How Do Tax Debt Relief Companies Work

What A Debt Relief Company Can Do For You

When they are in over their heads and cant tackle their debt, people sometimes turn to debt relief companies for help.

Such companies have also been known to aggressively market their services to targeted individuals. Debt relief companies can come up with a settlement plan and negotiate with your creditors to help you pay off your debt.

Typically, the settlement plan involves your setting aside a sum of money monthly in an escrow-type account that a third party handles until a balance is accumulated. The debt relief company can use the balance to negotiate with your creditor. In the meantime, you will not be paying your creditor the monthly payment due.

When the debt relief company negotiates with it, the creditor might be willing to accept a payoff thats lower than the amount you owe considering that it might not get any return at all if you become insolvent.

Optima Tax Relief Review

Broadest Tax Services | 4.5 Stars

Optima Tax Relief specializes in assisting consumers who feel threatened by aggressive IRS tax collection efforts, although the company also helps with state income tax issues as well. A company representative will contact you within 24 hours of being assigned to your case. Optima focuses only on tax relief solutions, including criminal tax defense services, with over 25 years experience in the field. Optima offers all tax relief options except for asset seizure negotiation.

The tax professionals at Optima Tax Relief are prepared to dig into the details to find a resolution. They will also let you know if you can do the investigation yourself to save money. If you arent satisfied with Optimas results, the company will refund your money within 15 days.

To learn more about Optima Tax Relief, read our comprehensive Optima Tax Relief review.

Do You Want To Settle Your Tax Debt In Full

The answer to this question depends largely on your individual financial situation. If you can pay in full, the IRS will make sure you do. To make that determination, the agency takes your monthly income, your assets and other factors into account. If you can’t pay it in full with one payment, it might be a good idea to reach out to a tax debt relief company to negotiate a payment plan with the IRS.

In certain cases, a tax debt relief service will negotiate with the IRS to settle your debt for a smaller amount. This process, known as the offer in compromise , is a very specific solution with many requirements. If you do not meet those requirements, you will not be approved for an OIC.

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Finding A Favorable Solution

Every tax problem is different. Its very rare you see the exact same case twice. Thats why we like to get to know each client, their business or work scenario and the intricate details of their tax debts and predicaments. Tax relief experts are there to find the most favorable solution to your tax debt problem so you dont pay the IRS any more than you absolutely have to. Not every taxpayer will qualify to pay less than 1% of their IRS tax debt , however every case does have a best case scenario. Its the job of a qualified tax relief firm to determine yours and then pursue it.

Is Freedom Debt Relief A Legitimate Company

Freedom Debt Relief: Yes. Since we began in 2002, Freedom Debt Relief has served over 750,000 clients and resolved over $10 billion in debtfar more than any other debt relief company in the United States. We are passionate about helping people create brighter financial futures. Visit our Freedom Debt Relief website to learn more about our commitment to integrity.

What our clients say:

Americas largest debt settlement company

• 15+ years

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Does The Irs Forgive Tax Debt

Though the IRS is widely seen as an antagonistic government agency, it does have programs in place to alleviate the tax debt problem for some. Measures such as the OIC can start the forgiveness process. For example, your tax debt could be forgiven if it’s deemed to have low “realistic collection potential,” meaning it’s very unlikely for the debt to be paid because you have a low income, no assets to seize and sell, and no way to make the payments. The IRS has other tax debt forgiveness measures, but the eligibility requirements are stringent.

Will Debt Relief Hurt My Credit Score

• Next Steps

Debt relief is an umbrella term describing a few techniques used to manage mounting debt. Debt relief actions may have an impact on your credit, but it depends on which method you choose.

Even if your credit score has taken a hit as a result of financial hardship or mismanagement of debt, it’s not too late to get relief and prevent any further damage to your credit. Read on for more information about various debt relief options and how they can helpor hurtyour credit scores.

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How Debt Consolidation Works

If the number of payments youve got every month is becoming overwhelming, a debt consolidation loan may help lighten your load. Whether youre struggling with multiple, high-interest credit cards or private student loans thatve gotten out of hand, streamlining your finances can help you get ahead in the long run. When you consolidate your debt, you bundle all your financial stress into one monthly payment.

