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The Best Tax Debt Relief Services of 2021

By Andrew Martins, Writer
| Updated
Nov 10, 2020

Looking for the best tax debt relief service? We have easy-to-read, unbiased expert reviews and feature comparisons of the best and cheapest services.
Best for the Self-Employed
No minimum debt amount required
Has tax debt avoidance programs
Experts assigned to each case
Featured Sponsor
Staffed by tax professionals
25 years of experience
Free consultation
Best for Low-Debt Situations
Good for tax debt of $25K or less
Flexible payment plans
High number of possible solutions
Best for High Debt
Best for $25K or more in tax debt
Lowest costs in the category
Onsite tax letter decoder
Looking for the best tax debt relief service? We have easy-to-read, unbiased expert reviews and feature comparisons of the best and cheapest services.
Updated 11/10/20

We updated this page with information on the recent changes to the IRS Taxpayer Relief Initiative.


Your costs may increase, your shipping partner may go out of service, and your equipment may experience some hiccups, so sometimes you have to get creative as a small business owner. A little creativity can go a long way, but there's one aspect of running a business that you should absolutely, under no circumstances, ever try getting cute with – your taxes. If you do, you run the risk of breaking local, state or federal laws and potentially getting buried under a heap of tax debt.

February 2020: Though it was formally signed into law in 2017, some of the provisions of the Tax Cuts and Jobs Act only recently went into effect at the state level. On Jan. 1, 35 states experienced major tax changes, including reductions in individual income tax rates, decreases in corporate income and capital stock taxes, and changes to estate taxes, to name a few. In particular, 13 states made changes to their sales taxes, with most of the focus landing on remote and online sellers. Individuals in Ohio and Vermont should also be aware that the former increased its earned income tax credit while the latter changed its state tax capital gains rules by instilling a hard cap on what percentage of those gains can be excluded from general income. Check your state's tax code for new changes.

Find the Right Tax Debt Relief Service for Your Business

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It doesn't matter how small your company is or what industry you're in – if you're selling a service or good in the United States, the Internal Revenue Service (IRS) will collect taxes. You'd think the process would be simple for individuals and business owners alike, but the U.S. tax code is a historically complex piece of legislation where one misstep could result in you owing thousands of dollars to the government.

If you've run afoul of the IRS and recently received a letter claiming you owe money, it's understandable to be scared, but there are ways to address the problem. Though the IRS will eventually get its money back from one or multiple forms of restitution, you can team up with a tax debt relief service to solve the problem in a way that doesn't ruin your personal and professional life.

Keep in mind that if you do not meet the IRS's criteria to negotiate for certain tax debt relief options, then you won't be able to get help from any of the following tax debt relief services. For those that do, however, we went through an extensive research process to determine the best tax debt relief services for businesses with various needs.

To read more about the companies we selected as our best picks, continue to our Reviews section. If none of these companies seem like a good fit for you, however, read our reviews of other services and check out other tax debt relief options available to you.

How We Decided
Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.

Compare Our Best Picks

back guarantee 
Tax Defense
$10,000 No No money-back
IRS, NAEA, ASTPS, Trustpilot
No minimum No Refunds for
services not
$15,000 Yes, in some
No money-back

Our Reviews

Community Tax: Best for the Self-Employed

With Community Tax, there is no need to pay a legal retainer for representation.
Community Tax professionals are very hands-on with their process.
The service may not be worth the cost if your debt is particularly small.
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Tax season can be a stressful time of year for freelancers and independent contractors. Without the relative safety of W-2s provided by a larger employer, it's easy for a self-employed individual to mishandle their taxes. If this happens and a tax debt crops up, we find that Community Tax is the best company to hire to address the problem. For the last nine years, Community Tax has provided its clients with a range of services and access to its team of tax professionals who specialize in dealing directly with the IRS. By law, only tax attorneys, enrolled agents and certified public accountants (CPAs) can negotiate tax debt relief with the government agency. Community Tax employs all three types of professionals.


Tax Services

Representatives from the best tax debt relief companies listen attentively as you explain your situation before they suggest a plan to help you resolve your debt with the IRS. They understand that it's important to address the problem promptly, and work hand in hand with you to come up with an effective strategy.

During our interactions with Community Tax, the representatives were courteous and attentive. Only after double-checking that they fully understood the situation did they offer solutions. In addition, they offered a separate tax preparation service to avoid future problems with the IRS once the debt was handled.

Tax debt relief services help their clients get their assets back while tackling the overarching problem. The IRS is extremely capable at getting its money from debtors, so any unaddressed tax debt can get out of hand quickly. Spend too much time with a tax debt on your records and the IRS will go as far as it can to get the debt paid, including garnishing your wages and keeping any tax returns.

How a tax debt is handled depends on your unique circumstances. What may work for an individual with unfiled taxes may not work for an S corp with payroll tax debt. Some of the IRS's more punitive actions can add more hurdles to the overall debt recovery process.

