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How to find the best tax relief company

An effective tax relief company could help you eliminate your IRS debt.  Getty Images/iStockphoto

The deadline for Americans to file their tax returns is quickly approaching. So, if you haven't already, it's important to file your return with the IRS. That's true even if you're one of the many American who will likely owe money to the IRS this year. After all, if you fail to file by the April 15, 2024 deadline, you could face penalties. 

While owing money to the IRS can be stressful, especially if you owe more than you can afford to pay, it doesn't mean you're on your own. Tax relief companies may be able to help you negotiate what you owe, erase penalties and avoid tax levies on your wages, bank accounts and properties. 

But, not all tax relief companies are equal. And if you seek the assistance of one of these companies, you'll want to find the best one to work with in your unique situation. So, how do you find the best tax relief company to work with? That's what we will discuss below.

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How to find the best tax relief company

There are a few things you should look for as you compare your tax relief options, including: 

The types of experts they employ

Tax relief companies employ experts to help with late tax filings, negotiations and more. In some cases, those companies require the experts they employ to be regulated, like certified public accountants (CPA), or fiduciaries, like tax attorneys. In other cases, those experts may be workers with no certifications or fiduciary responsibility to you as a customer. Instead, they may simply be trained by the firm they work with on items like negotiating with the IRS or filing paperwork. 

Though there may be some cases where the latter could be effective in providing tax relief, it's typically best to work with companies that employ highly-trained, knowledgeable and regulated tax experts; experts with a proven ability to negotiate with the IRS. After all, if your negotiator is new, or hasn't been able to achieve many meaningful settlements in the past, they may not be able to provide as much relief as a seasoned expert with many successful IRS negotiations to speak of. 

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The types of services they offer

There are a wide range of tax relief services available and none of them are a one-size-fits-all solution. After all, some filers will have more complex tax situations while others may only need help with certain aspects of their tax debt.  

Consider your tax situation to determine the type of company you should work with. If you didn't file some of your tax returns or have a complex tax situation, you'll likely be best served by a full-service end-to-end tax relief company that helps with past-due filings, penalties, negotiations and appeals. If you've filed all of your returns on time and simply can't afford the debt you owe to the IRS, a company that focuses more heavily on negotiations and creating effective payment plans might be more fitting to your situation.  

Red flags to watch for

Although there are plenty of legitimate tax relief services out there, it's also important to be cognizant of potential scams. Here are some common red flags to watch for:

  • Who called who?: It's usually a wise idea to only work with companies that you call first. Unfortunately, predatory tax relief companies may look to outbound call centers as a way to generate leads.   
  • They have poor online reviews: Before you sign up with any tax relief company, search for the company online and read several reviews. If the company has a high number of negative reviews, you'll likely be better served by other options. 
  • Large upfront costs: Though some legitimate companies may charge a small upfront fee associated with the work involved in understanding your tax situation, they don't typically charge larger fees until they've provided an effective service. On the other hand, predatory tax relief companies typically try to get as much money out of you as quickly as possible. So, it's common for them to ask for large up-front costs. If that's the case, you should probably consider another tax relief provider. 
  • They make promises too soon: A legitimate tax relief company won't be able to give you specifics on how they'll help in your unique situation or how much help they'll be able to provide until they review your tax documents. If one promises a specific result before they even know what's going on, they may be attempting to scam you.    

The bottom line

Having IRS debt that you can't afford to pay off can be scary. But it can be easier to deal with when you have an expert on your side. If you're comparing your tax relief options, look into the experts employed and the types of service the companies you're reviewing provide to determine which is best for your unique situation.

Moreover, be cognizant of scams and predatory companies. You should be cautious if a tax relief company calls you first, has poor online reviews, wants to charge a large upfront fee or makes promises too soon.  

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