What is Tax Relief & How
Does It Work
Some tax rules have
changed due to coronavirus
As part of the U.S. government's ongoing
response to the coronavirus, the tax deadline is now July 15, 2020. Learn more
about this and what else is different this year for taxpayers.
Tax season can be a very stressful and
anxiety-inducing time for some people, especially when you are, or think you
may be behind on your taxes. For those that struggle to pay their taxes on
time, there may be options to qualify for some form of tax relief.
Tax relief, by definition, is a reduction
in the taxes that are owed either by a business entity or an individual
taxpayer. Many people who face a tax burden do not have enough liquid assets to
pay back the full amount.
Aside from payment plans directly from
the IRS, there are alternatives to relieving some or all of your tax debt. Tax
resolution companies specialize in strategies to reduce the amounts of taxes
owed, including installment plans, and negotiation directly with the IRS on
behalf of the taxpayer or business.
How does it work?
At the core of it, tax relief companies
specialize in hiring and training tax experts to be on call to assist with
clients in need. The services that these tax experts typically provide to their
clients can range from serving as an intermediary between them and the IRS, as
well as helping the consumers negotiate tax relief programs, settlement
agreements, and installment agreements.
For a tax relief company and their
experts to begin work and negotiations on your behalf, it’s commonplace to
require clients to sign contracts, which include the full scope of work of the
arrangement as well as potential insurance policies.
If you owe outstanding tax debt, it
should be your goal to pay it off as quickly as possible. Tax bills that go
unpaid can quickly rack up late fees, penalties, and more costs that can
drastically add to the sinking sum of your debt. However, the IRS is typically
flexible with late payments if you can make an effort to and commit to a
Besides tax debt as described in the
beginning half of this article, there are various other reasons and problems
that one would seek assistance from a tax relief company for. Among those, are
Penalties & Interests
When taxes aren’t filed correctly, more
penalties and potential costs could be incurred, such as “failure to pay”
penalties. These debts add up quickly, especially considering the IRS’s daily
compounding interest rate from the due date until it is fully paid off.
If you don’t make arrangements or payment
plans for the outstanding tax debts that you owe, the IRS can legally seize
your assets or other finances you may possess.
Unfiled Tax Returns
Even if you can’t pay entirely what you
owe at the time, it’s always best to at least file your taxes on time, then work on a payment plan or with a tax
relief company to secure the payments afterward. Failure to do so can result in
a whole new line of penalties and added costs.
The Cost of Tax Relief
Depending on the total tax debt that you
owe, finding tax relief can cost anywhere from $500 — $10,000, with the latter
range being even higher in some situations.
Taxes are complicated, and unfortunately,
that can mean that finding relief can also be complicated, and expensive.
Depending on the complexity of your situation, the average tax relief case can
be resolved for $2000-$7000 excluding any fees or compounding interest rates
that may have been incurred.
When working with a tax relief company,
the first step is typically a free consultation, followed by a setup fee which
is usually no more than $600. Tax relief companies typically acquire their
payment through a set of fees from their client which can include, Time-based
fees, flat rates, or debt-based fees.
All of these potential payment plans
depend entirely on your personal tax situation and the way that the specific
tax company deals with it. This is why it’s important to be upfront and
transparent in initial consultations with relief experts, as they want to help you find the best solutions
to pay off your outstanding debt.
Types of Services
Tax relief companies provide a wide range
of services to help with debt relief, and other tax-related issues. The
services provided range by the specific tax companies, but the following list
is typical services available for those in need:
Tax Settlement & Negotiation
Business Payroll Relief Tax
No matter the complexity of the tax
situation you or your business is in, there are tax relief experts dedicated to
solving these problems quickly and effectively, at the lowest cost possible to
How to Settle your Tax
Debt Quickly (Without Tax Relief Companies)
Dealing with the IRS is never a fun
situation, which is why hiring a tax relief specialist can be beneficial for
many reasons, but mostly because it’s the quickest and most hassle-free way to
settle your debts and other tax problems.
However, if you owe less than $10,000 in
tax debts, or you simply don’t have the funds necessary to pay a tax relief
company to assist you, there are several ways of dealing with your debts by
Statute of Limitations
Dealing with the IRS and your tax debt
problems alone can be a stressful and hectic situation. Even if you can’t
afford or don’t technically need the help of tax relief companies, it can be
incredibly helpful to have a consultation or get basic guidance from tax
experts to lead you down the right path and tell you the best course of action
for your situation.
Simply knowing the right course of
action, and making efforts to have a plan in place can save you thousands of
dollars and hours of headaches in the long run.
Dealing with tax debt, and other
tax-related problems is never a fun situation, and only gets worse the longer
you let them sit. Anything that you can do to get ahead of your tax problems
will benefit you greatly in the long run.
Whether the best course of action for you
is to hire a tax relief company, or take advice from a tax expert and set up
payment plans, or work directly with the IRS on your own, it’s in your best
interest to take these problems very seriously and find a solution quickly.