The professionals at Community Tax offer the following options to their clients:

  • Offer-in-compromise
  • Fresh Start program
  • IRS installment agreements
  • Innocent/injured spouse relief
  • Currently not collectible (CNC)
  • Tax lien help
  • Levy and seizure prevention
  • Penalty abatement
  • IRS audit defense
  • Income tax preparation

After you and Community Tax select a plan of action, professionals assigned to the case begin the initial fact-finding phase. During this time, they assess your finances to make sure they have a clear understanding of your actual situation. This initial stage takes approximately two or three business days, though this may vary, depending on your specific case.

Next, the tax professionals at Community Tax begin working with the IRS. These negotiations can take weeks or months, depending on the type of work needed. If there are liens or levies, they work to lift those conditions off your case.


When it comes to the cost for hiring a tax debt relief company like Community Tax, it's important to remember that not all resolutions are the same. As a result, pricing will change on a case-by-case basis. The more involved your case, the higher Community Tax's flat fee will be.

Once in an agreement with Community Tax, you will be charged an initial fee between $500 and $750 for the first phase. How much you pay for the company's fact-finding efforts depends on the complexity of the case. After that, it charges a flat fee based on the amount of work a case required. Since the company has a team of tax lawyers on staff, there is no need to pay for a legal retainer.

We asked for a cost estimate for the second phase based on a tax debt scenario we used on each company in this category, but we were not given one. The representative declined to do so in each case, since pricing depends so much on the complexity of the case.

Each of Community Tax's fees can either be paid back in full or through a monthly payment plan. Working with Community Tax requires a contract.

Customer Service

Grappling with a tax debt from the state or IRS can be stressful, especially as a freelancer or contractor. As a self-employed individual, you don't have the relative safety net of operating under an LLC or partnership. The liability rests on you.

Considering how stressful this entire process could be, it was heartening to hear how personable and understanding Community Tax's customer service representatives were in our interactions with them. As we explained our situation, they offered a handful of solutions, including double-checking our tax issue and working out a payment plan with the IRS. They also offered additional tax preparation services so that we would not run into the same problems in 2020.

However, we did experience a couple instances where the representative we spoke to on the phone became pushy about hiring the company. At one point, we were asked why we wanted to shop around for this type of service. In another call, we were asked for specific identifying information during the consultation. Once we said we were just shopping around, however, they backed off and went back to being very forthcoming with information.


It's important to note the services that Community Tax provides require very specific criteria from the IRS to be met. If you do not meet the federal or state government's requirements, no tax debt relief company will be able to negotiate for that course of action.

While Community Tax does not have a minimum for how much debt you must owe before it takes on your case, it may not be worth your while to hire them – or any tax debt relief company – if you only have a small tax debt. Individuals with smaller debts may be able to handle their issues with the IRS themselves. While considering which company to hire for your case, you should make sure to conduct a cost-benefit analysis. Remember that these companies do not offer their services for free and will add a cost to your existing tax debt. Only use this kind of service if the benefits outweigh the costs.

More specifically to Community Tax, some of its representatives were pushy, which is unhelpful when you're already stressed about your tax debt.



The W Tax Group: Featured Sponsor

W Tax Group has a team of licensed tax attorneys, CPAs, and tax professionals who have vast expertise in tax law and will strategically work with the IRS or state taxing authority to resolve tax issues, reduce penalties, and provide quick resolutions. The W Tax Group team brings decades of experience to the table. Having seen virtually every tax issue before, their team knows how to address each issue they encounter. Among the specific areas W Tax Group can assist clients with are offers in compromise, installment agreements, lien and levy agreements, filing back taxes, and communicating with the IRS. W Tax Group offers 100% free tax consultations.

Tax Defense Partners: Best for Low-Debt Situations

Tax Defense Partners has a full accompaniment of tax professionals on hand.
It offers a multi-stage plan of attack to mitigate existing tax debt problems.
Quoted flat fees were on the high end of the spectrum.

Tax Defense Partners is an Encino, California-based tax relief company that works to help individuals and companies with their outstanding tax debt. Regardless of whether the problem is at the state or federal level, Tax Defense Partners' team of tax professionals and range of services makes them our best pick for businesses facing low-debt situations.

The company's tax professionals all work in a centralized office, eliminating the need for outside contractors. By law, the only individuals who can represent you or your business before the IRS other than yourself are tax attorneys, enrolled agents or certified public accountants (CPAs). Tax Defense Partners employs all three types of tax professionals. If conditions are right, they can try to lower your debt, establish a payment plan with the government or have a bank levy lifted, among other options.

A good tax debt relief company has representatives on hand who will carefully assess your situation before coming up with a plan to alleviate your debt with the IRS. How quickly you address the problem is vital, so a good company will attempt to work with you to strategize an effective course of action.

Over the course of multiple interactions over the telephone, we found that the representatives at Tax Defense Partners carefully listened to our tax debt scenario before offering potential solutions.

While it may seem like the tax debt relief industry is there to help in all circumstances, it's important to note that they are not the be-all, end-all solution. Some services require very specific criteria to be met. If you do not meet the IRS' criteria for certain federal and state debt relief options, no tax debt relief company will be able to negotiate for that course of action.

