How Much Does Tax Relief Cost?

If you’re here, you’re probably looking for the answer to how much does tax relief cost? Well, what could have happened? Let me guess…

Have the IRS sent your tax bill this year? How did you respond – afraid, angry, or the normal reaction? So, what happens if you don’t have enough money to do your tax returns to the government?

Do not panic, the IRS devised many tax relief options to help you intermittently.  If the concept of tax relief seems a bit new to you or ambiguous, then read the following paragraphs that define and explain what tax relief is.

What is Tax Relief?

A tax relief as the name suggests is a payment plan that makes it easier to take care of the tax debt you owe ‘Uncle Sam’.

It is devised by the IRS to help individuals and businesses who are financially disadvantaged in the event of an economic meltdown or natural disaster.

Victims of natural disasters like floods, hurricanes, wildfires, and so on, can apply for tax relief from the IRS. They can negotiate and reach a settlement with the IRS.

The IRS is viewed by most entrepreneurs and highly paid employees as a villain government agency as they take a part of their gross profit to the U.S. government.

In these selective instances, the IRS becomes angelic to these businesses and individuals by offering them tax cuts.

This does not mean that the entrepreneurs/business people and employees do not pay tax for that period but instead they qualify for deadline extensions or sometimes tax cuts.

These entities may be eligible to claim casualty losses on their federal income tax returns for that period of time and thus defer their taxes to a later date.

While you’re here, you can check out What is Tax-Deferred? Definition, Overview, and How it Works

What are Ways to Get Tax Relief?

So you want to get tax relief because you can’t afford to pay in full when they’re due? But how do you go about that? TheWealthCircle has highlighted four (4) ways to get tax relief.

1. IRS Repayment Plan

This is a strategy for managing taxes in which the IRS will break down your full tax amount into smaller payments.

The IRS allows you a long-term payment plan (i.e. paying instalmentally for equal to or greater than 120 days) if you have a tax bill of $50,000 or less in taxes

 If your combined taxes, interests, and penalties are as high as $100,000, the IRS may give you a short-term payment plan of 120 days or less.

You should note that although IRS payment plans can be helpful, they can increase your cost depending on the tax relief option you choose.

In some instances, businesses or individuals may pay a setup fee of up to $149 in addition to penalties and interest until the balance is completely paid.

2. Offer in Compromise

An Offer in Compromise is an official plea for leniency on the basis that you can’t pay your full tax because of hard financial times or near bankruptcy. In this case, there must be strong evidence supporting your application for an offer in compromise.

The IRS will review your application to ascertain whether or not your income, expenses, and assets will permit you or your business entity the ability to pay the tax debt.

If confirmed, the IRS will grant you the offer in compromise which settles your tax debt for less than you actually owe. It is advisable that you check out the IRS Offer in Compromise page to know if you qualify for a lesser tax bill settlement.

These days, there is even an online pre-qualifier that confirms your eligibility for an Offer in Compromise.

3. Penalty Relief or Interest Abatement

This is the option of having your tax penalties reduced if you meet certain criteria such as

1. Been devoid of any penalties since the last 3 tax years.
2. Paying your recent taxes promptly and on time
3. Arranging payment for any taxes owed

There’s a 50-50 chance that you may qualify for IRS penalty relief having met the above criteria. But this does not mean that the IRS forgives the penalties in addition to the full tax balance.

You will still need to fulfill your civic duty and pay up all taxes owed except that the debt will be reduced since the penalties have been lifted off or relieved.

You can check out the IRS guide on penalty relief for more information. Interest abatement is the same thing with penalty relief except for this time, it is the interest on unpaid tax that is been relieved or abated.

Interest abatement is quite uncommon but it still counts as a tax relief option from the IRS.

4. Personal Loan

Taking out a personal loan to fulfill your tax obligation is ‘a not-so-good option’ but some consider it if they don’t have the funds available to pay tax.

You should check whether you can secure a personal loan that’s equal to or less than the IRS tax settlement plan offer before going this route.

If you do opt to use a personal loan to pay for your tax obligation, research loan rates, and terms and make sure you’re getting the best rate available.

It can also be helpful to check your credit reports before you apply to know what lenders will see when they review your application.

What to Know About Tax Relief Companies

If you do not have enough money available to pay your tax bill, a tax relief company will help you with tax relief services. These firms charge a small fee to help you with tackling overdue taxes, penalties, and interests.

