Tax Relief Services: How Do Tax Relief Companies Work?
If you owe taxes or have a serious tax problem, tax relief services can be essential. Tax relief services help you deal with unfiled returns, unpaid taxes, and other tax-related problems. Depending on your situation, tax relief pros can help you eliminate penalties, stop wage garnishments, prevent asset seizure, and get back into compliance with the IRS and/or the state tax agencies. In some situations, they may even be able to help you reduce your tax debt and settle for less than you owe, and tax attorneys, in particular, can also help if you're facing criminal tax charges or issues with tax fraud.
The right option depends on your unique financial situation, and arguably, the most important role that a tax relief pro provides is helping you identify and execute the best possible resolution for your tax problem. Keep reading to learn more about how tax relief companies work and how to find the best company or tax pro for your needs.
Finding the Best Tax Relief Services
How do you find the best tax relief company? If you're like most modern consumers, you will start with an internet search, but unfortunately, the results you're likely to get may not take you in the right direction. The majority of big review sites only list a handful of tax resolution companies. These sites cover the big, nationwide firms, and although these companies are the biggest, they aren't necessarily the best option. These companies focus heavily on the sales side of operations, and by extension, their services tend to suffer. Imagine hundreds of salespeople closing deals for a handful of tax pros to work - that isn't a good setup for the consumer. Our guide to the worst tax relief firms outlines some of the red flags that you'll see if you consider a big tax resolution firm.
Instead of looking at the big companies, consider looking for a local tax professional who specializes in tax debt relief. There are three types of tax professionals who can represent you in front of the IRS, and they include tax attorneys, CPAs, and enrolled agents. However, it's important to note that all of these pros specialize in different things. For example, some CPAs focus on preparing tax returns for small businesses, while others focus on accounting for big corporations. Others focus specifically on tax relief services. For the best results, you want to find a local pro who can help with both IRS and state tax issues, and you want to ensure that they have experience with your specific tax problem.
TaxCure has a directory of tax relief professionals. Using our search feature, you can look for tax pros in your local area, and you can narrow down the results based on your specific concern. Also consider talking with friends, relatives, and business colleagues for recommendations. If you have a CPA or an attorney, talk with them, as they may know someone who specializes in tax relief services.
How to Evaluate Online Reviews for Tax Relief Services
When considering a tax relief company or tax professional, it is important to know how to assess online reviews. Many different sites offer different types of insight, and you need to know which ones to place more weight on in order to make an informed decision.
Understanding Various Review Platforms
Review sites are not all the same. Some only feature companies that have paid to be on the site. Others allow user-submitted reviews, but in that category, some sites vet the reviews, while others have a lot of fake reviews. Sites like the Better Business Bureau have a bit more legitimacy, but even then, you must beware that a company's rating has more to do with how it resolves complaints than it does with the number of complaints lodged. Before trusting the info on a review site, make sure that you research the site and learn how its reviews work. Look for an advertising disclaimer and/or find out how the site vets user-submitted reviews.
Signs of Trustworthy Reviews
If you see detailed personal narratives that outline both positive and negative experiences of consumers who are or were clients of the company, that is a sign of a trustworthy review. These reviews contain information about the services performed and interactions with the professionals and reflect genuine customer interactions. Additionally, a mix of recent reviews and older reviews is a good indicator of consistency with their business and less likelihood of manipulation happening. Unfortunately, it can be hard to find reviews like this. Even trusted brands like Forbes don't publish reviews that involve consumer experiences. Instead, they just summarize info from the company's website.
Red Flags of Subpar Review Sites
First, with online magazines or review sites, check the top of the page to see if there is a disclaimer. Many sites will contain a disclaimer that most people don’t read, which states that the ranking of the companies is influenced by what they pay. There are many variations of these disclaimers, so be aware of that. With user-submitted review sites, be cautious of sites that seem to have an overwhelming majority of positive reviews that repeat similar phrases and lack the actual first-hand experience you would expect, as this may indicate manufactured reviews. In contrast, many trustworthy review sites have algorithms to delete these types of reviews.
Comparative Analysis
To get a good overview of the tax relief company or the tax relief professional you are considering, compare reviews across multiple platforms. For example, consider reading reviews from a site like TaxCure (we have a detailed review process and validate each review), Google Business Profile (generally type in the brand name of the company and location, and you will see Google’s listing), and the BBB can usually provide a well-rounded picture of the company’s reputation. Avoid and ignore those sites that have advertising disclosures for ranking companies.
Looking at Pros & Not Companies
When you need help with a tax problem, you should consider the tax professional who is going to be working on your case. When evaluating a company, look at its "about us" page to learn more about the tax pros on the team. Consider their education, experience, and if they have any special tax relief credentials like a Certified Tax Resolution Specialist or a similar credential. When you have a free consultation, ask which pro will work your case, and make sure that you will have direct contact with them. For the best experience possible, you want to work with a tax pro. You don't want to deal with a salesperson as your liaison.
Remember a company is made up of the tax professionals who work there. Because of that, you should look at tax pros, not just companies. Understanding the experience of the tax professionals who will be working on your case is essential, and TaxCure has made it easier than ever to evaluate professionals based on their experience. Start a search by clicking “Find a Local Tax Pro” at the top of the page.
