Tax Relief: Does It Actually Work?

woman visiting the Innovative Tax Relief website on a smartphone

Although nearly one-fourth of US tax filers are estimated to have very few taxes withheld in 2021, the overwhelming majority of American taxpayers have received a quite heavy tax bill. For those that don’t have enough money to pay their tax debt, tax relief options come into play. Introduced by the IRS, they are created to either reduce the tax debt you have to pay to the government or help break down your debt into payments.

Tax relief options may make paying your due sum much more manageable. Our company has successfully helped thousands of clients settle, reduce, and sometimes even completely eliminate their tax debts.  So yes, tax relief does work!

Here are some critical details to know about tax relief and what you should be cautious of when considering seeking the help of a tax relief company.

 

What is Tax Relief?

We have written an extensive piece on tax relief, so here are some bare basics to get the juice of it. Tax relief is actually a strategy that enables you to set up a payment plan to repay your tax debt. Alternatively, you can negotiate a settlement with the IRS and take care of the tax debt a tad easier.

Additionally, special tax relief is often offered to victims of natural disasters, such as wildfires and hurricanes. These individuals may even qualify for casualty losses on their federal income tax returns.

 

Common Tax Relief Plans 

The three primary methods to help manage the taxes you can’t repay in full are:

IRS Repayment Plan

You can use this strategy to break down your full balance and set up smaller payments over a period of 120 days or longer. To qualify for it, you need to owe less than $50,000 in combined interest, penalties, and taxes. For a plan with a shorter duration (less than 120 days), you may owe up to $100,000. Note, though, that you might be called to pay a fee plus interest and penalties until you repay your balance in full.

Offer in Compromise

With this plan, you can settle your debt and pay less than what you owe. Individuals struggling financially can opt for this strategy. It may also be a good option if paying the whole sum you owe will create a financial hardship for you. You can confirm your eligibility for the tax relief program here.

Interest Abatement or Penalty Relief

If you are eligible for this one, the IRS will write off your penalties (the ones charged on your tax bill) provided you meet certain criteria. Note that this plan is a penalty relief; not a tax relief. However, it will help reduce your overall debt when your outstanding balance-related penalties are removed. On rare occasions, you might be provided with an option to have forgiveness on the interest you owe for taxes you have not paid.

 

How a Tax Debt Relief Company Can Help You

Figuring out the how’s and what’s of the admittedly complex tax laws can be overwhelming and confusing (not to mention time-demanding) for most non-tax professionals. There is lots of paperwork that needs to be collected and many forms to be filled out before they can all be sent to the IRS.

Also, you can never be certain that you actually meet the requirements for a tax relief program or even if you do need a specific one in the first place. Perhaps, another option is a better solution for your case. Depending on your case, a Levy Relief or an Innocent Spouse Relief plan, for example, might be a more convenient option for you if you qualify for them. For some people, a combination of solutions is the proper course of action so they can start getting their tax debt in line again.

But, how can you be sure that a tax relief program will work? A good tax debt relief company should be able to answer these questions for you and provide you with guidance through the process. They should also be able to give any information needed so you can make informed decisions about your financial future.

Of course, for all this to happen, it is paramount that the tax debt relief company you choose is equipped with licensed tax experts that will look into your particular tax debt situation and find the best solution (or solutions) to get you out of tax debt.

So, beware of scammers and incompetent tax relief professionals who could make things much  worse for you than they already are. Plus, you run the risk of losing an enormous amount of money, being left without funds, and still owing federal taxes to the government.

 

What To Look For In a Tax Relief Company

Here are some things to consider when selecting a tax debt relief company to represent you and either help get an affordable payment plan or reduce your tax debt. To be able to identify a scam company from a legit one, ensure:

  1. They employ licensed tax professionals

More than often, we see a particular business model where the staff members act more like salespeople than tax professionals because they simply are NOT licensed employees. This means that they have NO authority to represent you in front of the IRS. Without the proper license, they are literally useless, and the only thing they can do is try to persuade you to sign up for their services. They are also NOT equipped to provide tax advice. If they do, they can be dangerous as they don’t care about your best interest rather than theirs.

So, don’t be fooled by official-sounding titles (i.e., “Tax Associate” or “Tax Consultant”) and only work with licensed tax professionals (Tax Attorneys, Certified Public Accountants or CPA’s, and Enrolled Agents or EA’s) with a solid reputation and extensive training in the tax field. That way, you can be certain that you aren’t speaking to a salesperson but an actual tax professional that will examine your case and offer the best tax debt relief solutions for you.

  1. Make sure the asked price for the provided services is reasonable and transparent

Beware of tax relief companies that have hidden charges. Many of them also charge exorbitant fees for the offered services. Not long ago, we got a call from a prospective client asking for a Streamlined Installment Agreement quote. They were quoted by another tax relief company $5,500 for it when the service costs around one-sixth of that asking price. Other companies charge tens of thousands of dollars for an Offer in Compromise. Innovative Tax Relief prices the same service at a fraction of that cost. It is not because we do lesser quality work. We are just not interested in profiteering.

On the flip side, though, it is best to keep a small basket when you hear statements that claim settlements for pennies on the dollar. Although there are, indeed, such programs, the IRS is quite stringent on who is eligible for these plans. So, this is not a tax relief option that applies to everybody – most people are left out of these programs. A

tax relief company that respects itself and its clients will explain your options in detail and let you know about your chances of being accepted in such offers. They should not present this solution as a done deal rather than provide a realistic assessment of your case and truthful expectation of its outcome.

  1. Check the measures they take to protect your privacy

Working with a tax debt relief company entails sharing important files containing financial and personal information.  It is, therefore, paramount that the tax debt relief company has policies in place to protect your personal data and ensure your security. With cases of online ID theft and scammers trying to steal people’s sensitive details on the rise, it is critical that you remain safe. So, ask them (the tax debt relief company) how you can send them documents. Through email, which is totally unsafe, or via a secure online portal case management system that comes with advanced security and safety?

They should also have proactively implemented security measures to protect all information passed to and from them. This includes storage, transmission, and entry of the data.

 

Navigating Scary Waters With Trustworthy Captains

Tax debt is no fun, and the same applies to getting out of it. And, it is certainly not something you can simply look away from or try to ignore or skip. The IRS has an impressive range of sophisticated tools to get the money owed to them. If they have to, they can even seize your property, wages, and assets to collect their money. This is particularly dreadful and stressful for sure.

The good news is that dealing and handling your tax debt and eventually repaying it does not necessarily need to be a draining experience for you. And, that’s how you can recognize a tax relief company of real value.

Innovative Tax Relief can help you find the ideal solution for your case and develop a realistic plan to get you to the much-desired out-of-tax-debt situation. With your best interest at heart, you can rest assured that you will soon be able to breathe a sigh of relief from your tax problems.

 

Ozzie Gomez is a Senior Tax Settlement Agent and the owner of Innovative Tax Relief which holds business licenses in Tax Resolution, Tax Audit Representation and Tax Preparation.  With almost 10 years of experience in the tax resolution industry, he has personally helped more than 4,000 individuals and businesses resolve their tax issues.

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