Essentially, tax relief companies work by negotiating with the IRS on your behalf for a fee. That fee can amount to thousands of dollars, with no guarantee that they will be more successful than you would if you negotiated with the IRS on your own. Unfortunately, the industry is rife with scams and bad business practices. Disreputable companies lure customers with false promises and, at the same time, charge high fees.
However, there are legitimate tax settlement firms. These companies are honest when it comes to deciding if you can benefit from their services, and they charge reasonable fees that are indicated in advance. The answer to this question really depends on the company you use for your tax debt relief service. Yes, there are legitimate tax relief companies that can help you reduce your tax debt or get an affordable payment plan.
However, there are also a lot of fraudulent companies. Do some research before choosing a tax debt relief company to represent you. Tax relief is a general term for government programs or policies that help taxpayers reduce their tax burden. He'll want to know that you're up to date with all your tax returns (or that you've filed a valid extension) and that you've made all the required estimated tax payments.
To qualify for CNC status, you must file all overdue tax returns and provide the IRS with financial information, including details about your income and expenses. Most tax settlement firms promise to send their experts to the IRS to negotiate on behalf of the client, where they can presumably persuade the agency to accept a much smaller amount, often cents on the dollar. With the TaxAudit app, you can securely upload the documents your tax professional needs from your smartphone, send and receive messages with a tax professional, and stay informed of the status of your case. If you discover that you are due a tax refund while your tax debt is suspended, the IRS will apply it to the amount you owe.
A case manager will review your current tax debt and other financial details and provide you with an estimate of your services. While the IRS offers several relief options, here are three you should consider if you owe back taxes. For example, the tax relief company may tell you that your one-time fee will cover all the services needed to reduce your tax liabilities, while the contract will indicate that the down payment is for limited services and that additional services will require additional payments. As part of their sales pitches, tax relief companies may tell you that tax authorities won't work with you.
Known as tax settlement firms, these entities claim that they can drastically reduce or eliminate what the customer owes the IRS. Some tax relief companies attract customers by stating that they can reduce customer debts by filing a commitment offer (OIC) with the IRS. Often, you'll hear announcements from tax debt relief companies about “cents on the dollar” settlements. In reality, this is virtually impossible to do, and the IRS rarely accepts a real reduction in the amount of taxes due.
In addition, before hiring a tax relief company to try to settle your accounts, check directly with the IRS to see if you qualify to participate in its commitment offer (OIC) program. If you're confused about the tax settlement industry and what it does, think about the debt settlement business. In complaints filed with the agency, disgruntled consumers said that they had paid thousands of dollars to tax relief companies and that they had become even more indebted and could not get refunds.