Posted: 3/13/2018

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Owing money to the Internal Revenue Service (IRS) can be a very scary and stressful situation. The penalties for not paying taxes can be steep and can even land a taxpayer in jail. Facing such pressures can cause someone to act hastily and pay for tax debt relief to untrustworthy companies. If you owe back taxes, there are programs that can help.

money stress

Owing money to the Internal Revenue Service (IRS) can be a very scary and stressful situation. The penalties for not paying taxes can be steep and can even land a taxpayer in jail. Facing such pressures can cause someone to act hastily and pay for tax debt relief to untrustworthy companies. If you owe back taxes, there are programs that can help. If you find that you would rather pay a company to handle the matter for you, there are precautions you can take before hiring anyone. Let’s discuss some options and red flags to be aware of.

IRS Programs

There are several IRS programs set up to assist individuals facing tax debt. Some of these include:

  • Payment Plans – Depending on the tax situation, short-term payment plans (120 days or less) are available to eliminate tax debt. Fees, penalties, and interest apply until the balance is paid.
  • Installment Agreements – If you cannot pay your tax debt in full in one payment, a longer payment plan—called an installment agreement—may be what you’re looking for. Under installment agreements, you make smaller monthly payments until the debt is satisfied.
  • Offer in Compromise – This program lets taxpayers permanently settle their tax debt for less than what is owed. To qualify, tax returns or valid extensions must be filed.
  • Penalty Abatement – In some circumstances, penalty abatement can be granted to people who have not been able to pay their taxes due to special hardship.
  • Interest Abatement – The IRS will rarely waive interest on the tax debt owed.

Certain criteria must be met for each of these programs. The IRS website has many helpful tools to help you determine if you qualify for the various debt relief options mentioned above. For example, you can check the Offer in Compromise Pre-Qualifier to see if you are eligible. Check out the IRS website at https://www.irs.gov/.

Tax Relief Companies

You’ve no doubt heard ads from tax relief companies offering help to distressed debtors with their tax issues. If you’re looking to hire a tax relief company, don’t get taken in by catchy jingles, flashy websites, and guarantees to eliminate your tax debt. Do your research.

Many of these companies promise to settle your tax debts for significantly less than the amount owed, and may claim to stop wage garnishments, levies, property seizures, or collections for an up-front fee. Business Consumer Alliance has received a variety of complaints against tax relief companies alleging that they collect their money then do very little to help resolve the tax situation, with some companies just disappearing.

Be wary of tax relief companies that claim they have inside information that will help relieve your debt, or that promise to eliminate interest and/or penalties for you.

Check out the business’s reputation first by getting a report from BCA. This can alert you to any complaints, government actions, or other areas of concern. Ask for references so you can speak to individuals who have used their services. Make sure any contract includes a clear explanation of what the business will do, how much their fees are, and how long it will take to render services. Review all refund policies, cancellation procedures, and guarantees.

Have you used a tax debt relief company before? If so, tell us about it. Or, if you have dealt with the IRS to relieve tax issues, how was your experience? We’d like to hear from you.

About Business Consumer Alliance

Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.

Tags: IRS, tax debt, tax relief

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