Tax Resolution Services Cost and Pricing Guide

The tax resolution services cost and pricing guide will help you create an initial budget for hiring a tax resolution firm or a licensed tax professional to help you end your tax issues. It outlines how much tax relief services cost, what to expect when hiring a firm, and red flags to watch out for.

At TaxCure, we understand that paying a tax resolution firm or a licensed tax professional to resolve your personal or business tax problems is a complicated decision, but we also know that hiring the right pro is an investment in your long-term financial security. As former owners of a tax resolution firm, we strive to cut through the clutter of review sites that list pricing estimates that are often inaccurate. Our goal is to empower you with the information you can rely on to help you set a budget.

Key takeaways

• Word of caution - Don't sign up for tax relief services unless you understand which services you're getting and how the fees are calculated. 
• Payment structures - Tax relief pros may charge all upfront, a down payment followed by monthly payments, or a monthly retainer. 
• Average cost to resolve tax problems - tax relief services cost $3500 to $5500, but a lot of cases fall above or below that range.
• Average costs for tax relief services:
  • Initital investigation fee - $500 to $1200
  • Tax prep - $3500 to $5500.
  • Installment agreements - $2500 to $3500
  • Penalty abatement - 35% of penalties, with a base fee of $250
  • Offer in compromise $4000 to $7500
• Extenuating factors - The exact price you pay depends on the firm you hire and the complexity of your case.

What to Expect When You Contact a Tax Relief Company

Most tax relief firms start with a free consultation. This gives you a chance to see if the company can handle your problem and to determine if they're the right fit for your needs. However, you need to be careful - a lot of the so-called "best" tax relief companies use the initial consultation as a sales pitch - they do whatever they can to get you to sign up for their services.  To protect yourself, check out the section below on red flags before calling a tax relief company. 

After the free consultation, most companies start with an investigation - this involves pulling your IRS transcript, talking with you about your finances, and creating a resolution plan. This part of the process takes a significant amount of time and work, so it's rarely free. Tax pros generally charge $500 to $1200 for this service, but in some cases, they may subtract those fees from the cost of your final services. Be wary of companies that offer a free or low-cost investigation - often, they just get you to do that so that you sign up for their services, and then, they overprice the services. 

Then, the tax pro or resolution company moves forward with the resolution you have decided upon - depending on the situation, that may include filing tax returns, setting up payments, requesting penalty abatement, applying for a tax settlement, etc. The company may also need to stop collection actions such as appealing liens, wage garnishments, or levies, which may come with additional fees.   

How Tax Resolution Fees Are Structured

The way a tax resolution company charges client fees varies by company. However, we can generalize how these fees are structured:

• Flat Fee Structure - Flat fees can refer to two things:
   
  • A flat fee for the total service. In other words, resolving everything from soup to nuts, including tax preparation for an IRS or state issue. Usually, if you have a problem with multiple tax agencies (IRS, State), there is a separate flat fee for each tax agency.
  • Some firms may have flat fees for specific resolutions that vary based on your tax amount owed. In other words, a sliding fee scale for a payment plan based on the total amount you owe the IRS or State.
     
• Hourly Rate Structure - Some tax relief firms and licensed tax professionals will bill on an hourly basis. Their fees can range from $200-$550 per hour.

How Tax Resolution Companies Charge Fees

Once a tax resolution firm has detailed out their fees for specific services, ensure you understand how you will pay them via their contract or agreement:

• Total Fee Upfront – Some tax resolution companies or tax firms require the entire fee upfront. Others offer payment plans but will give you a discount if you pay in full.
• Part of the Fees Upfront – Some tax resolution companies or tax firms will ask for part of the fee upfront to get started. You end up paying the rest of the fee over a series of monthly payments.
• Continuous Monthly Payments Until Case Closure – Other tax companies continue to charge you a monthly fee until the case is complete. They may even have a hefty upfront fee.

How Much Do Tax Relief Services Cost?

The average tax resolution case tends to be around $3500-$5500 - that includes both tax prep and applying for IRS resolution options.

If a business, such as a partnership, LLC, C-Corp, or S-Corp, is involved, the fees will generally be in the $5000 to $7000. That's because tax prep for the business will generally lead to an overall higher cost, especially if you need to file payroll returns such as 940s or 941s. 

Major firms that spend a great deal on advertising usually charge substantially more for the same services you can find elsewhere. Generally, the firms with nationwide name recognition spend so much on advertising that their fees need to be higher to compensate for marketing costs. To learn more about those firms, check out our guide to the worst tax relief firms.

Other Factors to Consider With Pricing

Although the average case is between $3500-$5500, that doesn't mean that your fees will necessarily fall into that range. There are many different services offered by tax resolution companies that all vary in price. Usually, the more complicated and intensive the service, the higher the cost. For example, typically, an Offer in Compromise will carry higher fees than a simple payment plan.

Another factor in the price of the service is the tax amount owed by the taxpayer. As the tax amount increases, the complexity of services usually increases. For example, the IRS requires more documentation and financial information for taxpayers that owe over $50,000. By extension, the more you owe, the higher fees you may end up paying, and conversely, if you don't owe much, the fees for tax relief services may be lower.

Pricing Guide for Specific Tax Relief Services

Below you will find the standard services offered by tax relief companies and the average fees associated with each service. Realize, in most cases, tax preparation is a separate fee in and of itself unless the tax preparation is simple.