Often with lower interest rates than credit cards, debt consolidation loans let you take back control. Available through online lenders, banks, and credit unions, a debt consolidation loan can be a good option for getting out of debt and moving forward with your goals.

How We Chose The Tax Relief Companies

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 then took a look at the types of services offered and evaluated the companys customer service. We analyzed customer reviews using the Better Business Bureau and other review websites, taking into consideration any relevant certifications or accreditations. Finally, we asked about the companys pricing structure, minimum debt amounts, and any money-back guarantees.

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Sound Too Good To Be True

Some tax relief companies may guarantee to lower your tax obligaÂtions. Others might tell you that they have âinsider tipsâ or special expertise to get a favorable result with the tax authorities. Remember: if a promise sounds too good to be true â it is. Donât do business with a firm that does not give you the biography of the attorney, certified public accountant, or tax agent who will actually work on your case.

What Are The Signs Of A Tax Relief Scam

Scammers abound in the tax debt relief market you have to be savvy when hiring a firm. You don’t want to shell out money and not get help in return. There are several telltale signs that can clue you in as to whether a company is running a tax relief scam.

• The company requests a large, upfront payment. No reputable business should charge you a large, upfront fee for services not rendered. They may require an initial payment, but not a huge one.

• They make misleading representations. Many scammers find their victims by sending unsolicited emails, texts and letters that appear to be from a government entity such as the IRS. They may claim you qualify for a government program to settle your debt. Before paying money to a tax debt relief company, research them thoroughly, rather than respond to an unsolicited email or text.

• The messaging is too good to be true. A lot of fraudsters appeal to your need for immediate help. If the company claims to settle debt for pennies on the dollar, slash what you owe by impressive amounts, or remove penalties and interest, that should raise a red flag.

• The agency conducts little due diligence. A telltale sign that a tax debt relief company is not legitimate is how it handles your case, or more precisely, that it doesn’t handle your case. If it fails to assess your financial background and/or doesn’t inquire about why you owe taxes, alarm bells should go off.

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State Tax Relief Programs

The process for tax settlements with the states is very similar to the process with the IRS, although it varies from state to state. In some states, for instance, a taxpayer’s penalties can be waived, but interest can’t. In other states, interest can be waived, but penalties can’t. And in some states, legitimate tax debt can’t be reduced at all. For more information, contact your state comptroller. For a state-by-state listing, visit the National Association of State Auditors, Comptrollers and Treasurers at nasact.org.

Protection Of Assets And Income

If you happen to skip out on a tax bill or avoid filing your taxes for a while, the IRS can and will find ways to make you repay this debt. Wage garnishment and asset seizuresare two of their biggest tools for debt repayment, but both are avoidable. You do have options if youre currently unable to pay your tax debt, but you may not know what they are. Thats where a tax relief firm comes into play.

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How Does Debt Relief Affect Your Credit

Freedom Debt Relief: Debt settlement programs like the one offered by Freedom Debt Relief involve letting creditor accounts go past due, which could impact credit score. However, once the debts are resolved, clients should be on better financial footing to rebuild their credit.

What our clients say:

Instant Tax Solutions Review

Great Guarantee | 4 Stars

When you first get in touch with Instant Tax Solutions, you will describe your tax circumstances to one of four consultants who have decades of experience with the IRS. This consultation is free. Instant Tax Solutions gives free advice so consumers can handle tax problems themselves if they dont need a professional to do the job.

Instant Tax Solutions main office is in Idaho, but the company employs highly-trained tax professionals and tax lawyers across the country. Instant Tax Solutions has a goal of 100% customer satisfaction, inviting clients to report problems to work out a complete resolution. If you arent happy with the tax relief Instant Tax Solutions provides in the first 30 days, you will get a full refund.

