If you need tax relief, you can work directly with the IRS yourself (more about that at the bottom of this review). But if you want professional help, you can work with a tax relief company such as Community Tax.
Community Tax offers help with getting on a payment plan with the IRS, settling tax bills for less than what's owed, and putting IRS collections on temporary hold. The company also offers tax preparation, bookkeeping and accounting services.
The bottom line Community Tax covers a wide range of issues, but it won't be cheap.
$750 - $5,000; average is $3,000
Pros & Cons
Free initial consultation with no time limits or subject-matter limits.
Communicate with your case manager in a variety of ways.
Investigation fees can run on the high end versus competitors.
Limited options for a refund if the IRS denies a request.
Compare to similar providers
Community Tax provides a variety of tax relief services that can help people manage their back taxes.
Investigation, or discovery, work — where the company rounds up details to assess the scope of your tax issue — runs $325.
Resolution work — where the company works toward actually resolving your tax issue — costs much more and depends on the particular tax issue, but the fee for setting up installment agreements, applying for an offer in compromise or applying for Currently Not Collectible status with the IRS runs $750 to $5,000 ($3,000 on average).
Clients are assigned a case advocate to be their primary day-to-day contact and a licensed practitioner who will actually represent you before the IRS.
Community Tax is best for:
People who don’t mind working remotely.
Taxpayers whose tax issues (and potential tax savings) outweigh the bill.
Clients who are sensitive about refund policies.
Community Tax at a glance
$750 - $3,000 (depending on complexity and debt amount)
Offer in compromise applications
$3,000 - $5,000 (depending on complexity and debt amount)
Currently Not Collectible status applications
$2,000 - $3,500 (depending on complexity and debt amount)
Refundability of fees if IRS denies requests
Available, but somewhat limited.
Phone, e-mail, chat, online portal or by mail. In-person available only in Chicago (when safe to do so).
Dedicated case manager?
Yes, but not necessarily a licensed practitioner.
Community Tax features to know
Fees: The company says it offers a free consultation, which can help you decide whether they’re for you, and there’s no time limit or topic limit. After that, you’ll pay for the company to diagnose the size and nature of your tax issue, and then more for the company to try to resolve the issue.
Who does the work: Community Tax assigns you a case advocate, and every case has a licensed practitioner as well as a tax preparer if needed. The company says it requires employees to have a law license, CPA or EA designation in order to negotiate with the IRS on your behalf. The company also says you can work with them via phone, e-mail or chat, or by mail.
Refunds: Given that most people can get on a payment plan with the IRS (also called an installment agreement), it’s unlikely that this or any other tax relief company will say there’s nothing they can do for you. But if it comes to that, Community Tax says that if it's unable to recommend a resolution or made a material mistake, it may offer a refund.
Do tax relief companies really work? Things to know
Before you decide to hire a tax relief company, here are a few things to know.
Working with a tax relief company generally entails two steps:
Investigation, or discovery, work, which involves giving the company legal access to your tax records and information in order to learn how much you owe and understand what the problem is. Tax relief companies typically charge a fee for this.
Resolution work, which involves the tax relief company working with the IRS on your behalf to get you on an installment plan, apply for an offer in compromise to pay less than you owe, apply for Currently Not Collectible status or figure something else out. Tax relief companies typically charge a fee for this, too.
You’re not required to hire anybody
If you want to hire a tax relief company because you don’t have the time or energy to deal with a tax issue, that’s fine. But be aware that it’s not required. There are many things you can handle directly with the IRS to get back on track without having to pay a third party. Some of those things include:
You’re still responsible
Three things here:
Your tax bill doesn’t become the tax relief company’s tax bill. The IRS will still look to you for answers (and money), even if the tax relief company loses your paperwork, misses a deadline or screws something up.
The tax relief company can ask the IRS for a break on your behalf, but that doesn’t mean you’ll get one. The IRS denies more than half of all applications for an offer in compromise, for example. You may still have to pay the tax relief company (on top of your tax bill), even if the IRS denies the request or gives you just a tiny break.
Take a minute and do some math. Compare the amount you’re hoping to save to the amount you may need to pay the tax relief company. For example, if you end up paying a tax relief company $2,000 to reduce your IRS bill by $2,000, you haven’t saved any money.
Is Community Tax right for you?
Community Tax covers all of the bases, but it won’t be cheap. Clients get a list of services covering a wide range of issues, including offers in compromise, installment agreements, Currently Not Collectible status and penalty abatement.