Tax Services

Like their contemporaries, Tax Defense Partners has a range of potential tax debt relief options to cover most situations. How your tax debt is handled depends on several variables, including how much you owe, your current monthly income and whether it's a personal or business debt. In addition, some of the IRS' more aggressive steps in recovering debt can complicate the overall process.

The worst thing you can do in a tax debt situation is ignore the problem. Here are some of the options Tax Defense Partners can offer:

  • Offer-in-Compromise
  • Fresh Start Program
  • IRS Tax Payment Plans
  • Innocent Spouse Relief
  • Payroll Tax Debt Relief
  • Foreign Bank Account Reporting
  • Currently Not Collectible (CNC)
  • IRS Back Tax Help
  • Tax Lien Help
  • Bank Levy Help
  • Penalty Abatement
  • IRS Audit Representation
  • Transcript Analysis
  • Income Tax Preparation

Once a solution is chosen, tax professionals are assigned to the case. They start with an initial fact-finding phase where they get an idea of the financial situation. We were told that this initial stage takes just a few days, though that largely depends on the scope of your case.

After the fact-finding phase is done, representatives told us that the second phase can take much longer – between five and eight months in most cases, though that also depends on the individual case. As the tax professionals work with the IRS, negotiations can take weeks or months, depending on the type of work needed, before a final resolution is in order.

Pricing When it comes to pricing in the tax debt relief industry, it's important to remember that not all resolutions are the same. As a result, pricing is on a case-by-case basis. The more involved your case, the more expensive the flat fee will be. It must be noted that for this company to take on your case, you must have at least $10,000 in tax debt.

Based on the tax debt scenario we presented Tax Defense Partners as part of our testing, we were quoted at flat fees between $3,250 and $4,250, with $1,000 due as a down payment. However, depending on your case, you may be able to negotiate the down payment to $500. We gave the same tax debt scenario to the other companies on our list and Tax Defense Partners was on the higher end of the spectrum.

Despite the company's higher-than-average cost, we found that the initial down payment, as well as the rest of the company's fees, could be split up into more manageable payments over six months. No work would begin on our case until we remitted the first payment. Since the company has a team of tax attorneys on hand, there is no need to pay a retainer.

Customer Service

When we called Tax Defense Partners posing as potential clients, we found their representatives were highly knowledgeable about each scenario we put before them. During each call, we spoke with a tax professional who tried to get as much information about our tax debt situation as possible without requiring that we enter into an agreement.

Dealing with a tax debt can be extremely stressful. In the cases where we posed a problem that could prove to be dire to our supposed small business, Tax Defense Partners' representatives worked to assuage our worries. In one instance, a representative said our company would not need to shut down because of our tax debt and that they would work to make our tax debt repayment fit within our means.

Our interactions with Tax Defense Partners' tax professionals were fact-driven and to the point, giving estimates for how long each step could generally take. That being said, they were extremely careful to point out that each case is different, and unforeseen changes could come up that would change any proposed timetable.


While Tax Defense Partners can provide a range of services, it should be noted that they each come with strict guidelines for eligibility from the IRS. If you do not meet those guidelines, either at the federal or state levels, you cannot move forward.

We also warn against hiring a tax debt relief company if the costs exceed your tax debt. Individuals and businesses with smaller amounts of tax debt may be able to represent themselves before the IRS. In those instances, a company like Tax Defense Partners may charge more for their services than you may want to spend. With that in mind, we will reiterate that the price we were quoted in our testing of Tax Defense Partners was on the higher end compared to other companies we reviewed.



ALG Tax Solutions: Best for High Debt

ALG Tax Solutions has all three tax professional types (CPAs, attorneys and enrolled agents) on staff.
The company factors in the complexity of your case when determining the cost.
If your tax debt is already this high, you may not be in a place to pay an outside service to manage it.

If your tax debt is $25,000 or more, we find that ALG Tax Solutions is the best company to hire in your situation. Since 2011, the Howell, Michigan-based company has provided its clients with access to a staff of tax professionals trained to directly negotiate with the IRS. By law, only certain legal specialists can represent your case before the IRS, and ALG Tax Solutions has all three on hand: tax attorneys, enrolled agents and certified public accountants (CPAs).


Tax Services

As you look for a tax debt relief service, you want to find a company that listens carefully to your situation and offers a plan for getting out from under the IRS. It should help you address the situation quickly and work closely with you through the entire process. After we've considered multiple companies and learned what they have to offer, ALG Tax Solutions is our best pick for high-debt situations.

Tax debt relief services help their clients with a variety of situations, from unfiled state and federal taxes to tax liens and bank levies that leave assets in limbo. When it comes to collecting debts, the IRS is well versed in getting its money back and can go so far as garnishing your wages or placing tax liens on your property.

Tackling a tax debt at the state or federal level can come with a unique set of challenges, based on certain circumstances. What may work for an individual with unfiled taxes may not work for an S corp with payroll tax debt. If levies or liens are also part of the case, additional considerations must be made.

If the IRS or your state are calling you and sending letters about your tax debt, it probably feels like the hole you're in is getting deeper. While it may seem easier to just ignore the problem, that's the worst thing you can do.

ALG Tax Solutions' professionals offer a variety of services to their clients. Each handle very different situations and have certain criteria that your unique case must meet.