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Optima Tax Reliefs Core Values

In the decade that its been in business, Optima Tax Relief has grown and expanded in many ways. However, the firm continues to stick to its core values. The firm defines the following values as foundation to its culture and dedication to customer service:

• Calmness: Reflect carefully, and then respond confidently.
• Change: Adapt to market trends and client demands rapidly.
• Dependability: Be reliable and always offer credible advice.
• Education: Learn and enhance knowledge at every opportunity.
• Excellence: Deliver the best possible services to each client every time.
• Goals: Make, achieve, and exceed objectives.
• Leadership: Stand out as a leading firm in the back tax assistance industry.
• Positivity: Build a sense of respect and optimism.
• Responsibility: Be accountable for every action.
• Trust: Embrace transparency and communicate clearly.

Ial Payment Installment Agreement

One newer IRS program allows you to pay your tax debt in low monthly installments. The Partial Payment Installment Agreement lets you pay your IRS tax debt in monthly installments for a specified amount of time.

Once youve paid the installment payments as agreed, your debt is forgiven, even if you havent paid the entire balance owed.

The IRS gears this program toward people who owe at least $10,000 to the IRS, including interest and penalties.

As with all government programs, you need to meet additional conditions with this type of program. A qualified tax debt attorney from a trusted firm like Community Tax can help you wade through the red tape.

If you qualify, your application and approval may go faster with an experienced tax debt attorney on your side. Not to mention you wont have to become a self-educated expert in tax laws.

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The Biggest Benefits Of Hiring A Top Irs Tax Relief Company

The IRS is intimidating thats something almost every American taxpayer can agree on. On closer inspection, it can be easy to see why. Taxes are needed to help run the country and contribute to the betterment of our government, communities, states and more. And the IRS is the agency charged with collecting those taxes.

Because the IRS website and other agency material is filled with red tape and tax jargon, it can be difficult to understand every law, liability and limitation they present to you. Having someone in your corner is important when youre dealing with the IRS, and this is especially true if you owe them money in some way, shape or form.

What exactly are the benefits you can receive from a professional tax relief firm? Here are some of the most important reasons to hire a tax relief firm when dealing with the IRS.

How To Determine If A Tax Debt Relief Firm Is Legitimate Or A Scam

If youre looking for immediate help from a tax debt relief company to tackle your tax debt, its easy to enlist the help of the first internet search result you click on. But you need to be aware of scams and what to watch for.

One red flag is if a company demands payment before any work is done. Fraudulent tax debt relief companies tend to request an upfront payment and claim to get your tax debt erased when you enlist their help.

If a company tells you about an IRS hardship program you qualify for, you may want to do your own research. The Federal Trade Commission says that most taxpayers dont qualify for these programs, and most companies are looking to take your money and run, rather than give you assistance.

Watch out for these scam warning signs:

• Guaranteeing that your IRS debt will be reduced or eliminated
• Not reviewing your financial situation
• Promising debt forgiveness
• Ignoring you after youve paid for services
• Denying you help, saying that the IRS rejected your request or that you no longer qualify for help

Before you sign up with a third-party company, especially one you arent sure about, the FTC recommends addressing your concerns directly with the IRS to settle your tax debt. If you believe that youve been scammed, file a complaint with the FTC.

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How Do Debt Settlement Firms Actually Operate

If youre seeking help to resolve your tax debt, and you see or hear an ad from a tax settlement company pop up, think twice before reaching for your phone. By law, the only people who can give you advice on how to settle your debt to the IRS are Enrolled Agents, CPAs, or attorneys.

Theres an entire industry dedicated to helping taxpayers deal with the IRS, and it was borne out of the fear that many people have of facing the IRS on their own. Companies that operate in this area are known as tax settlement or tax resolution firms. As with any industry, there are the good, the bad, and the flat out scam artists. Since you hopefully only need to deal with the IRS once, you may not be aware of what to look for to determine who can help you, and who will simply take your money and run.

Whats more, once you have given your contact information, you will be contacted by someone who may or may not be authorized to give you advice. Heres a real example for you. Head over to www.irs-tax-settlement-hq.com. Scroll down to the bottom of the page, and you will see this statement: The IRS-Tax-Settlement-HQ.com website is used as an advertising and marketing tool to connect taxpayers for tax resolution services. Did you get that? They will connect you with some unknown third party for tax resolutions services. Is this really what you want?

Well deal more extensively with OICs in a later chapter, but for now, heres what you need to know:

Of these 4 million:

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