What tax relief companies do
A tax relief company is a firm that employs licensed tax professionals to help individuals and businesses resolve unpaid tax debt with the IRS or state tax agencies. Their services typically break into phases:
Phase 1: Investigation
The firm pulls your IRS account transcripts (using a Power of Attorney, Form 2848) to determine exactly what you owe, which tax years are affected, and the current status of your account. This phase identifies whether you have unfiled returns, pending levies, or liens.
Phase 2: Compliance
If you have unfiled tax returns, the firm prepares and files them. The IRS requires full compliance (all returns filed) before it will consider any resolution program.
Phase 3: Resolution
Based on your financial situation, the firm recommends and applies for the appropriate IRS program — installment agreement, Offer in Compromise, Currently Not Collectible status, penalty abatement, or a combination. They handle all communication with the IRS on your behalf.
Credentials that matter
The most important factor in choosing a tax relief company is the professional credentials of the people who will actually work on your case.
Licensed professionals who can represent you before the IRS
| Credential | How they qualify | What they can do |
|---|---|---|
| Enrolled Agent (EA) | Pass 3-part IRS exam or former IRS employee; 72 hours CE every 3 years | Represent you before the IRS in all matters (audits, collections, appeals). Tax-focused specialists. |
| CPA | Degree + Uniform CPA Exam + state license + experience | Represent you before the IRS. Broader accounting expertise beyond tax. |
| Tax Attorney | JD + state bar exam; often LL.M. in Taxation | Represent you before the IRS and in court. Attorney-client privilege. |
How to verify
- Enrolled agents: IRS Enrolled Agent verification tool
- CPAs: Check your state's Board of Accountancy website for active license status.
- Attorneys: Check your state bar association's online member directory for active, good standing status.
Fee structures explained
Tax relief companies typically charge in phases:
Investigation fee
An upfront fee to pull your IRS transcripts and assess your situation. Typically $250–$750. This phase should result in a clear recommendation of which IRS programs you may qualify for.
Resolution fee
The fee for the actual resolution work (filing returns, submitting OIC applications, negotiating installment agreements, etc.). Typically $2,500–$7,500+ depending on complexity. Some firms charge a flat fee; others use hourly billing.
What to watch for
- Fees should be clearly defined in writing before you commit. Ask for a detailed engagement letter.
- Understand what is and is not included. Does the resolution fee cover appeals if the IRS rejects the initial application? Does it cover filing delinquent returns?
- Be wary of firms that charge the full resolution fee upfront before the investigation is complete. You should know what programs you qualify for before committing to the larger fee.
- Ask about refund policies. What happens if the firm determines you do not qualify for any resolution program after the investigation phase?
Contract terms to review
Before signing any agreement, check these terms:
- Scope of work: Exactly what services are included (investigation, return preparation, resolution application, IRS communications, appeals).
- Fee schedule: Total cost, payment schedule, and what triggers additional fees.
- Refund policy: Under what circumstances can you get a partial or full refund if services are not completed.
- Communication: How often will you receive updates? Who is your primary contact?
- Timeline: Estimated timeline for each phase. Be wary of unrealistic promises — OIC reviews alone typically take 6–12 months.
- Cancellation: Can you cancel and what are the terms? Are there early termination fees?
- Assigned professionals: Which licensed professional(s) will handle your case? Can the firm reassign without your consent?
Red flags and scam warnings
The tax relief industry includes legitimate firms with qualified professionals — and also scam operations that take fees and deliver nothing. The FTC has brought enforcement actions against tax relief companies that made false claims. Watch for:
- "We can settle your debt for pennies on the dollar" — No company can guarantee a specific OIC outcome. The IRS accepted approximately 21% of OIC applications in 2024.
- Guaranteed results before reviewing your case — Any promise of a specific outcome before pulling your transcripts is a lie.
- Claims of a "special government program" — There are no secret IRS programs. All resolution options are publicly available on IRS.gov.
- Pressure to pay thousands upfront immediately — Legitimate firms explain their process and give you time to decide.
- No licensed professionals on staff — If they cannot name the EAs, CPAs, or attorneys who will work on your case, walk away.
- Impersonating the IRS or government — The FTC has sued companies that send mailers designed to look like official government correspondence. The IRS does not partner with private companies to contact taxpayers.
- Refusing to provide a written contract — No written engagement letter means no legal accountability.
Vetting checklist
Use this checklist to evaluate any tax relief company before committing:
- Free consultation: Does the firm offer a free initial consultation to discuss your situation?
- Licensed staff: Can they name the specific EAs, CPAs, or attorneys who will handle your case? Verify their credentials independently.
- Clear fee structure: Have they provided a written breakdown of investigation and resolution fees, including what is and is not included?
- Written engagement letter: Will they provide a detailed contract before you pay anything?
- Refund policy: Is there a refund policy if they cannot deliver the agreed-upon services?
- Realistic expectations: Did they explain which programs you might qualify for without guaranteeing outcomes?
- No pressure: Are they giving you time to compare other firms and review terms?
- BBB and complaint check: Have you checked their BBB rating, state AG complaints, and online reviews?
- IRS verification: Have you verified enrolled agent status through the IRS and attorney status through the state bar?
- Multiple consultations: Have you spoken with at least 2–3 firms before making a decision?
FAQ
Are tax relief companies legitimate
Many are. Legitimate tax relief companies employ licensed enrolled agents, CPAs, and tax attorneys who are authorized to represent you before the IRS. However, the industry also has bad actors. The FTC has taken enforcement action against companies that made false promises or impersonated government agencies. Use the vetting checklist above to separate reputable firms from scams.
How much do tax relief companies charge
Fees vary by firm and case complexity. Investigation phases typically cost $250–$750. Resolution services typically cost $2,500–$7,500 or more. Some firms charge flat fees; others bill hourly. Always get a written fee breakdown before committing and understand what is included.
Can I resolve my tax debt without a company
Yes. Many IRS programs can be accessed directly through IRS.gov. Streamlined installment agreements can be set up online, and the OIC Pre-Qualifier tool is free. However, complex situations (multiple unfiled years, large balances, business taxes, active levies) often benefit from professional help. Low Income Taxpayer Clinics (LITCs) provide free or low-cost assistance for qualifying taxpayers.
What should a tax relief company do first
A reputable firm should first pull your IRS account transcripts to determine exactly what you owe, which years are at issue, and the current account status. This investigation phase should happen before they recommend a specific resolution program. Be cautious of firms that promise a specific outcome before reviewing your transcripts.
How long does the process take
Timelines vary. Investigation typically takes 1–4 weeks. Filing delinquent returns adds weeks or months. A streamlined installment agreement can be set up quickly. An Offer in Compromise takes 6–12+ months for IRS review. Complex multi-year cases can take over a year from start to resolution. Beware of firms that promise unusually fast results.
Compare tax relief companies side by side
Our ranked list evaluates tax relief companies on credentials, fees, transparency, and client outcomes using a published methodology.
Compare vetted providers