5 Best Tax Relief Companies

If you owe Uncle Sam money from years prior, you’re not alone. According to the IRS, tax filers in the U.S. owed over $114 million in back taxes, penalties, and interest in 2020.

Even thinking about your back taxes can be overwhelming. Naturally there’s financial stress, but there’s also the fear of not knowing what to do. If you’ve turned a blind eye to your IRS tax debt for quite some time, the complexity of your predicament might have compounded. And not knowing how to get tax relief makes the situation worse.

The good news is that anyone can reach out directly to the IRS and work out a tax settlement agreement. In some situations, however, working with tax relief services to handle your back taxes could be in your best interest. When researching the best tax relief companies, you’ll want to work with an accredited firm that offers free consultation and flexible payment plans, has years of experience, is well-versed in tax law, and can handle both state and federal tax issues.

We analyzed the market and chose the five best tax relief companies based on these factors. Read on to find the best tax relief companies according to your situation.

Our Top Picks for Tax Relief Companies

Best Guarantee: Anthem Tax Services
Best Mobile App: Optima Tax Relief
Best for Business Tax Debt Relief: Larson Tax Relief
Most Affordable Fees: Community Tax Relief
Best for Bilingual Services: Tax Defense Network

Anthem Tax Services was our top choice for this category because it offers a money-back guarantee that, unlike its competitors’ guarantees, is not time-limited.

A standout feature of Anthem Tax Services is its money-back guarantee with no time limit. While other tax relief companies offer a money-back guarantee within a certain time frame, if Anthem cannot help you reach tax relief or save you cash, you’ll receive a refund regardless of how much time has elapsed since Anthem began assisting you. This money-back guarantee only applies to tax relief services, and not to Anthem’s bookkeeping and tax preparation services.

Anthem is also notable because it’s staffed with licensed tax professionals in 50 states. This tax relief company typically works with clients with at least $10,000 in tax debt. Clients must have a monthly household income of $2,000 and have no active bankruptcies. Anthem can help you with federal or state income taxes, but not property taxes.

If you qualify, free consultations are available. To work with Anthem Tax Services, you will also have to pay a flat upfront fee, and it usually starts at $3,000. So if you have a simple situation and a low amount in back taxes, you might want to pursue other options.

Optima Tax Relief is our top contender for the Best Mobile App category due to its excellent mobile app capabilities.

Optima Tax Relief is the top contender in our Best Mobile App category. Unlike other tax relief companies, its mobile app offers some uncommon features such as a free risk review, which can help you assess your tax debt situation.

If you upload an IRS notice, the Optima Tax App can provide a free risk review, which can help you figure out the urgency level and potential risks implied by the letter you received. Other mobile app features include the ability to file a free tax return extension and the option to reach out to one of Optima’s tax professionals quickly.

Optima Tax Relief also offers various services to help with both federal and state tax issues and options for tax relief, including levy releases, penalty abatement, and unfiled tax returns. Optima’s tax services also extend to tax preparation.

Because it provides a broad array of services specifically aimed at small businesses with complicated tax situations, Larson Tax Relief is our top choice in this category.

If you find yourself in a complicated situation with your small business, Larson Tax Relief offers a suite of tax debt solutions to problems with your 941 payroll, 1099s, and worker classification. It also assists in dealing with tax liens, accounts receivable levies, and asset seizures.

And if you have a complicated business tax issue, Larson’s team of tax professionals can steer you toward the best option for your particular case. Before committing, you can receive a free consultation with one of Larson Tax Relief’s tax professionals.

While Larson Tax Relief does offer a 15-day guarantee, that might not be enough time to assess whether Larson’s team will be able to help you with your business tax debt effectively. This is especially true for those with more complex cases.

Community Tax stands out in this category for featuring a free consultation, a flat rate for the initial investigation, and a flat fee for the remainder of services, which is determined before you agree to move forward with your case.

If you owe back taxes and are suffering from financial hardship, Community Tax can be a lifeline. It offers free consultations and affordable initial fees. The minimum debt requirement is $7,500, which is lower than that imposed by many of its competitors.

While Community Tax offers lower fees, the actual cost of working with this tax relief company depends on your tax situation — its complexity, and how long it takes to resolve. There is a flat $295 upfront fee for the initial investigation, which can take up to five business days.

Through Community Tax, you work with a tax attorney, an enrolled agent, and a certified public accountant. They will propose a solution based on your case and financial situation. You’ll be asked to pay a flat fee.

Tax Defense Network offers fully bilingual services in English and Spanish. This is a boon to those who face a language barrier and need help navigating our complex tax system. Tax relief options include payment plans, offers in compromise, and innocent spouse relief.

The Tax Defense Network can also assist with payroll taxes, business tax preparation, and close corporate filing services should your small business need to shut down permanently. The low minimum debt requirement of $2,500 makes this company a solid option for people with smaller tax issues.

