This guide helps you understand your IRS tax relief options and associated costs if you need relief from IRS debt and back taxes. There are primarily three ways to get tax relief help, including Offer in Compromise, installment agreements, and currently not collectible or hardship options.
How much tax relief companies charge is critical of course (see below), but let us first quickly recap some of your tax resolution options and application fees:
What Are Your Tax Relief Options?
Following, find details for three ways to resolve unpaid IRS debt.
1. Offer in Compromise
An Offer in Compromise reduces the amount you have to pay. This is a good option to consider if you can’t pay the full amount you owe without financial hardship.
The factors that impact eligibility include:
- Ability to pay
- Asset equity
- Expenses
- Income
The IRS typically approves an Offer in Compromise if that’s the most money they can collect within a certain timeframe.
Offer in Compromise Eligibility
If you haven’t filed tax returns and paid the corresponding estimated payments, the IRS returns your application. This option isn’t available for the current tax year.
Offer in Compromise Application Cost & Fees
The IRS charges a $205 Offer in Compromise application fee. Note that this fee isn’t refundable. Low-income taxpayers can request for the fee to be waived via a “Low Income Certification.”
Offer in Compromise Payment Options
The IRS offers two payment options for an Offer in Compromise settlement: lump sum and periodic payment.
For lump sum offers, you pay 20% of your offer amount when you submit your offer and the remainder within 5 months.
For periodic payment offers, your first payment is due when you submit your offer and the remainder is paid over 24 months.
2. Installment Agreements
The IRS automatically approves an Installment Agreement if your IRS debt is less than $10,000.
You must meet the following criteria:
- No late payments or late tax filing in the last five years. This excludes filing extensions.
- Filed all your tax returns.
- Agree to file and pay all future taxes on time.
- Agree to let the IRS keep your refunds in future years.
To calculate your monthly payments, add the total taxes due plus penalties and interest, then divide the total by 36. If desired, you can make overpayments to bring down the debt faster.
If you owe less than $50,000, you may also file for a Streamlined Installment Agreement. With this IRS monthly payment plan, you can repay your debt in up to 72 monthly payments. The IRS will not require you to submit detailed financial information and records (like bank statements).
If you owe less than $100,000, you may qualify for a Streamlined Installment Agreement that can be repaid in up to 84 monthly payments.
Outside of the “Streamlined” installment agreement, you may still qualify for a monthly payment plan. The IRS will review your income and expenses and determine what the disposable amount of income is at the end of the month. That disposable amount of monthly income becomes your Installment Agreement.
Installment Agreement Application Cost & Fees
IRS payment plan and installment agreement fees vary by type of plan.
There is no setup fee for a short-term payment plan. For long-term payment plans (installment agreements), setup fees are lower for Direct Debit compared to other forms of monthly payment (EFTPS, check, money order or credit/debit card) and whether you apply online, in-person, by phone or mail.
For a Direct Debit Installment Agreement, the IRS charges a $31 setup fee when you apply online or a $107 setup fee when you apply in-person, by phone or mail. Direct debit fees can be waived for low-income taxpayers.
For all other installment agreements without automatic monthly payment withdrawals, the IRS charges a $130 setup fee when you apply online or a $225 setup fee when you apply in-person, by phone or mail. Fees for low-income are $43 and may be reimbursed for some.
Installment Agreement Payment Options
For a Guaranteed Installment Agreement (owe less than $10,000), you have three years to pay your full tax debt.
With a Streamlined Installment Agreement (owe $10,000 – $50,000), you have 72 months to pay in full.
For a Non-Streamlined Installment Agreement (owe less than $50,000), you have up to your Collection Statute Expiration Date (CSED) or 72 months (whichever comes first) to pay in pull. For a Partial Payment Installment Agreement, you pay what the IRS determines you can until your CSED date.
3. Currently Not Collectible
Non-collectible Status is an option for taxpayers the government decides can’t pay their IRS debt. If your account is marked as Currently Not Collectible, the IRS temporarily stops the collection process — no more phone calls and threatening letters.
How Much Does Tax Relief Cost?
On average, other companies charge around $5,000 – $8,000. The price range for tax resolution services is between $3,500 (on the low end) and $10,000+ depending on how much you owe the IRS for unpaid taxes and how complex your case is. Importantly, IRS tax settlement companies almost never show their pricing up front.
Wiztax is different and typically charges half the cost of resolving IRS debt compared to even the lowest end of what other companies charge for tax relief services. And remember, at Wiztax you can take our online tax relief evaluation for free.
Avoid Set Up or Consultation Fees
Most tax relief companies first charge $500 to $750 just for an “initial consultation” or “Investigation.” (We don’t charge anything at Wiztax, see below).
After this, tax resolution services are billed based on a percentage of the debt, the time needed to prepare your documents, or a flat fee. Here are the three most common fee structures that tax resolution companies use to determine how much to charge for tax relief services:
- Time-based fees are based on an hourly rate for resources that work on your case.
- Debt-based fees are based on a percentage of your IRS debt.
- Flat rates are a set price you pay for your tax resolution assistance, regardless of how long it takes to complete your application.
The Wiztax Difference
Now there’s a new way to get tax resolution help and quickly settle your IRS debt. Wiztax never charges for “investigations” or consultations and doesn’t add hidden fees to services. Our co-founder is an expert tax attorney who has successfully resolved clients’ IRS problems for over 25 years and believes tax relief should be affordable for everyone.
Once we understand your tax matter, we will provide you with clear expectations and a simple flat fee, monthly pricing. Our monthly fees are inclusive of all our tax resolution services — there are no other charges of any kind. We believe in transparency and fairness, and we promise to save you thousands of dollars in fees compared to other tax relief companies. And to be clear, we don’t ask for a percentage, we don’t bill hourly, and we certainly don’t ask you to sign up for a high-interest personal loan just to pay for our services.
Be sure to check out our A+ rating with the BBB, 5-star reviews on Google, and customer testimonials to see why our experienced Wiztax team is gaining so many positive reviews for tax relief help from satisfied clients.
Start for free and let us show you how we can help.
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