Here are some of the options ALG Tax Solutions can provide:

  • Offer-in-compromise
  • Fresh Start initiative
  • IRS installment agreements
  • Innocent/injured spouse relief
  • Currently not collectible (CNC)
  • Federal tax lien/levy assistance
  • Penalty relief
  • Audit representation
  • Tax preparation

Once a course of action is chosen and an agreement is made between ALG Tax Solutions and a client, professionals assigned to the case will begin their initial evaluation. During this time, they will do a deep dive on your finances and ensure that they get a clear understanding of your actual financial situation. We were told that this initial stage takes approximately two or three business days, though it may vary given the scope of your case.

The second phase generally takes longer. As ALG Tax Solutions' tax professionals work with the IRS, negotiations can take upward of a year before final resolution is in order. If there are liens and/or levies, ALG's team will work to lift those conditions off your case while working on the overarching problem.


Like most tax debt relief companies, ALG Tax Solutions charges its clients on a case-by-case basis. The more involved your case, the higher the price tag will be. If your tax debt isn't large enough to warrant their services, we found that their representatives will suggest not hiring them and handling the problem yourself. The fact that they were willing to turn down our business based on a cost-benefit analysis was noteworthy.

If you decide to use their services, they charge an initial fee for the first phase, generally ranging from $250 to $500, again depending on the case. After that, they charge a flat fee based on the amount of work a case required. Based on the tax debt scenarios we presented the company as part of our testing, we were quoted flat fees ranging from $1,500 to $2,500. We gave the same tax debt scenario to the other companies on our list, and ALG was the lowest price in this category.

ALG Tax Solutions generally does not charge a retainer, but we were told that some circumstances warrant such a fee. All of ALG's fees can be paid back either in full or in a payment plan. If you start working with ALG, you will be required to sign a contract.

Customer Service

Living with tax debt from the IRS or your state can be a tough experience. When calling a tax debt relief company, you're usually looking for any help with the problem and worried about the consequences. That's why ALG Tax Solutions' customer service stood out to us.

In our multiple calls with the company, during which we posed as small business owners, each representative and tax professional we spoke with was understanding and wanted more information to better address the problem. They listened to our concerns and quickly responded with follow-up questions or potential solutions. They didn't require personal information before providing their consultation. They carefully laid out the process and tried to make the best suggestions they could with the information we gave them.

They also offered additional services to help ensure that we did not have to call them again in a year. When hiring them didn't make sense financially, they told us so and explained how we could handle the problem ourselves rather than pay more money.

Additional Considerations

Something else that makes ALG Tax Solutions stand out from its peers is the Tax Letter Decoder on its website. When a tax problem first comes to light, the IRS sends a letter describing the situation. While those documents are generally meant to explain the problem, they often make the situation even more confusing.

For those instances, ALG Tax Solutions has a feature on its website where you enter the number located in the upper right-hand corner of the letter. Once entered, the decoder will explain what the letter means, why you received it, and what your options are if you agree with the notice or plan to appeal. From there, you can set up a consultation with one of ALG's representatives to get started on your potential case.


The services that ALG Tax Solutions can provide come with requirements from the IRS. If those requirements are not met at the federal or state level, ALG Tax Solutions will not be able to negotiate for the solution you choose.

We also suggest considering the costs against how much you already owe in taxes. Smaller tax debts may be easier and cheaper to manage by yourself than with the help of a tax debt relief company.




When the IRS starts sending letters warning that you or your company owe taxes to the government, it takes approximately 30 days before they begin garnishing paychecks and levying bank accounts (and other assets). While it may seem like time is on your side, the longer you wait to address a tax issue with the IRS, the more likely those liens, levies and garnishments will become a reality.

When you hire a tax debt relief company, a team of lawyers, certified public accountants (CPA), enrolled agents, or a combination of the three, will work directly with the IRS to negotiate your situation.

The best tax debt relief companies will begin by investigating your case to determine where the debt is coming from and your eligibility for certain programs. No matter which company you choose, all of them charge for their initial investigation, though some companies fold this fee into their overall cost. In addition, some companies charge a retainer for their law team, which generally helps pay for the overall service. Each of our top picks charges a flat fee for their work on a case-by-case basis; the more involved the case, the more you will be charged. You should also expect to sign a contract with the tax debt relief company before services are rendered.

Despite what most tax debt relief advertisements claim, legitimate tax debt relief firms cannot promise any significant relief with the IRS. As mentioned before, the IRS has strict eligibility requirements for renegotiating your tax debt.

While you may want to enter into an offer-in-compromise (OIC) agreement with the IRS, which will allow you to settle for a lower amount than what you owe, you may not be eligible for an OIC if you can pay the full tax liability. What tax debt relief companies can do in that instance is advocate on your behalf to establish an installment agreement with the federal government.


Buying Guide

Types of Tax Debt Relief Options

When evaluating which tax debt relief company to use, consider how you want to deal with the IRS. In addition to OIC and payment plan options, most companies provide various other avenues for tax debt forgiveness. Those options include:

Innocent Spouse Relief. Most couples who get married in the United States file a joint tax return with the IRS. While that filing status generally comes with some benefits to the couple, it can also bring on some liability for either individual. Certain cases, such as when a spouse fails to properly report income or claims incorrect deductions or credits, can cause financial harm to the other individual. Innocent spouse relief helps protect an individual from their spouse's mistakes.

