If you hire a reputable tax relief company to work on your behalf, they may contact the IRS to try to negotiate an offer in compromise, installment agreement, or penalty or interest abatement. If you prefer to have a third party represent you, make sure you hire a reputable and qualified tax professional.
These include:. When hiring a third party to represent you, be on the lookout for high upfront fees, unfavorable refund policies, and default billing rates that kick in if you decide to cancel. Furthermore, the FTC recommends that you meet face-to-face with any tax professional you're considering hiring. Ask them to explain your options and the company's fee structure in detail before you pay anything or sign an agreement.
In addition to taking care of your outstanding tax obligations, it's also important that you be on alert for any signs of tax-related identity theft. If you've ever lost your wallet, had your mail stolen, or had personal information compromised in a data breach, you may be at risk. If you're worried about the tax bill you owe the federal government hurting your credit scores, don't be. Tax liens are no longer included on your credit reports.
You should be aware, however, that just because tax liens are missing from your reports doesn't mean they can't cause you problems when you apply for a loan or other types of financing. Some lenders may check public records reports, and your unpaid tax liens could show up there. In addition, if your tax payments affect the rest of your financial picture and cause you to get behind on other bills, your credit scores could be affected.
Remember, trying to hide from your tax bill won't help you. In fact, as interest and fees continue to pile up, you'll only make your tax problem worse by trying to ignore it. Be proactive, file your taxes, and reach out to the IRS to see which options you have available.
You can consult with a reputable tax professional if you feel overwhelmed, but also know you have the right to reach out to the IRS on your own. Learn what it takes to achieve a good credit score. The purpose of this question submission tool is to provide general education on credit reporting. The Ask Experian team cannot respond to each question individually.
However, if your question is of interest to a wide audience of consumers, the Experian team may include it in a future post and may also share responses in its social media outreach. If you have a question, others likely have the same question, too. We also found that most of their state tax services were tailored toward individuals and businesses in California, where the company is headquartered.
Tax Defense Network offers bilingual tax assistance to those who speak Spanish and may be struggling to communicate with the IRS. If someone you know is struggling with tax debt and speaks Spanish as a native language, Tax Defense Network can help. The company has bilingual tax professionals on staff and a dedicated customer service line for assistance in Spanish. This makes it a fair choice for situations where the debtor is struggling to communicate with the IRS due to a language barrier.
Having started in , Tax Defense Network is a well-established tax relief company with an overall positive record.
However, we wish they offered an initial money-back guarantee of at least 14 days to better protect customers. ALG Tax Solutions offers a complete library of free educational resources designed to empower consumers and prevent future tax debt. One of the best indicators that a tax relief company has your best interests in mind is an education-based approach.
With educational resources, tax relief companies can empower their customers with the knowledge and skills required to prevent further tax debt. For example, the company offers a free online meter called the IRS Letter Decoder which shows you how serious a notice from the IRS is simply by entering a code found on the letter. ALG Tax Solutions was founded in ALG Tax Solutions also offers a standalone service called a tax help evaluation, a relatively low-cost option in which a tax professional reviews your tax documentation, conducts a full financial review, and provides recommendations for how to proceed.
In fact, the professional who reviews your case may even recommend steps to resolve the situation on your own. State tax services are available for individuals and businesses located in Michigan only. ALG Tax Solutions offers no guarantee on its services. Tax relief companies, also known as tax settlement firms , are for-profit organizations that offer to negotiate with the IRS to reduce your overall debt or monthly payment.
Taxpayers usually contact tax relief companies when they have received multiple notices from the IRS regarding debt and are now afraid they may face wage garnishment or asset seizure. Tax relief companies have a bad reputation that comes from an industry littered with poor business practices and scams. Disreputable tax relief companies may lure customers in with false promises, continue upcharging them with more fees, and eventually leave them in worse debt than they began with.
The idea is that, as experienced professionals, tax relief companies will pay for themselves by negotiating more effectively and generating a better outcome. The tax relief process usually begins with a free consultation, during which a case manager will review your current tax debt and present you with a quote for continued service. Tax relief companies set prices on a case-by-case basis that involves many factors, such as the total amount owed, type of solution required, and services included.
For this analysis, we began by evaluating 23 tax relief companies and scoring them based on a number of criteria. We only evaluated companies that offered free consultations, had been in business for at least five years, and had no complaints filed with the FTC. We analyzed customer reviews using the Better Business Bureau and other review websites, taking into consideration any relevant certifications or accreditations.
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Nobody can guarantee that. Also, be aware if they demand payment upfront before they deliver any services. Tax relief programs offered by the IRS include installment agreements, Currently not Collectible status, offers in compromise, and tax lien releases, to mention a few. Here is a brief discussion of the main tax relief programs available. Installment agreements will not actually reduce the amount owed in taxes, but they will create a payment plan that makes tacking that tax debt easier.
It allows people to pay it off gradually over time, in much the same way they would pay off their credit card. If you qualify, this payment plan approach stands as one of your best tax debt relief options. It will protect your credit score and send a message that you are willing to be good-faith partners with the IRS in settling your debt. Much like with installment agreements, currently not collectible CNC status will not reduce any of your tax bills, but it will serve as a temporary restraint on the IRS.
Essentially, CNC status recognizes that someone is in a dire financial position and is unable to pay owed taxes. If your financial status improves significantly, CNC status will be removed, and you will be expected to repay owed taxes or face penalties and interest. An offer in compromise is an agreement with the IRS where you pay less than the full amount of what is owed in taxes.
An offer in compromise is generally seen as a win-win as the taxpayers pay less and the IRS collects money it might not have otherwise.
In , A bank levy release is when the IRS makes a withdrawal out of your bank account to recoup a share of what is owed. This can come in the form of a one-time levy or as continuous deductions over time. A tax lien is a hold or claim the government has on your property, which restricts your ability to sell the property at will. Often when it can be demonstrated that by selling the property affected by the lien, there is a greater likelihood that the IRS will accept the offer and remove the lien.
Penalties for late payments can quickly add up and make a heavy tax burden even worse. This is where the IRS grants relief to one spouse when the other did something shady when filing a joint tax return. In , 42, requests for innocent spouse relief were filed with the IRS.
Tax relief companies can help taxpayers determine what programs they qualify for and assist with the application and negotiating process. Some have tax lawyers, enrolled agents and certified public accountants on staff. Accessed Nov. Federal Trade Commission.
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