So how much do tax relief companies charge? According to LendEdu.com, “the costs for tax relief services generally vary based on how much debt you have, what kind of assistance you’re needing, and the complexity of your tax problems”.

The tax relief cost of one individual or company will be different from that of another even though they may appear to be in the same boat from the outside eye.

The tax relief cost or fee you’ll pay vary according to the tax relief company you choose. That is why it is good that you inquire about the fee breakdown of various companies before going for one with the best deal.

Be aware that some tax relief providers may charge you flat rates while others charge hourly rates. Some may ask for part payment upfront and the rest after the issue is settled, while some may charge monthly payments until the tax bill is settled.

In most cases, you’ll need to pay the investigation fee upfront or may a free consultation fee to let the company discover the problem and ascertain whether their tax attorney can solve it.

What are the Best Tax Relief Companies in 2022?

The following are the best tax relieving companies in 202.

1. Community Tax Relief

Community tax is known to give the most affordable fees in the industry. The tax relief cost starts at $250 with a small initial fee.

The minimum debt required for them to help you with good tax relief services is $5,000. They offer bilingual services but they have limited state tax relief options available.

2. Anthem Tax Services

This tax relief offers a hundred percent money-back guarantee if you don’t receive tax relief through their intermediary services with the IRS.

The fast action and feedback of their tax experts make customers love Anthem. They can resolve the issue in as little as a few days.

3. Larson Tax Relief

It is the best for business tax debt relief and is rated A+ by BBB. Larson Tax Relief requires that businesses with a minimum of $10,000 tax debt come to them for tax relief services.

4. Optima

Optima is the best mobile app that allows users to file a free tax extension and also receive IRS notices from time to time. Costs start at $495 and the minimum tax debt is $10,000 which are both on the high side.

5 Tax Defense Network

Their tax relief cost starts at $250 and they are known to offer a wide range of tax education resources. With minimum tax debt of $5,000 and the availability of bilingual services, this makes Tax Defense Network one of the best tax relief service providers.

Also, you can also check out 20 Best Small Business Tax Tips | 2022

How Much Does Tax Relief Cost?

Below is an overview of how much tax relief costs:

FAQs How Much Does Tax Relief Cost

Many legitimate tax relief companies offer a free-of-charge consultation to attract clients to patronize them.  All the 5 best relief service providers highlighted above will offer consultations for free including the likes of Enterprise Consultants Group, Liberty Tax, and Coast One Tax Group. However, a few will charge a small initial consultation fee before they can attend to you.

Community Tax Services are known to give the most affordable fees in the industry. The tax relief cost starts at $250 with a small initial fee. The minimum debt required for them to help you with good tax relief services is $5,000.

Yes, you can. You can personally make your tax settlement directly with the IRS or send your business representative to do so for you. Nevertheless, don’t forget to make inquiries of what to expect before you head to the IRS office near you.

Tax relief companies will help you negotiate and reach a settlement with the IRS in case you’re unable to pay your tax bill at the year’s ending on reasonable grounds. these companies have tax experts and attorneys who deploy different effective strategies to help you get an extension or clear associated tax penalties.

Kindly note that tax relief agencies can not nullify your taxes as this will be illegal.

Conclusion

Tax relief costs do not come cheap. It is quite an expense on its own and that’s why you must compare the charges of 3-4 tax relief service providers to select from and get the best deal. It is important you know if the reward is better than the cost of tax relief

 For instance, paying $3,500 to settle tax relief for a $5,000 tax debt may not really be a sound financial move. Tax relief services make the most sense if the business or high net worth individual is owing to a large tax debt.

Even at that, if the cost is too pricey, help from a good tax attorney may be preferable. Otherwise, it might be better for you as an individual or small-medium enterprise to negotiate directly with the IRS to settle for tax relief.

In conclusion, you can visit the IRS FAQs webpage to learn more about tax reliefs and how you may go about it.

References

• Michelle Black (2019); How Does Tax Relief Work?     March 24, 2019,          https://www.experian.com/blogs/ask-experian/how-does-tax-relief-work/
• Aly Yale (2022); How Much Does Tax Relief Cost?   March 1, 2022,      https://lendedu.com/blog/how-much-do-tax-relief-services-cost/

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