Separation of Liability Relief. Most tax debt relief companies can help divorcees deal with the financial sins of the other. In this instance, the IRS allows for "the separate allocation of additional tax owed" between the two individuals. Both parties must either be legally separated from or not living with each other to qualify for this type of relief. Further, you are responsible for the amount of tax allocated to you.

Equitable Relief. When neither Innocent Spouse Relief or Separation of Liability Relief is applicable for anything not properly reported to the IRS on a joint return, you can try to seek Equitable Relief. To be considered for this option, the issue must be attributable to your spouse. According to the IRS, you may also qualify for this option "if the amount of tax reported is correct on your joint return, but the tax wasn't paid with the return."

Currently Not Collectible (CNC). If you are financially unable to repay your tax debt, you may qualify for Currently Not Collectible status. Rather than an absolution of your tax liability, CNC is more of a reprieve from the IRS' collection efforts. Under this agreement, you will stop receiving letters and the phone calls will stop while you get things back under control. To qualify, you must prove your financial hardship to the IRS. You will do that by sharing your financial information with the government, including any savings accounts or other potential assets. Without any assets to repay the debt, the IRS will need to document your average monthly income and living expenses in order to determine if an installment agreement would be better. You may also be required to file a financial statement and potentially prove your income and expenses. Further, the IRS limits your monthly expenses. Any tax refunds will go directly toward paying back your debt, and you will likely get penalized with a federal tax lien if your debt is over $10,000. If you become able to repay your debt, you will lose CNC status. If, however, your financial situation remains the same for 10 years, the IRS will write off your debt.

Federal Tax Lien/Levy Assistance. If you've failed to pay your taxes and ignored the problem for some time, chances are you have been threatened with or been the subject of tax liens or levies. Levies and liens are the federal government's way of ensuring it gets the money owed to them. If you are hit with a tax levy, the IRS can garnish your wages, withdraw funds from your bank accounts, garnish your Social Security and seize your property, though the last option is usually for the most egregious tax dodgers. Tax liens, however, originate from overdue property taxes or failing to pay your taxes. Liens generally affect real estate and personal property, more than your bank account. If you have a tax lien, your credit score will take a hit and your ability to get a loan or refinance your home will be severely hampered, among other issues. Tax debt relief companies negotiate with the IRS to lift levies or liens while you get everything in order.

Penalty Relief. If you can't pay the penalties leveled against you from the IRS, some tax debt relief outfits will work to have those fees reduced or removed. Penalties can be incurred if you fail to file your taxes, don't pay your taxes in a timely manner or don't deposit your taxes before the deadline.

Audit Representation and Tax Preparation. If you or your business are being audited, most tax debt relief companies will provide legal representation. Additionally, some tax debt relief companies offer a tax preparation service aimed at ensuring you do not run afoul with the IRS again.

Should You Settle Your Tax Debt Yourself?

The U.S. tax code, comprised of nearly 74,000 pages, has often been considered one of the most byzantine pieces of legislation in the country. With so many tax laws to navigate when dealing with the IRS, it may just make sense to hire a tax debt relief company regardless of how much or little you owe. While these companies are staffed with experts that know the inner workings of the IRS, individuals acting on their own behalf can still reach agreements with the government for free and without representation.

Started back in 2008 and expanded in 2012, the IRS Fresh Start Initiative is a government program that gives individuals and business owners with up to $50,000 in back taxes a chance to resolve their debt directly with the IRS. Through the program, tax debtors can establish a payment plan with the IRS, spreading out repayment over time, rather than all at once. How much you would repay each month is based on your current income and the net value of your liquid assets. For individuals with tax debt problems who have been unemployed more than 30 days, the program allows taxpayers to request a six-month filing extension, and the IRS will forgive penalties.

The Fresh Start Initiative also gives individuals the option to enter into an OIC agreement to settle the debt for less than the tax originally owed. In order to be approved for an OIC, you must prove you cannot pay the full amount owed and that the settlement amount you are offering is greater than the funds the agency is able to collect.

Along with the Fresh Start Initiative, the IRS also offers its Taxpayer Advocate Service. This program is open to anyone living in the U.S. and is free to use. If you have tried to settle matters with the IRS by yourself and have come up empty, the Taxpayer Advocate Service will provide representation to work with the IRS, similar to the services tax debt relief companies provide.

Whether either of these DIY options is right for you depends on your individual case. If the amount of money you'll owe to a tax debt relief company is more than your initial debt, look into the aforementioned options and contact the IRS.

Avoiding Tax Debt Scams

The tax debt relief industry has had issues with fraudulent companies in the past. Some companies claim to be able to settle a tax debt for "pennies on the dollar" or warn that certain services are available only for a limited time. Some companies make offers in their advertising materials that sound too good to be true, claiming that they can get your tax debt completely wiped from your records. Frankly, those offers usually sound too good to be true because they are.