Case Study on Evaluating Reviews
As an exercise, we will evaluate the reviews of several tax relief companies and highlight some critical aspects to look at and consider. If you would like a particular company evaluated, please email [email protected], and we will provide our analysis of places to look and avoid when evaluating the company.
Case Study 1: Optima Tax Relief
Optima Tax Relief is one of the larger firms that spends a lot of money on brand awareness. They have listings on many review sites and are a good example of which review sites can be trusted and which ones cannot. Knowing where to look is essential to getting a good company assessment.
Free Tax Consultation With Tax Relief Services Assessment
Once you find a few tax relief pros or companies that might be able to help, the next step is a free consultation. It typically lasts about 30 minutes but can take longer. During the discussion, a tax professional will qualify you and ask you questions about your tax and financial situation to ensure you would benefit from tax services. Then, they may tell you which resolution option will help you the most.
However, the consultation is also a time when you can decide if the company or pro is a good fit for you. When talking with them, make sure that they have the experience you need, and pay particular attention to their knowledge of state tax issues. This is one area where most of the big nationwide firms fall short. Also, watch for lies and harsh sales tactics. For example, if the person on the phone says that you will qualify for the fresh start program but only if you sign up right now, that is a big red flag that you're talking to a company that doesn't have your best interests in mind.
In fact, that's actually why many big companies use unlicensed salespeople to handle the initial consultation. Salespeople can make outlandish claims like that. In contrast, tax pros such as CPAs, tax attorneys, and enrolled agents are bound by the ethical rules of Circular 230.
You can search for top tax professionals by agency and problems using the form below. At TaxCure, we have developed a system that allows taxpayers to find top-rated tax professionals by tax agency, problem, solution, and more. Start your search today.
What Are Paid Consultations?
Although most tax relief companies offer free consultations, some only offer paid consultations where you pay a set fee for the tax pro's time. That's not necessarily a bad thing--many extremely high-quality, experienced tax attorneys will only do paid consultations. In those situations, you will likely share a bit about your tax problem in the first call or email. For example, you may say, "I have unpaid taxes and I want help setting up payments" or you may say, "I have unfiled FBAR returns." In either case, the company will tell you if they can help or not. Then, if you like, you can pay for a consultation. During that paid meeting, you will get info on the best resolution methods. Then, if desired, you can move forward with the company as explained below. The reason some companies only offer paid consultations is because they don't want to give out advice for free.
After You Choose a Tax Relief Firm or Tax Professional
Once you choose a firm or an individual licensed tax professional, you typically start by signing an 8821, or a Tax Information Authorization form. If you are representing a business, you will be required to use this form as well. This form enables a licensed tax professional to complete a tax compliance check to find out the services you may need along with your tax options.
Tax Resolution and Settlement Process Begins
After a licensed tax professional reviews your tax transcripts and gets an understanding of your financial situation, the company will generally present you with a list of IRS programs and/or state tax programs you can pursue. If you have unfiled returns, they'll also help you make a plan to catch up on those. You don't qualify for most relief programs if you have unfiled returns. At this point, the tax relief firm will generally provide you with a breakdown of the fees involved.
Some common IRS solutions are the following,
- An Installment Agreement (payment plan)
- Hardship Status Request (Currently not Collectible)
- Partial Payment Installment Agreement (PPIA)
- Offer In Compromise
- Innocent Spouse Relief
- Audit Defense
- Identity Theft Victim Assistance
The goal is to balance what the IRS/State will accept with your budget. Each state has its own set of solutions they offer as well. Many of the solutions mirror what the IRS offers, but will require completely separate filings to address state issues.
If you want to move forward, the company will assign your case to a tax attorney, an enrolled agent, or a CPA who will be representing you or your business if you agree to the services and fees. Before representation becomes active, you will need to sign a 2848 or Limited Power of Attorney form (POA) so that the licensed tax professional can resolve your tax problems by directly speaking to an IRS agent or Revenue Officer. In some cases, several professionals may work together on your situation. Your tax professional handles all the paperwork associated with applying for a settlement or payment plan.
The process is not always quick, but once you hire a tax firm, at least you are moving in the right direction. You can save money and eliminate stress by tackling your problems sooner rather than later.
Settlement Approved and Taxpayer in Full Compliance
When the IRS approves the proposal, you make the required payment. For instance, if you applied for an offer in compromise, you pay the agreed-upon amount if the IRS accepts the offer (generally have to wait 9-12 months). The IRS is entirely off your back, but you have to ensure you stay compliant with tax filings and payments for the next five years.
After that, as long as you stay up to date on payments and compliant with future filing requirements, you stay in good standing with the IRS. Your tax professional will also give you tips on how to avoid future tax problems. Last but not least, once you set up a resolution with the IRS, and the tax professional provides future guidance, the licensed tax professional will generally withdraw the POA with the IRS.
How Much Do Tax Relief Services Cost?
The cost of these servies varies based on what you need and the complexity of your problem. Costs can also vary baed on your area and the type of tax pro that you hire. When thinking about costs, think about value. You don't necessarily want the cheapest option. Instead, you want the best value for your situation.