How much does it cost for tax relief help from tax firms? Here we’ll break down the services provided by tax companies as well as the pricing ranges for the services. Prices vary based on complexity but these ranges will help to give you an idea of typical costs associated with tax resolution. 

First, let’s list all of the services. These services are usually grouped together into one or two fees as you’ll see later. I’ll use the industry terms as well as the lay terms to help you avoid confusion (some things you don’t know and some things they don’t want you to know).

When you call a tax resolution company you are called a client, and your tax situation is called a case. You’ll be sent forms to sign both from the IRS and from the tax firm (note that most of these “firms” are not tax firms but most do have tax attorneys on staff). The initial documents are IRS forms 8821 and 2848. These are IRS forms filled out with important information such as your personal tax payer information (name, address, social security number, etc.) as well as the Firm’s information (name or tax professional’s name, address, CAF numbers (given by the IRS to tax professionals). 

The next form is usually the Firm’s service agreement. Here you will find a list of services, responsibilities, pricing, and payment details including cost, payment method, and billing schedule. There will also be the fine print including how the firm will be able to contact you, the requirements of the firm and the how they will deliver the services they provide. It is important to read this in full. We all know that forms these days are electronically sent and signed so it can be difficult to read. We do this even when getting new credit cards and book flights. 

This process of getting the initial documents signed and over to the firm is called onboarding in the sales world. These documents allow the Firm to contact the IRS and represent you. Once the forms are collected, it could take one to two weeks to send these to the IRS and have them acknowledge them. Once on file with the IRS, the firm can request detailed information about your tax case. However, these firms and professionals can call the IRS with you on the phone to make it much quicker to understand the scope of the tax issue. This is called an IRS Compliance Call. 

Now we can get to the pricing of tax relief. If you were to call a tax firm and want to learn about the scope of your tax problem and what can be done (prior to paying for services) you’d be asked to pay for an Exploratory and typically costs $300-500 for personal and $500-$1,500 for businesses. 

Next, if the tax case warrants it would be tax preparation and filing. In some cases bookkeeping might be required and/or offered. Most firms charge $350-$500 per tax return for personal and $1,000 and up for business, depending on the size of the business. It is not unheard of for corporate tax returns to cost thousands of dollars for businesses with a large number of transactions and a lengthy Schedule C. Even personal returns with many lines of income and expenses can go up in pricing but these fees above are for your average tax payer. 

Now we get into the services where pricing is usually based on the scope of the tax problem and less about the actual work related. Services could include a Penalty Abatement (address the penalties on the tax balance for failing to file on time, failing to pay on time, and civil fines for having payroll or business tax roll over to tax payer’s personally). Penalty Abatements could be simply calling the IRS agent and asking or could be lengthy petitions to the IRS from the firms requesting removal for specific reasons along with proof as to why the penalties should be removed. Simple Penalty Abatement is usually $1,500 – $3,500 while others could be higher. Here is where you want to pause and ask yourself and the firm you hire if it is worth it. Ask if you will save more than you are paying. The IRS has exact penalties they are willing to remove. For instance, a first time penalty abatement will be a portion of the penalties on the oldest tax year with a balance AND as long as there was no late paid tax balance on the previous three tax years. 

As your case progresses towards resolution it may be required to petition for certain hearings and petitions. If you are assessed liens or collection action (levies and garnishments), you’ll be sent notices or letters and may include forms for the IRS so that you can schedule hearings to avoid collection action while your case is still being worked on by the firm. A Collection Due Process is a hearing giving you the ability to ask for more time or present information that may help your tax case at this critical stage. A Collection Due Process is a telephonic hearing and there is no court or judge. Firms may charge $500 – $3,500 for a Collection Due Process (CDP) or Collection Appeals Program (CAP) hearing. Pricing varies on the complexity of the case and the information needed to present your reasons for avoid immediate collection action by the IRS. 

Along the way, the IRS may assign an IRS Revenue Officer if your case goes over a certain dollar amount or a number of tax returns are missing where the income is substantial. When a Revenue Officer is assigned to a tax case, all communication and paperwork now has to go through this IRS representative causing a slow down in the interaction with the IRS. Revenue Officers (ROs) are thorough and the process takes longs and requires more attention to detail. Firms may charge an additional fee to make up for the time to work on cases assigned a RO and can run anywhere from them having a minimum of $7,500 paid to date or upwards of $10,000 of more depending on the scope of work involved.

Lastly, there is the work and costs of the final resolution. Based on your income, expenses, assets, equity (all basically giving the IRS a way to determine your collectability to see what program you’ll qualify for to settle the tax balance). If you have less than $100 left over after expenses, the IRS may change the status of your tax case to CNC or Currently Not Collectable. CNC is often charged as a flat fee ranging from $1,500 to $3,500 depending on additional work related to prove to the IRS you are indeed a hardship candidate. If you have more than that available to pay, the IRS may place you on a payment plan. Firms may charge $500 – $2,500 to set this up and is again based on the work to prove a lower payment is warranted. However, if you have a greater amount of income left after expenses and/or you have assets, equity, and cash available, the IRS may accept an OIC (Offer in Compromise). Firms typically charge $6,500 – $15,000 for this and is again based on the scope of work to assist in getting you the lowest possible offer as well as how much effort it takes to prove to the IRS why they should settle for less than the total due. 

I hope this helps to not only give you an idea of the costs but also a better understanding of the services on cases. There are sometimes other fees such as keeping the IRS Power of Attorney on file to monitor incoming notices and IRS letters to stay ahead of issues. But these fees are usually low ($1,500 – $2,500 per year) and you can always negotiate any of the fees. There is no price sheet for the fees but understand that the IRS does not allow tax professionals to charge outrageous fees. Nor are firms allowed to charge based on contingency (% of savings). 

If you have any questions related to fees, services, or if you feel you’ve been over charged or quoted by a firm, let us know and we’d be happy to discuss your options.