Other standout features of Tax Defense Network include its robust education resources and tools, a tax glossary, compromise and tax withholding calculators, and comprehensive tax guides.

Other tax relief companies we considered

Precision Tax Relief

Victory Tax Lawyers

Tax Debt Relief Companies Guide

What is tax debt relief?

Companies that offer tax debt relief provide ways to help people pay or reduce their tax obligations. Relief might come as an agreement with the IRS to settle your tax debt. This may take the form of a payment plan with an installment agreement, a wage garnishment, or a settlement (aka an offer in compromise) in which you pay less than the amount the government claims you owe.

While state and federal tax collectors offer similar plans, regulations at the local level can vary. To learn about the options where you live, check your state’s comptroller office.

While you can negotiate directly with the IRS, there are situations when hiring professionals is a good choice. You might be nervous about contacting the IRS, confused about the process, owe a sizable amount, or have an overwhelmingly complex situation.

Also known as tax resolution firms, tax relief companies offer the opportunity to have your situation addressed by tax professionals. These might be certified public accountants (CPAs). Or they might be enrolled agents (EAs) – people who are tax professionals, have passed a rigorous IRS exam, and are authorized to represent clients before the IRS.

The team of professionals assisting you also might include bookkeepers and CPAs who specialize in helping people resolve their tax debt. These professionals will look over your documents, tap into their federal and state law knowledge, and assess your financial situation to determine the best option for you.

Typically, the process entails communicating with the IRS on your behalf and filing the necessary paperwork. Some debt-relief companies are staffed with tax lawyers who can also act as go-betweens in your negotiations if you have a particularly complicated case.

How does tax relief work?

Tax relief companies work out an agreement with the IRS on your behalf to cut the amount of back taxes owed.

Remember that in theory, you can do pretty much everything that tax relief companies do by contacting the IRS directly. So why work with a tax relief company? Reputable tax relief companies have experienced professionals such as tax attorneys, boast a solid track record, are well-versed in tax law, and can swiftly navigate complicated cases involving higher debt amounts.

For example, if your tax debt situation is simply a matter of not having paid Uncle Sam last year, you may get the same results by reaching out to the IRS yourself. In that case, it wouldn’t be very beneficial for you to work with a tax relief company and pay the added cost.

But if your tax debt is sizable — we’re talking over $10,000 — and your situation involves years of unpaid taxes, multiple assets and bank accounts, and other variables that make it a bit more tricky, a tax relief company can help pinpoint your options, plot out a strategy, and help you reach a settlement with the IRS.

While a general rule of thumb is to contact a tax relief company if you have over $10,000 of debt, it largely depends on your circumstances. If you feel like you could benefit from professional tax help, no matter the size of your debt, consider getting a free consultation with a tax relief firm. That will assist you in determining whether working with such a company is a good decision.

How much does tax relief cost?

The cost of tax relief can vary widely and is based on how complex your situation is and on the route you decide to take. There are generally two pricing models: flat hourly rate or a percentage of the debt owed.

Some companies may charge only a flat hourly rate, while others charge based on a percentage of the debt owed. And some tax relief services have prices for different services. For example, they might charge several hundred dollars for a basic assessment but will charge $4,000 if you want to go the route of installment agreements or $500 for penalty abatement.

If a company gets paid on a percentage basis, the rate might be 10% to 15% of your debt. Let’s say you owe $20,000 to Uncle Sam. In that case, you can expect to pay the tax relief company $2,000 to $3,000. If your tax debt is substantial, it might be less expensive to pay an hourly rate instead of a percentage of the amount owed.

No matter which company you decide to work with, it’s essential to look carefully at its pricing model and fees. Otherwise, you might get blindsided with unexpected costs.

Tax relief debt options

Here are some common tax relief debt options:

Offers in compromise

If you’re facing financial hardship, you might benefit from an offer in compromise (OIC), which is a debt settlement option that allows you to pay less than you owe. The IRS will consider your circumstances, income, ability to pay, credit score, asset equity, and expenses. It’s a good idea, though, to explore other debt-relief options before querying the government about an OIC arrangement.

Innocent spouse relief

If your spouse — or former spouse — omitted items or incorrectly reported items on your tax return, you might be off the hook for paying back taxes, interest, and penalties. The tax owed, interest fees, and penalties can only be collected from your spouse.

Note that you and your spouse are responsible for anything that doesn’t fall within the “qualify for relief” bucket. Innocent spouse relief only applies to individual and self-employment taxes. Household employment taxes (i.e., Social Security tax, Medicare tax, and federal unemployment tax) and business taxes don’t qualify.

Installment agreement

Installment plans are a common way to pay back taxes. You can reach out directly to the IRS to request one. If your request is approved, you will be placed on either a short-term or long-term payment plan.

