Can IRS Resolution Services Help You Get Out of Back Taxes?

Andrea Miller

Expert Contributor
Last Updated: December 19, 2021

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Tax resolution services can help negotiate with the IRS on your behalf if you owe back taxes.
It’s important to choose a firm that has the necessary experience and credentials to assist you, including the ability to practice before the IRS.
Costs for these services vary based on the amount of taxes you owe, your financial situation, the complexity of your tax situation, and other factors.

IRS resolution services are designed to help taxpayers eliminate a portion of their back taxes. If you’re struggling with past-due taxes that you can’t afford to pay, working with a legitimate resolution company can help you avoid staggering penalties and interest.

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1 What Are Tax Resolution Services?

2 How Much Does Tax Resolution Cost?

3 What Should I Look For in a Tax Resolution Firm?

What Are Tax Resolution Services?

If you already owe money to the IRS, you may be hesitant to hire a tax attorney or certified public accountant (CPA). After all, these services can be costly. However, tax professionals have the resources and knowledge necessary to negotiate with the IRS and understand complex and ever-changing tax regulations.

Understanding what to expect from tax resolution services can help you determine whether you should consult with a professional. In general, these services include:

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Tax Return Review and Audit: The tax professional will review your state and federal tax transcripts from the years in question to verify the balance of your back taxes, including interest and penalties. He or she will also determine whether you have outstanding returns that need to be filed.
Financial Analysis: Based on the information from your return review, the person you are working with will determine the best course of action. For example, if you were financially insolvent during the tax years in question, you may be able to settle back taxes for less than you owe with an offer in compromise. You’ll need to provide additional financial information during this analysis to figure out whether you qualify for IRS back tax assistance programs.

How Much Does Tax Resolution Cost?

Once your return review and financial analysis are complete, you will usually get a quote for the necessary next steps. The initial analysis is often free or may be charged at a flat rate.

Can IRS Resolution Services Help You Get Out of Back Taxes?

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However, if you need additional tax help, you’ll likely be subject to a different rate structure. You will need to sign a contract with the cost of your desired services and the agreed-upon payment schedule. Common schedules include:

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Paying the total cost upfront, often at a discount over periodic payments
Part of the fee upfront and monthly payments for the rest
Fixed monthly payments while your tax case is open

Some tax professionals charge an hourly rate. They will bill you for the time spent working on your case. Fees average $200 to $550 per hour. Other professionals charge a flat fee. This can be based on either the total service or your amount of back taxes.

The average cost of back taxes assistance ranges from $3,500 to $4,500 for an individual taxpayer and $5,000 to $7,000 for small business owners. The more back taxes you have and the more complex the required solution, the higher the overall cost of tax resolution services.

These are the average reported prices for common back tax assistance services:

Negotiating an installment agreement with the IRS: $2,500 to $3,500 for a standard agreement and $3,500 to $5,000 for a partial payment installment agreement in which a portion of your back taxes is forgiven before the installment agreement begins.
Penalty abatement: Either $250 to $1,000 as a flat fee or a base fee of about $250 along with 35% of abated penalties. Make sure the penalties you have been charged are significant enough to make this service worthwhile when compared to the costs.
Offer in compromise: $4,000 to $7,500, which should include all appeals and follow-up costs. With an offer in compromise, the IRS agrees to settle back taxes for less than you owe.
Currently not collectible (CNC or hardship status): $2,500 to $4,000 to establish with the IRS that you were insolvent at the time the past-due taxes were assessed. With CNC, collection efforts are temporarily halted.
Innocent spouse relief: $3,500 to $5,000.
Tax-related identity theft resolution: $2,500 to $5,000.
Individual tax preparation: $150 to $375 for each annual return.
Business tax preparation: $500 to $2,000 depending on the complexity of each annual return.

Make sure you get a detailed quote before hiring a tax resolution firm.

What Should I Look For in a Tax Resolution Firm?

It’s important to research the background of the tax professional you hire to resolve your back taxes. Big-name companies often charge larger fees because they need to compensate for marketing costs. Smaller companies with reliable track records and good references often provide a bargain for the struggling taxpayer.

Make sure the professional you hire has tax resolution experience. Although every CPA can prepare your taxes, they don’t all have the knowledge and skills to negotiate with the IRS on your behalf. Ask the person if he or she has handled cases like yours before and what outcomes resulted. Choose a firm that has been in business for at least a few years and that is able to provide references from satisfied customers.

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If you hire an attorney, make sure he or she is admitted to the state bar. CPAs should also be licensed in the state of practice. Look for an individual who is certified as a tax attorney or a tax resolution specialist. They should ideally belong to a professional association like the Institute of Certified Public Accountants or the American Society of Tax Problem Solvers.

To obtain tax resolution certification, the individual must be an enrolled agent (EA), CPA, or tax attorney. Enrolled agents must pass a test given by the IRS to demonstrate their tax law knowledge and/or have experience working as an IRS agent.

When you use Solvable, it’s easy to find IRS resolution services that fit your needs. We’ll ask you a few simple questions about your back taxes and match you with vetted, well-reviewed companies that can offer assistance. Visit us today to get on the path to an obligation-free future.

Andrea Miller

Expert Contributor
Last Updated: December 19, 2021

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