As you do your research, do not share any personal information or pay any money until you are absolutely certain the company is legitimate. You can do that by asking questions of the service and learning more about the team who will represent you before the IRS.

Almost every company offers a free consultation. You will either speak to a representative over the phone or through live chat on the company's website. After answering some brief screener questions, you will likely be handed over to a tax professional who will attempt to answer your questions.

Once you are speaking with a knowledgeable representative, ask what the company can offer you and how long they've been working with the IRS. Find out what qualifications the company's tax professionals have. Seek out companies that have been in business for longer periods of time. Companies with tax attorneys, certified public accountants and enrolled agents on staff should also be higher on your list for consideration, since those individuals are the only ones who are legally able to represent you before the IRS.

If the company you're speaking with is on the up and up, they will answer your questions with no reservations and without requiring an agreement up front.

Tax Debt Relief FAQs

How can you tell if a tax debt relieft company is legit?

In determining whether a tax debt relief company is worth your time and won't lead to more problems in the future, time is your friend. For years, the Federal Trade Commission has worked to root out fraudulent tax debt relief companies. The longer a company has been in operation, the less likely that it's a fraud.

It's also beneficial to look up the company's rating with the Better Business Bureau. There, you can see how a company fares in the industry, as well as any complaints leveled against it by consumers.

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, it takes your monthly income, your assets and other factors into account. If you can't pay it in full with one payment, reaching out to a tax debt relief company to negotiate a payment plan with the IRS could be the way to go.

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 (OIC), is a very specific solution with many requirements. If you do not meet those requirements, you will not be approved for an OIC.

Can you negotiate debt with the IRS?

Depending on your situation and the amount you owe, it is possible to negotiate directly with the IRS. Some tax debt relief companies will suggest you handle it yourself instead of using their services, since their costs could exceed what you owe to the government. In those cases, a representative will at least point you in the right direction.

Since the U.S. tax code is so cumbersome, it may be in your best interest to hire a tax debt relief company to negotiate in your stead. Only certified public accountants, enrolled agents and tax attorneys can represent you in front of the IRS.

How far back can the IRS collect unfiled taxes?

The IRS has a long memory when it comes to the money you owe. Generally, the IRS has three years to audit you and determine whether you owe more taxes. If it feels you have committed fraud or other criminal tax activities, it could extend the statute of limitations for audits. If the IRS believes you underreported more than 25% of your gross income, or if the same amount was underreported in an estate or gifts given in a year, it can audit you within six years. If you are found to owe taxes to the IRS, it has 10 years to collect any unpaid taxes.

When are the best times to contact a tax debt relief service?

It's never a great time to contact a tax debt relief service, because that means you're in trouble (or about to be) with the IRS. Still, if you have a massive past-due tax bill and think you need professional help, you should absolutely reach out. An unpaid bill can balloon quickly, thanks to penalties and fees levied by the IRS, so reaching out for help from a tax debt relief service is one way to deal with the situation.

You should also consider a tax debt relief service if you want to seek an OIC to have your debt forgiven, there's a lien on your business or personal property, or you want to establish an affordable tax debt repayment plan. Tax debt relief services can act as a middleman between you and the government, with the ability to facilitate negotiations.

Who might need tax debt relief?

If you're having any issue with unpaid back taxes, liens on your property, wage garnishments or related issues, you need a tax debt relief service. If you're just having trouble filing your taxes or facing some other tax issue not related to debt, you should not seek assistance from a tax debt relief professional.

Does the IRS forgive tax debt after 10 years?

The IRS may not want the general public to realize this, but it has 10 years to collect on any debts it's owed. Known as the Collection Statute Expiration Date (CSED), this mandate requires the IRS to expunge any tax debt after a decade. While that may seem clear cut, the IRS won't sit idly by if you try to wait them out for 10 years. Over time, its debt collection efforts will be increasingly aggressive, with wage garnishments, tax liens and other tactics firmly on the table. Additionally, your CSED can change, since there are provisions to let the IRS pause and restart the process if necessary.

Does the IRS ever 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 like 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.

What is the minimum monthly payment for an IRS installment plan?

When you settle your tax debt through an IRS installment plan, the amount of money you owe greatly impacts how much your minimum monthly payments will be, since the IRS suggests that you pay as much as you can to lessen the sting of additional penalties and interest charges. However, the IRS also considers the nature of your debt and the agreement behind the repayment plan.

Though the IRS lets its debtors select their own monthly payment amount, that's not necessarily how much they will have to pay. If a debtor doesn't select a monthly payment amount, sets the bar too low or lets the IRS decide, the payment amount defaults to the owed amount divided by 72 equal monthly payments.

What can the IRS do to you when you carry a tax debt?

If you're in debt to the IRS, you have likely already begun facing the consequences, starting with numerous notices. If you've ignored those notices, you will immediately be placed into collections, at which point your bank accounts and wages can be levied by the federal government.

Additional punitive actions that the IRS can take against you and your business include confiscating your tax refund as payment, charging additional interest on your tax bill, and hitting you with additional penalties like the "failure to pay" penalty. Ultimately, the IRS can file a notice of federal tax lien against you, meaning future creditors will know about your tax debt, ruining your ability to sell or borrow against your assets.

