Understanding Tax Relief Services: Costs, Benefits, and Alternatives
Understanding Tax Relief Services
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- Tax relief services assist individuals with tax debt in applying for IRS payment plans.
- They often charge high fees for services taxpayers can accomplish independently.
- If you’re struggling to pay your tax bill, we recommend contacting the IRS first to discuss your options.
If you’re one of the many Americans facing federal tax debt, you may be considering tax relief services. While tax debt is a serious concern, you usually don’t need a professional to get relief. In fact, doing so can significantly increase your bill.
If you’re facing financial challenges, it’s almost always cheaper to negotiate a payment plan directly with the IRS or your state tax agency.
What are Tax Relief Services?
Defining Tax Relief Services
A tax relief service is a company that helps you formulate a plan to pay back taxes by liaising with the IRS on your behalf. If you owe the IRS, hiring a professional may seem like the smartest option — but it’s costly and often unnecessary.
“I believe some of these companies are taking advantage of people a bit, exploiting their fear of the IRS,” says Greg Hudgins, a CPA in Florida and New York.
The Federal Trade Commission cautions individuals to be wary of any tax relief company or professional charging high upfront fees and making false promises to “eliminate” or reduce your tax debt or stop back-tax collections.
While there are some legitimate tax relief services, the average taxpayer can negotiate their tax debt on their own, often by applying online for a payment plan or offer in compromise.
“This isn’t something that requires any magic or any specific training. It’s just a form that gets filled out and submitted,” Hudgins says.
Types of Available Tax Relief Services
Over 11.3 million Americans owes on federal taxes at the end of 2023, making tax relief services widely advertised. But they often aren’t as good as they seem.
“Be cautious; many charge high fees and their success is not guaranteed,” says Paul Miller, managing partner and CPA at Miller and Company, an accounting firm with offices in Florida, New York, and Washington, DC.
“Instead, consider reaching out to
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