Do Tax Relief Companies Really Work? What You Should Know About Tax Relief Company Services

Do Tax Relief Companies Really Work

Tax relief companies are also known as tax settlement firms. They are profit-oriented organizations that offer to renegotiate their clients’ tax debt with IRS or other tax collection entities. They aim to reduce the overall debt or monthly debt repayment and help their clients get tax relief benefits. These tax settlement firms claim to have numerous experts, but many think they sometimes offer false promises, and their service fees can be exorbitant.

Why People Think Tax Relief Companies Don’t Work

There are lots of tax relief companies out there with outstanding track records, one of such is Optima Tax Relief service provider, but you can’t rule out scams too. The Following are the primary reasons why many people believe that tax relief companies don’t work;

Most Offers of Compromise Forms are Rejected

One thing that makes people lose faith in tax relief companies is that they usually send a form known as “Offer of compromise” to their clients. Most people think that these tax relief companies are aware that the IRS will reject such conditions, yet they still want people to try their luck.

Many people are successful with their offer of compromise applications. The offer of compromise is an agreement that IRS makes with taxpayers to help them settle their tax debts for a lesser amount than what they owe. For a taxpayer to get through with this arrangement, they must provide important information to the IRS, including their current assets, liabilities, and projected future incomes.

The Offer in Compromise application will take several months to complete and get approved. Qualifying for the offer of compromise can be very difficult because there is no spend-down strategy for applicants.

In other to get your tax reduced through the offer of compromise, you must show pieces of evidence that the taxes you owe are incorrect or the probability of repaying the total amount is low. You must also show proof that paying back all the taxes owned will cause you financial hardship.

The offer of compromise in IRS form 656 must indicate that likely financial hardship from payment of total tax debts should be along the lines of severe illness or any other unplanned catastrophe. If you can’t prove that you have a severe illness or disability or any serious issue, then you wouldn’t get the offer of compromise application approved.

Tax Settlement Companies Impose High Fees

For low-income people struggling to pay their tax debts, fees charged by tax relief companies can be too high, causing further financial hardship.

The initial fee on tax resettlement service could range from $3000 to $6000 depending on the amount owed and the proposed settlement. Unfortunately, the upfront fee is non-refundable, which means you incur more debt if your debt resettlement is not approved. Some of these companies will initially charge lower fees and then ask for more if your chances of getting the settlement approved are high.

Bogus Claims

Another primary reason why many clients believe tax relief companies don’t work is that they make so many bogus claims and wouldn’t deliver on their promises. Many of these resettlement firms also misrepresent their fees to their clients, and the client ends up paying more in the end.

Settlement Rates are Low

As mentioned earlier, the most offer of compromise applications is rejected. This means that the number of clients that are satisfied by tax resettlement company services is very low.

The majority of the clients who seek tax resettlements will have to work out a tax repayment plan with the IRS to clear their debts over time while retaining their assets and dignity.

In What Conditions Will You Get Tax Resettlement?

The primary sales pitch most tax settlement firms use in getting clients is to deploy their experts to the IRS to help renegotiate. In reality, IRS rarely accepts a significant reduction in tax debts. There are some exceptional cases where tax resettlements are approved, and these include the following;

The Tax Payer is Undergoing Exceptional Situations

If a taxpayer is experiencing some hardship and paying the tax owed will cause economic hardship, it will be unjust for the tax collectors not to accept a debt resettlement deal. The debtor’s condition must be an exceptional case, for instance, serious illness, loss of income source, and disability.

The debtor Couldn’t Get Employment.

An individual may qualify for debt resettlement if they don’t have sufficient income to repay the debt. If, for instance, they are not gainfully employed or if they suffer a long-term illness, they can request for debt resettlement deal.

If the debtor Has no Tangible Asset

This is another critical case the IRS looks into when deciding who qualifies for debt. The debtor will likely win a debt consolidation plan. People lose their assets in many ways. An individual may have their obligations seized or get destroyed in an accident. All these things will be considered for debt resettlement.

The best people who owe taxes can look out for is the extension of their debt repayment plan. Keep in mind that more extended debt repayment plans may attract more interest and penalties in the long run.


The IRS can be the most challenging creditor one can deal with in their lifetime. The IRS can forcefully take possession of assets and impose some other extreme. This situation, perhaps is the main reason why many tax debtors do seek the help of debt relief companies . If you have to choose a debt relief company for your needs, you must do some quality research and ensure the companies you listed have great track records. Perhaps the most important thing is your debt situation. You need to ensure you have a cogent reason to request for debt relief. It can be difficult to get a debt relief when you have tangible assets, and you are not in a serious health or financial crisis. Speak to a professional tax relief agent before making your final decision.