Furthermore, your money and assets can be seized by the government, meaning they can levy those items and sell them to pay off the debt. This rarely happens, though, given the difficult process that such an action requires.

Ultimately, you could be barred from leaving the country and your debt handed over to a collection agency, at which point you will likely be hassled by collectors to settle the debt.

Does settling your tax debt with the IRS affect your credit score?

Like most debt, your tax debt does affect your credit score. Though unpaid taxes haven't directly hurt credit scores since April 2018, tax debt will hurt your credit score if the IRS files a notice of federal tax lien against you, since that will be reported to the three credit bureaus. In any case, you will receive plenty of notice from the IRS before your credit score is affected.

What to Expect in 2020

As we get closer to the deadline for individuals and businesses to file their income taxes for the previous year, it's very likely you have already begun seeing tax debt relief commercials on TV and hearing them on the radio.

One aspect that you may not have considered is how much of an impact the 2020 general election could have on the tax system as a whole. For example, 2016 saw the election of Donald Trump to the White House, ushering in a swath of changes to the American tax system dubbed the Tax Cuts and Jobs Act of 2017. Though the legislation dealt more with a series of tax cuts that totaled more than $1.5 trillion, it changed a number of deductions that may have impacted your taxes on a personal or professional level.

As Trump sets to face off with whoever breaks through on the Democratic side, the difference in how each party plans to tax the public will be on display. Democratic front-runners Joe Biden, Elizabeth Warren and Bernie Sanders all have similar views in some aspects and completely conflicting views in others. Warren and Sanders want to take a more drastic approach to debt forgiveness, with plans to ax student loan debt from the ledger, for example. We expect all small business owners will be paying attention to the election and its impact on taxes in 2020.

March 2020: Over the last few weeks, the entire planet has had to adjust to life as governments around the world attempt to contain the novel coronavirus, or COVID-19. With thousands of people losing their jobs nearly overnight, the federal government has implemented measures to help taxpayers.

On March 21, the Treasury Department and the IRS announced that it was pushing back the tax filing deadline from April 15 to July 15, 2020. As a result, federal income tax payments that were due in April are being pushed back without any penalties or interest being charged to the individual taxpayer. Officials said the deferment applies to everyone, including "individuals, trusts and estates, corporations and other non-corporate tax filers as well as those who pay self-employment tax."

The IRS urged taxpayers expecting refunds to file as soon as possible, with IRS Commissioner Chuck Rettig stressing that "filing electronically with direct deposit is the quickest way to get refunds."

"Although we are curtailing some operations during this period, the IRS is continuing with mission-critical operations to support the nation, and that includes accepting tax returns and sending refunds," Rettig said. "As a federal agency vital to the overall operations of our country, we ask for your personal support, your understanding – and your patience."

Under the Families First Coronavirus Response Act, the Treasury Department, IRS, and Department of Labor also announced that small and midsize businesses can take advantage of a pair of refundable payroll tax credits. The credits, officials said, were created to "immediately and fully reimburse them, dollar for dollar, for the cost of providing coronavirus-related leave to their employees."

Under the act, employees can receive up to 80 hours of paid sick leave, as well as paid child care leave when schools are closed or there are no child care providers to help out. Employers will receive full coverage for that paid leave under the act, including health insurance costs, with zero payroll tax liability. Self-employed individuals will get an equal credit.

Companies with fewer than 50 workers are also exempt from existing requirements "to provide leave [to employees] to care for a child whose school is closed, or child care [that] is unavailable in cases where the viability of the business is threatened," according to the IRS.

The Department of Labor issued a temporary nonenforcement policy, allowing employers some time to comply with the new measures. "Under this policy, Labor will not bring an enforcement action against any employer for violations of the act so long as the employer has acted reasonably and in good faith to comply with the act," officials wrote. "Labor will instead focus on compliance assistance during the 30-day period."

April 2020: Along with the delay in the federal tax filing deadline, Congress passed a $2 trillion stimulus package to help various aspects of the U.S. economy deal with the ongoing disruption caused by COVID-19. Dubbed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, the bill established the Paycheck Protection Program to provide $350 billion in forgivable SBA loans to keep people employed and receiving paychecks during the crisis. If your small business is one of the lucky ones to receive funding before the program ran dry, you should know that those funds are not going to contribute to your tax debt.

The funding was offered by the government in a bid to deal with the downshifting economy, potential loss of wages and the general financial malaise that's fallen upon the country as a result of the coronavirus. To ensure those funds do the most good possible for small businesses, the CARES Act exempts the loans from taxation once they are forgiven. Canceled debt, or forgiven loans, are usually considered a form of income and taxed accordingly. If your business meets the forgiveness requirements attached to the loan, you will not have to pay taxes on those funds.

If you have tax debt and want to use the PPP funds to help pay that down, that's completely allowed under Section 1102 of the CARES Act, which states the money can be used to pay "interest on any other debt obligations that were incurred before the covered period." While that's good news for your tax debt, it may cause problems when it comes time for the PPP loan to be forgiven. According to Section 1106 of the act, such interest payments are not included in the list of items eligible for forgiveness.