A short-term payment plan means you’ll pay individual unpaid taxes within 180 days, and a long-term payment plan means you have up to six years. You might be eligible for a short-term payment plan if you owe $100,000 or less in taxes, fees, and penalties. A long-term payment plan might be an option if the back taxes are $50,000 or less.

When your request is under review, the good news is the IRS is prohibited from taking enforcement actions against you. It’s blocked from levying or collecting on an asset to settle a tax debt.

Penalty abatement

Through penalty abatement, you might be eligible to be absolved from paying penalties that have accumulated from being late on taxes. To be eligible for penalty abatement, you’ll need to meet a few conditions. You must have filed all currently required returns or filed an extension; have paid — or arranged to pay — any tax due; and either had to file a tax return previously or had no penalties for the three tax years before you got dinged with a penalty.

Currently not collectible

If your financial situation is a case in which a payment plan won’t provide sufficient relief, you can report your account as currently not collectible. While this doesn’t absolve you from back taxes owed, it changes your status to “cannot afford to pay the debt at this time.” To be eligible for this tax relief option, you’ll need to complete a Collection Information Statement form and detail your financial status.

IRS Fresh Start Program

The IRS Fresh Start Program is for taxpayers who cannot pay back taxes upfront but don’t have any federal tax liens. It offers the option to make monthly installments to pay off your back taxes over a period of six years.

The IRS Fresh Start Program also changed existing law in a way that helped provide tax relief. These changes included upping the threshold that triggers the Federal Tax Liens (FTLs) to $25,000, making it easier to get FTL releases, and in some cases, allowing you to repay state and delinquent taxes, and your student loans.

Other Services Offered by Tax Relief Companies

Audit defense

You can think of audit defense as an add-on to protect you should you get audited. For an additional fee, a tax relief company will agree to help you resolve any audit issues that pop up within a specified time period.

Note that the odds of an audit are pretty low — the IRS closed 452,515 audits in 2020, which is about 0.29% of the individual tax returns filed. If you’re not running the risk of an audit, then audit defense might not be necessary.

Alternatives To Using Tax Debt Relief Companies

Direct negotiation with the IRS

Suppose your tax situation is simple. Or your debt burden is on the smaller side — usually less than $10,000. In that case, it might be best to negotiate directly with the IRS. You could apply for one of the IRS’s tax debt relief programs on your own. It would cost substantially less than working with a tax debt relief company.

Tax relief lawyers

You might consider working with a tax debt relief lawyer if your tax debt situation is particularly complicated or if you might be in danger of facing criminal charges. Some tax relief companies have tax debt relief lawyers on their teams, but not all. These tax attorneys know the ins and outs of tax law and legal code and tend to be more specialized than an EA or CPA. In turn, they can help you navigate through the complexities of your particular case and offer viable routes to take.

Warning Signs of a Scam

Tax debt can be terribly stress-inducing. Any offer for relief from such a burden can be enticing. However, as the Federal Trade Commission (FTC) warns, not all tax relief companies have good intentions. Remember: Only the IRS can determine if you qualify for relief programs.

If a company does any of the following, you should proceed very cautiously. Here are some red flags that are signs of a potential tax scam:

• Makes promises to lower your debt without first examining details about your situation
• Fails to ask specific questions about your tax debt
• Requires upfront payment for results that are “guaranteed”
• Adds pressure or an element of urgency to commit quickly
• Reaches out to you first via a phone call, unsolicited email, or a letter in the mail
• Makes claims that are too good to be true
• Prolongs the process or delays results by making excuses or asking you for the same documents

Reputable tax debt relief companies will make it clear that they can’t guarantee that they’ll save you money on your tax situation. However, they might offer a full or partial refund of what you’ve paid them if they’re unable to assist you. Look to see if they’re part of tax professional organizations such as the National Association of Enrolled Agents (NAEA), the National Association of Tax Professionals (NATP), and the Association of International Certified Professional Accountants (AICPA).

How We Chose the Best Tax Relief Companies

We used the following criteria to choose the best tax relief companies:

Availability. We selected companies that handle federal and state tax issues and offer their services nationwide.

Cost. We chose tax debt relief companies that offer free consultations and flexible payment plans.

Credibility. We evaluated the reputations of tax debt relief companies by looking at consumer feedback from trusted review sites such as Better Business Bureau (BBB) and Trustpilot.

We also picked companies with at least one certification or membership with major tax professional organizations such as the National Association of Tax Professionals (NATP) and the NAEA.

Summary of the Best Tax Relief Companies

Best Guarantee: Anthem Tax Services
Best Mobile App: Optima Tax Relief
Best for Business Tax Debt Relief: Larson Tax Relief
Most Affordable Fees: Community Tax Relief
Best for Bilingual Services: Tax Defense Network