 billion from taxpayers who owed but had not yet paid, which represents an enormous number of people.
The good news is, if you owe taxes, tax resolution services are here to help. There are programs and procedures available to you to get back on track.
Here’s how tax resolution services work and how to know if you need one.
Understanding Tax Resolution Services
Tax resolution services are professional services that help taxpayers resolve tax debts owed to the IRS. These are companies or individuals that work with you to figure out the best way to get out of debt.
Tax resolution professionals are your advocate when it comes to dealing with the IRS. They know the tax code and how to negotiate with the IRS. This means they can get better results for you.
Most tax resolution companies only take on clients who owe at least $5,000 to the IRS. That’s because anything less is often not worth the cost of professional fees.
The value they provide lies in their knowledge of IRS procedures and requirements. They know which relief programs you qualify for, and they can prevent you from making mistakes that can make your situation worse.
The Different Types Of Tax Relief Programs
The different types of tax debt resolution include:
- Installment Agreements
- Offer in Compromise
- Penalty Abatement
- Currently Not Collectible Status
The solution that’s right for you will depend on your financial situation and the IRS’s requirements.
Installment Agreements
Installment Agreements are one of the most popular solutions. In fiscal year 2024, the IRS collected more than $16 billion in installment agreements. These agreements allow you to pay your tax debt in monthly payments instead of a lump sum.
The IRS offers both short-term and long-term installment agreements. Short-term plans give you up to 180 days to pay off your debt, while long-term plans can go for several years, depending on how much you owe.
Offer in Compromise
An Offer in Compromise (OIC) is an agreement that settles your tax debt for less than the full amount owed.
It sounds amazing, right?
But here’s the catch…
It’s difficult to qualify for an OIC. The IRS will only accept it if they believe they cannot collect the full amount or if it would be a financial hardship for you to pay the full amount.
Penalty Abatement
Penalty abatement is a program where the IRS will forgive or reduce penalties associated with your tax debt. This does not get rid of the tax you owe but can significantly reduce the total amount you owe.
To qualify for penalty abatement, you will need a reasonable cause, such as a serious illness, natural disaster, or other circumstances beyond your control that prevented you from paying your taxes on time.
Currently Not Collectible Status
If you simply cannot afford to pay anything to the IRS right now, you may be able to place your account in Currently Not Collectible status. This will temporarily halt collection activities.
But here’s the thing…
This does not eliminate your debt. The IRS can still collect against you in the future through tax refunds. Interest will also continue to accrue on your balance.
When Should You Get Help?
It’s not necessary to get tax resolution services for every tax problem. In some cases, you may be able to handle things on your own.
However, you should consider professional help when:
- You owe more than $10,000 to the IRS
- You are being threatened with wage garnishment or bank levies
- You have not filed tax returns for several years
- You are being audited and don’t understand the process
- You have attempted to resolve the issue yourself without success
Did you know nearly 23% of taxpayers who owe taxes expect to incur debt to pay their tax bill?
Getting help as early as possible is best, even if you think you can handle it on your own. Tax problems compound over time — the more you wait, the more expensive they become due to penalties and interest.
How To Choose The Right Tax Professional
Not all tax resolution companies are created equal, and not all companies are legitimate. Some are skilled professionals who can help you with your problem.
Others… well, not so much.
The FTC warns of companies that overpromise results, misrepresent the time it takes for resolution, or use deceptive practices to take your money. Stay away from tax resolution services that:
- Guarantee to settle your debt for “pennies on the dollar”
- Require large upfront fees before even reviewing your case
- Promise results without first analyzing your finances
- Instruct you to stop communicating with the IRS
Look for tax professionals who:
Have enrolled agents, CPAs, or tax attorneys on staff. Tax professionals must have credentials to work on tax issues. Look for EA, CPA, or EA credentials, which indicate an individual has the training and authorization to represent you before the IRS.
Offer a free consultation to review your case. Reputable companies want to understand your situation before charging you money.
Set realistic expectations about what they can do and how long it will take. Tax resolution is not quick or easy — anyone who promises miracles is probably lying.
Have a history of positive reviews and solid track record. Check BBB and online reviews for other clients’ experiences.
Taking Action On Your Tax Problems
Tax resolution services exist because the tax code is confusing, and the IRS is scary. You don’t need to deal with your tax problems alone.
The key is to take action sooner rather than later…
The longer you wait to resolve your tax issues, the more penalties and interest you’ll owe. The IRS has powerful collection tools, including wage garnishment and bank levies.
But with the right help, most tax problems are solvable. Whether you need to set up a payment plan, qualify for an offer in compromise, or get penalty relief, there is usually a solution.
Don’t let fear or shame prevent you from getting the help you need. Tax professionals have seen every problem before and are there to help you find the right solution for your situation.
Your Next Steps
Tax resolution services exist because the tax code is complicated and the IRS can be intimidating. If you owe taxes, you don’t have to tackle your tax problems alone.
Tax resolution services offer programs and help to get you back on track.
Remember these points:
- Getting professional help makes sense when you owe more than a few thousand dollars
- There are multiple types of tax relief programs, depending on your situation
- Choose tax professionals with proper credentials and realistic expectations
- Don’t wait — act now before your situation gets worse
The IRS isn’t going away, and neither is your tax debt. But professional tax resolution services can guide you toward a manageable solution to resolving your tax problems and restoring your financial peace of mind.
Take the first step today, whether scheduling a free consultation or gathering your tax documents. Your future self will thank you for taking action now rather than waiting until the situation becomes even more complicated.