May 2020: As the country continues to deal with the COVID-19 pandemic, those with tax debt should know that they were also considered for relief in the People First Initiative. According to the IRS, the tax filing deadline extension also impacted offers in compromise (OICs).

Under the People First Initiative, taxpayers with pending OIC applications have until the new tax filing deadline of July 15 to provide more supporting information to the IRS. The government agency also is refraining from closing pending OIC requests before the deadline "without the taxpayer's consent."

In addition to a temporary moratorium on pending OIC requests until July 15, the IRS is giving taxpayers with tax debt the ability to suspend their payments on any accepted OICs until the July filing deadline. While this will be a help for many, such deferments will accrue law interest on unpaid balances.

June 2020: Adding to the list of tax debt relief companies offering their services to individuals affected by the COVID-19 pandemic, Benefit Tax Solutions is offering a free tax consultation. According to a recent press release, the company is offering the consultations "to taxpayers in need of tax relief or tax filing help."

According to the company, the initial consultation is free, but the actual service comes at a cost. Exactly how much the fee will end up being depends on each individual case.

Along with the free consultations, Benefit Tax Solutions is having its tax experts help people manage any coronavirus-related tax issues. For instance, they can help people file their taxes before the extended July 15 deadline and answer businesses' and self-employed individuals' questions on filing past-due tax returns.

October 2020: Thanks to ongoing issues at the IRS, taxpayers are receiving CP14 notices from the agency, informing recipients that they owe unpaid taxes to the federal government. The notice could be particularly worrisome for Americans who have been financially impacted by the pandemic. TaxAudit has announced that it is providing guidance and tips to taxpayers who received the notice.

One of the biggest issues, according to experts at TaxAudit, is that the IRS has 20 million backlogged notices and 11 million unopened taxpayer letters – and many of these likely contain payments. Since the IRS hasn't processed payments in a timely fashion, some people have received the CP14 even though they've already paid their back taxes. Arnold van Dyk, TaxAudit's director of tax services, says that sort of thing can cause compounding issues for taxpayers.

"Although the IRS has recognized that these notices have been sent out automatically, and some in error, the burden falls on the taxpayer to rectify the situation," he said. "It's never a good idea to ignore a notice from the IRS, but given their current mail backlog, it may make sense to wait for the situation to resolve itself if you sent a timely payment by mail."

November 2020: In early November, the IRS announced some changes to the Taxpayer Relief Initiative in an effort to help individuals struggling with the ongoing effects of COVID-19. According to the announcement, the IRS considered how it could provide relief to taxpayers in its collection activities, noting that people are still facing some hard times as the end of the year rolls around.

Though repayment methods already existed for taxpayers who owe money to the IRS, the agency said it has expanded those solutions to make repayment easier. These are some of the changes:

  • Those with short-term payment plans can have up to 180 days instead of 120 to settle tax liabilities.
  • There will be leniency for taxpayers who can't make payment terms for an accepted offer in compromise (OIC).
  • The IRS will add certain new tax balances to existing installment agreements for individuals and out-of-business corporate taxpayers.
  • Certain qualified individuals who owe less than $250,000 can set up installation payments without providing a financial statement or proof of their monthly pay.
  • Since some individuals only owe for the 2019 tax year and may owe more than $250,000, they can qualify to set up an installment agreement.
  • Qualified taxpayers with existing direct debit installment agreements (DDIAs) can propose lower monthly installments through the IRS Online Payment Agreement system.

More details about the changes are available on the IRS website.


Andrew Martins
Andrew Martins, Writer
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I am a former newspaper editor who has transitioned to strictly cover the business world for and Business News Daily. I am a four-time New Jersey Press Award winner and prior to joining my current team, I was the editor of six weekly newspapers that covered multiple counties in the state.

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Ray Badger
Ray Badger
I think the first thing you need to determine is if you are an independent contractor in which case he will give you a 1099 or if he considers you to be working under the table (paid in cash basically). If he is considering you to be working under the table, basically filing taxes on that income will trigger some problems but working under the table is also illegal. Now if he is considering you to be an independent contractor then he will give you a 1099 and you will file a schedule C plus...
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Brandon Hart
Brandon Hart
Hi Shania. There are a few different taxes to consider. Federal and State taxes, and how you pay for those will depend on your business form, ie Sole Proprietor, Partnership, Corporation, S-Corp..etc. I will speak on Sole Proprietor as it is by far the easiest and cheapest form you can choose and I am assuming you are in business for yourself which is also a whole lot cheaper than having partners. Typically the first tax you will pay will be the fee for registering your Doing Business AS...
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Do I owe money if I leave my start up? I own 20% of the company but only contributed 5% of capital.
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Dan Greenberg
Dan Greenberg
#1 Get legal advice from someone in your jurisdiction. The answer is going to depend a great deal on: Corporate structure: corporation, LLC, partnership, etc. (and how those are treated under your laws) Any/all agreements in place, including compensation for your time. Whether the debt has been signed off personally or only in company name. The main lesson you should take from this: corporate structure is important, and it's important that it be in writing, including termination...

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