Tax Resolution Services Cost and Pricing Guide
The tax resolution services cost and pricing guide will help you create an initial budget for hiring a tax resolution firm or a licensed tax professional to help you end your tax issues.
We understand that paying a tax resolution firm or a licensed tax professional to resolve your personal or business tax problems is a complicated decision. As former owners of a tax resolution firm, we strive to cut through the clutter of review sites that list pricing estimates that are in many cases inaccurate. Our goal is to empower you with the information you can rely on to help you set a budget.
Before you decide on hiring a tax resolution firm to provide specific services for you, it is essential to understand what your options are and their respective requirements.
Tax Transcript Review & Compliance Check
At the heart of most cases, to provide you precise tax resolution fees, the tax firm or one of the firm’s licensed tax professionals will obtain your tax transcripts or transcript information from the IRS or State. This process is essential, as it confirms your interest, penalties, and tax debt balance for each year (if applicable) as well as your filing compliance history. Some companies call this a transcript review or compliance check. Others, call it an investigation and include a financial analysis (discussed below).
In many cases, your financial situation determines your best course of action with the IRS or State. The ability to qualify for an IRS or State tax resolution hinges mostly on your personal or your business’s financial situation.
Some tax firms provide the tax transcript and financial analysis for free. Others will charge you a small fee upfront, while others will include it within a total flat fee for services.
How Tax Resolution Companies Charge Fees
Once a tax resolution firm has detailed out their fees for specific services, ensure you understand how you will pay them via their contract or agreement:
- Total Fee Upfront – Some tax resolution companies or tax firms require the entire fee upfront. Others offer payment plans but will give you a discount if you pay in full.
- Part of the Fees Upfront – Some tax resolution companies or tax firms will ask for part of the fee upfront to get started. You end up paying the rest of the fee over a series of monthly payments.
- Continuous Monthly Payments Until Case Closure – Other tax companies continue to charge you a monthly fee until the case is complete. They may even have a hefty upfront fee.
How Tax Resolution Fees Are Structured
The way a tax resolution company charges client fees varies by company. However, we can generalize how these fees are structured:
Flat Fee Structure
Many tax relief firms use the term “flat fees.” Flat fees can refer to two things.
A flat fee for the total service. In other words, resolving everything from soup to nuts, including tax preparation for an IRS or state issue. Usually, if you have a problem with multiple tax agencies (IRS, State), there is a separate flat fee for each tax agency.
Second, some firms may have flat fees for specific resolutions that vary based on your debt level. In other words, a sliding fee scale for a payment plan based on the total amount you owe the IRS or State.
Hourly Rate Structure
Some tax relief firms and licensed tax professionals will bill on an hourly basis. Their fees can range from $200-$550 per hour.
How Much Does Tax Relief Services Cost
With most clients needing a few years of tax prep, the average case tends to be around $3,500-$4,500 dollars.
If a business, such as a partnership, LLC, C-Corp, or S-Corp, is involved the fees for tax preparation will lead to an overall higher cost, especially if you need to file 940s or 941s. Therefore, for businesses with complex situations, the fees could be in the $5,000 to $7,000 range.
Major firms that spend a great deal on advertising can charge substantially more for the same services you can find elsewhere. In many cases, many of the firms you recognize spend so much on advertising that their fees need to be higher to compensate for marketing costs.
Other Factors to Consider With Pricing
Although the average case is between $3,500-$4,500 dollars across many companies, it doesn’t mean that you will pay the average. There are many different services offered by tax resolution companies that all vary in price. Usually the more complicated and intensive the service, the higher the cost. For example, typically an Offer in Compromise will carry higher fees than a simple payment plan.
Another factor in the price of the service is the debt amount owed by the taxpayer. As the tax balance increases, the complexity of services usually increases. For example, the IRS requires more documentation and financial information for taxpayers that owe over $50,000 in most cases. A taxpayer who owes less is likely to fall on the lower end of the average pricing while a taxpayer that owes over $50,000 is likely to pay more than the average fee.
Pricing Guide for Specific Tax Relief Services
Below you will find the standard services offered by tax relief companies and the average fees associated with each service. Realize, in most cases, tax preparation is a separate fee in and of itself unless the tax preparation is simple.
Setting up an Installment Agreement
If the tax resolution company is setting up a payment plan or installment agreement with the IRS or state for an individual the average fee will range from $2,500 to $3,500. Many firms may charge you more for setting up a business-related payment plan.
Partial Payment Installment Agreement
Although similar to a regular Installment Agreement, it requires more work. This type of agreement often results in a taxpayer paying less than they owe. The average fee will range from $3,500-$5,000.
Penalty abatement often runs as an add-on to an installment agreement (payment plan). However, it is also provided as a stand-alone service by many firms. Pricing ranges from $250-$1,000. However, always make sure you are abating more penalties than the total fee. Some companies may structure a small baseline fee for penalty abatement coupled with a price equal to your tax savings. For example, the cost may equal 35% of the penalties reduced along with a base fee of $250 dollars.
Offer In Compromise (OIC)
If you are pursuing an Offer in Compromise, expect your case to be around $4,000-$7,500 dollars. Always ensure there are no additional costs to appeal or place you in the next best resolution if the IRS or State does not accept your OIC.
Currently Not Collectible Status (Hardship aka CNC)
A CNC usually runs around $2,500-$4,000 on average.
Innocent Spouse Relief
Innocent spouse relief costs around $3,500-$5,000 on average.
This service ranges from $2,500 to $5,000 depending on the severity of the case.
The type of tax return that you need to file mostly determines the price. Is it a personal, estate, or business income tax return? Individual tax preparation ranges from $150 to $375 per year, with higher fees if you are self-employed. Tax preparation for partnerships and corporations can vary from $500 to $2,000 depending on the complexity of the return. If you need bookkeeping services to complete a tax return, then usually you will pay an hourly rate.
It is essential to understand that there are no “special programs” that certain tax firms offer that others cannot provide. Some tax resolution firms can handle certain State taxes or certain types of taxes better than others. In the end, the experience of the licensed tax professionals working your case counts. Just because a tax professional is a CPA, EA, or tax attorney, does not mean they have tax resolution experience.
Our experience in the tax resolution industry allows us to provide you with this pricing guide. As an experienced team, we identified a company in the market that has been in business for over 10+ years, has an A+ Rating with the Better Business Bureau, and provides reasonable pricing. If you owe at least $10,000, they can give you your best course of action and a free quote with no obligation to move forward. Request a free consultation and quote today.