Initial Investigation: Tax Transcript Review, Compliance Check, & Financial Analysis

To determine what needs to be done, the tax firm or one of the firm’s licensed tax professionals will obtain your tax transcripts, sometimes by filing Form 4506-T.  During this process, the tax pro learns how much you owe, including tax debt, penalties, and interest, when the tax debt expires, and whether or not you have unfiled tax returns. Then, the tax relief pro learns about your financial situation to determine which relief programs you may qualify for. 

As noted above, companies typically charge $500 to $1200 for these services. However, there are a few caveats - some companies will reimburse this fee if they realize during the review process that you're not going to qualify for relief. Others may credit this fee to the services that you get. In other cases, tax relief firms use a low investigation fee to convince you to sign up for their services, and that's why, even though low fees sound great, you need to be wary, as too-low fees can signal potential problems with the company you're hiring.

Installment Agreements

If the tax resolution company is setting up a payment plan or installment agreement with the IRS or state for an individual, the average fee will range from $2500 to $3500. Many firms may charge you more for setting up a business-related payment plan.

Partial Payment Installment Agreement

Although similar to a regular Installment Agreement, a PPIA requires more work. This type of agreement often results in a taxpayer paying less than they owe. The average fee will range from $3500-$5000.

Penalty Abatement

Penalty abatement often runs as an add-on to an installment agreement (payment plan). However, it is also provided as a stand-alone service by many firms. Pricing ranges from $250-$1000. However, always make sure you are abating more penalties than the total fee - it doesn't make sense to pay $250 to abate just $100 in fees, for example. Some companies may structure a small baseline fee for penalty abatement coupled with a price equal to your tax savings. For example, the cost may equal 35% of the penalties reduced, along with a base fee of $250.

Offer In Compromise (OIC)

If you are pursuing an Offer in Compromise, expect your case to be around $4000-$7500. Always ensure there are no additional costs to appeal or place you in the next best resolution if the IRS or State does not accept your OIC. However, the cost varies based on your situation and the OIC tax services that you need. 

Currently Not Collectible Status (Hardship aka CNC)

A CNC usually runs around $2500-$4000 on average.

Innocent Spouse Relief

Innocent spouse relief costs around $3500-$5000 on average.

Tax-Related Identity Theft

This service ranges from $2500 to $5000, depending on the severity of the case.

Tax Preparation

The type of tax return that you need to file mostly determines the price. Is it a personal, estate, or business income tax return?  Individual tax preparation ranges from $200 to $375 per year, with higher fees if you are self-employed. Tax preparation for partnerships and corporations can vary from $500 to $2,000, depending on the complexity of the return. If you need bookkeeping services to complete a tax return, then you will usually pay an hourly rate.

It is essential to understand that there are no “special programs” that certain tax firms offer that others cannot provide. Some tax resolution firms can handle certain state taxes or certain types of taxes better than others. In the end, the experience of the licensed tax professionals working your case counts. Just because a tax professional is a CPA, EA, or tax attorney, does not mean they have tax resolution experience.

Red Flags - How to Protect Yourself From Deceptive Pricing Practices

Unfortunately, there are some shoddy practices within the tax relief industry - that's why TaxCure was created to increase transparency in this industry and to help taxpayers connect with experienced, trustworthy tax professionals. To protect yourself, be aware of these red flags:

• Misleading program names - Tax relief companies often try to create buzz by using misleading program names for tax relief. For instance, they might really push the idea of a limited-time Fresh Start program, one-time tax forgiveness, or even something that piggybacks on current events like "Trump" tax forgiveness. Avoid these companies and work with pros who are straightforward about which type of relief they're applying for (installment agreement, offer in compromise, innocent spouse relief, etc). 
• Deceptive service names - Some companies may also use program names that vary slightly from the IRS's real relief programs - for instance, they may call an installment agreement an affordable payment plan. While that's not intrinsically problematic, it is something that these companies do purposefully - if you don't know the name of the program, it's harder for you to research options on your own, and then, you have to use their services.
• Promising results before doing an investigation - A seasoned tax pro can often tell you which relief programs you may qualify for, with just a few details about your situation. But that said, you need to be very wary of companies that make big promises before doing an initital investigation. Some companies will promise you that they can settle your debt before they understand your personal finances or your history of compliance, and they're often just overselling services to get you to pay upfront. 

Why You Should Use TaxCure to Find Help for Your Tax Problems

Our experience in the tax resolution industry allows us to provide you with this pricing guide. As a mission, we decided to provide better transparency to the tax resolution industry by allowing taxpayers to find a tax professional who specialized in their specific tax agency, tax type, tax problem, and more. Start your search for a top-rated tax professional below. Our technology allows you to filter by the types of problems, solutions, and agencies that the professionals specialize in. Feel free to talk to multiple professionals. Also, consider reading our How to Find the Best Tax Relief Company guide. 

Are You a Tax Resolution Professional?

Get found by taxpayers looking for your services by signing up with TaxCure today! We have the largest directory of tax resolution professionals in the country. Get found by the taxpayers in need of the unique services that you offer. Simply define the agencies, problems, and solutions you help with, complete your profile, and get found! Are you looking to offer tax resolution services? Read our complete guide on how to start offering tax resolution services for your business. We provide details on where to get trained, how to market your services, and much more.