If you have tax debt and need to hire a tax professional to help, you may be wondering how much your tax resolution is going to cost you. The quotes from different firms can vary widely, so it’s important to know what to expect.
Before you hire a tax resolution firm to provide tax relief services, take a look at your tax resolution options and their requirements.
In many cases, a tax firm will need your tax transcript to provide you with precise fees. This will confirm your penalties, interest, and tax debt balance, as well as your compliance history. This is known as a transcript review, a compliance check, or, in some cases, an investigation.
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Your financial circumstances will also impact your possible solutions with the IRS. Your eligibility for IRS tax resolution is largely based on your personal or business financial circumstances.
Most tax resolution companies include the tax transcript and financial analysis with their other services, but others may charge a minimal upfront free. Other firms may include the tax transcript and financial analysis in the total fee for the resolution services.
Once a tax resolution company informs you of the fees they will charge for their services, it’s important to understand how your payments are laid out in your contract.
The manner in which a tax resolution firm charges fees may vary by company, but they do follow a general structure.
Several tax resolution companies use flat fees, which could mean one of two different structures:
Some tax resolution companies and individual licensed tax professionals bill by the hour. Fees can range from $200 and $500 per hour.
Depending on the extent of your tax debt and the work involved in reaching a resolution, a case can take between several months and several years. On average, tax resolution services cost around $3,500 to $4,500 total.
For a business, such as an LLC, partnership, C-corp, or S-corp, the fees for tax resolution will have a higher cost. This is especially true for businesses that file 940s or 941s. With complex tax resolution circumstances, the fees may cost as much as $7,000.
Major tax resolution firms often charge higher rates for the same services, due to their increased overhead and marketing costs.
Even if the average range is $3,500 to $4,500 for tax resolution firms, you may end up paying more or less than that. Tax resolution companies can vary in the prices and services offered, and the more extensive and complex the case, the higher the overall cost will be.
Another factor in the price of tax resolution is the total debt you owe to the IRS. Generally, the higher the debt, the more complex the resolution will be. This is because the IRS requires additional documentation and financials for tax debt exceeding $50,000. If you owe more than that, you may be required to pay a higher amount than the average fee.
Here are the standard services provided by a tax resolution company and the average fees for each:
If your tax resolution firm is arranging a payment plan or installment agreement with the IRS, the average fee will be between $2,500 and $3,500. You may pay more than that if you’re looking to arrange a payment plan for a business.
Partial payment agreements are a little more involved than standard payment agreements, and they often result in you paying a lower amount than your total debt. Because of the work involved, the average fee for a partial payment agreement is $3,500 to $5,000.
Penalty abatement tends to be an additional service to a payment agreement. It is also offered as a stand-alone service, however. Penalty abatement costs range from $250 to $1,000. It’s important to be sure that you’re abating more penalties than the cost of the total fee to ensure that the service is worthwhile.
Arranging an Offer in Compromise can cost between $4,000 and $7,500, due to the work involved. Before entering into an Offer in Compromise, be sure that you won’t be charged any additional fees if the IRS doesn’t accept the offer.
Obtaining a Currently Not Collectible status costs around $2,500 to $4,000 at the average tax resolution company.
Achieving innocent spouse relief can cost between $3,500 and $5,000.
Resolving tax-related identity theft can cost between $2,500 and $5,000, according to the complexity of the case.
If you’re shopping for a tax resolution firm, it’s important to be sure that the pricing works for your needs. Remember that although an experienced firm may have slightly higher fees than another firm, it may be worth the extra cost to get the right tax professionals to handle your case and get the best possible outcome.
At Solvable, we have a vast network of tax professionals to help you navigate your tax resolution options and find the best solution to your tax problems. Contact us today to learn more about what we have to offer!