Tax resolution services cost an average of $4,000, but can range from $1,000 to $10,000 or more depending on how much assistance you need. Individual tax resolution services cost less than business resolution services.
How Tax Resolution Companies Charge Fees
Tax resolution settlement companies will work off of a retainer if they are billing hourly or collect a portion of the fees in advance for flat fee arrangements. Some tax professionals will bill the remaining amount due on a monthly basis while others will bill the remainder when the case is settled.
You should make sure you understand the billing schedule and fees involved. The worst case scenario is not being able to afford to stay current on the fees to the tax resolution professional. Additionally, you should consider the cost of the tax relief services compared to the bill from the IRS.
Cost Breakdown of Tax Relief Services
The cost for tax relief and resolution services will depend on how many years you need assistance with, how complex your issues are, and how much time the tax professional thinks your issues will take to resolve.
Penalty abatements tend to have the lowest cost ranging from $250-$1,000 whereas an offer compromise may push the top end of range of $10,000. The cost will also vary depending on the amount due and potential savings from a successful outcome. If you need assistance with multiple years, your bill will increase.
How Tax Resolution Fees are Structured
Tax negotiators will either charge a flat fee or hourly. You need to make sure you understand the billing structure prior to signing an engagement agreement.
Hourly Billing
Tax resolution specialists normally charge between $200-$350/hour although rates may be higher in some location. The number of hours involved in tax settlement services will vary based on the complexity of your tax issues.
Flat Fee
In a flat fee arrangement, the price of the services are agreed upon before any work is done. The services included in the fee are outlined in an engagement letter, and any additional services outside the listed services may incur additional charges.
Monthly Billing Until Resolution
Much less common is a fee structure where you pay a set monthly fee until your issue is resolved. You should be cautious of these arrangement because it does not incentivize the tax professional to resolve your case quickly.
Other Factors to Consider with Pricing
Free Consultation
Most reputable tax resolutions firms will offer a free consultation to evaluate your situation and provide a pricing estimate. If the firm charges for the initial consultation, you should make sure to check reviews first.
Price of Services Compared to Balance Due
Even if you feel like you are correct and the IRS has incorrectly billed you, you should consider whether the cost of tax resolution services will be more than the cost of simply paying your bill.
Whether you are Approaching the 10 Year Statute of Limitations
Except in the case of fraud, the IRS only has 10 years to collect on balances due. The 10-year clock starts when you file your return. So if you are approaching 10 years since you filed your return, you may be better off waiting until the time has passed.
Specific Tax Relief Services Pricing Breakdown
Installment Agreement
If you owe less than $25,000, the process is fairly straight forward and a tax professional will cost $500-$1,000 to set up the plan on your behalf. If you owe more than $25,000, the fees will be $1,000-$2,000.
Partial Payment Agreement
Unlike an installment agreement, partial payment agreements do not involve standardized forms and will take more time to resolve. The costs for this service range from $2,500 – $4,500.
Penalty Abatement
Though penalty abatement requests do not have a standard form, a penalty abatement request will usually cost less than $1,000.
Offer in Compromise
Offers in compromise involve substantial amounts of work from your tax professional and their charge will vary depending on the amount due. You can expect to pay $3,500-$5,000 for this service.
Innocent Spouse Relief
Depending on the complexity of the situation and the reason you are claiming innocent spouse relief, you will generally pay $3,500-$5,000 for assistance from a tax professional.
Back Taxes Filing
Assistance with filing back taxes may cost slightly more than a timely return due to the additional time and hassle of locating older records.
Are Tax Relief Services Worth It?
Yes, having a professional assistance you with your tax relief efforts increases the chances of a successful outcome. Navigating the IRS system for tax relief can be a complicated process for people who are not used to dealing with government agencies and their many rules and regulations.
You need to find a tax professional that is well-versed in your particular tax issue and can work within your budget. The average tax resolution saved taxpayers over $15,000 so in most cases, the additional expense of hiring a professional will be offset by the tax savings.
FAQs
Questions about pricing for tax resolution services? We have the answers.
The cost for tax resolution services ranges from several hundred dollars to tens of thousands.
The IRS will calculate the amount you can afford to pay by looking at your income and necessary expenses.
You can, but it’s not recommended. Tax professionals have an acceptance rate of over 90% for offers in compromise, while self-prepared offers have a success rate of less than 35%.
