Tax resolution services are designed to help individuals and businesses negotiate with the IRS, reduce penalties, and set up manageable payment plans. These services can provide valuable support, especially if you’re dealing with tax liens, wage garnishments, or IRS audits.
In this guide, we’ll break down how tax resolution services work, the different types of tax relief available, and how to choose the right service for your situation.
What Are Tax Resolution Services?
Tax resolution services are professional assistance programs that help taxpayers manage and settle their tax debt with the IRS. These services are typically provided by:
- Enrolled Agents (EAs)
- Certified Public Accountants (CPAs)
- Tax Attorneys
A tax resolution professional will review your financial situation and work with the IRS on your behalf to find the best solution for settling your tax debt. Depending on your case, they can help you reduce penalties, negotiate settlements, or set up an IRS-approved payment plan.
Common Tax Issues That Require Resolution Services
Tax resolution services can help address a variety of tax-related problems, including:
- Unpaid IRS tax debt
- Wage garnishments and bank levies
- Tax liens on property
- IRS audits and appeals
- Incorrect tax assessments
- Penalty and interest reductions
If you’ve received an IRS CP14 notice (which is the first notice that you owe taxes), it’s important to act quickly to avoid additional penalties and collection actions.
Options for Resolving IRS Tax Debt
There are several ways to settle tax debt, and a tax resolution service can help you determine the best option based on your financial situation.
Installment Agreement (IRS Payment Plan)
If you can’t afford to pay your full tax bill upfront, the IRS allows taxpayers to set up a payment plan to pay off their balance over time.
- Short-term payment plans (for balances under $100,000) allow you to pay off your debt within 180 days.
- Long-term installment agreements (for balances under $50,000) allow you to make monthly payments over several years.
This option helps prevent enforced collections, such as wage garnishments or bank levies.
Offer in Compromise (OIC) – Settle for Less
An Offer in Compromise (OIC) allows eligible taxpayers to settle their tax debt for less than what they owe. The IRS will only approve an OIC if they believe you cannot afford to pay the full amount and if settling is in their best interest.
To qualify, the IRS will evaluate:
- Your income and expenses
- The value of your assets
- Your ability to pay
Applying for an Offer in Compromise requires submitting detailed financial records, so having a tax resolution professional can increase your chances of approval.
Currently Not Collectible (CNC) Status
If you’re facing serious financial hardship, you may qualify for Currently Not Collectible (CNC) status. This pauses IRS collection efforts, meaning the IRS won’t garnish your wages or seize your assets.
However, interest will still accrue on your debt, and the IRS will review your financial situation periodically to see if your circumstances have changed.
Penalty Abatement – Reduce or Remove IRS Penalties
If you’ve been charged penalties for late payment or filing, you may qualify for penalty abatement. The IRS may remove penalties if you can prove reasonable cause, such as:
- Serious illness or hospitalization
- Natural disasters
- Unexpected financial hardship
- First-time tax penalties
A tax resolution service can help you file a request for penalty relief, reducing the total amount you owe.
Tax Lien and Levy Release
If you ignore IRS tax debt, the government may place a tax lien on your property or issue a levy to seize your bank accounts, wages, or assets.
A tax resolution professional can:
- Negotiate a lien withdrawal or release
- Prevent wage garnishment
- Help you set up a payment plan to stop enforced collections
Acting quickly is crucial to prevent further financial damage.
Audit Representation and Tax Appeals
If the IRS selects you for an audit, a tax resolution expert can represent you during the audit process and help ensure that your tax return is properly defended.
If you disagree with an IRS decision, a tax professional can file an appeal on your behalf to challenge incorrect tax assessments.
How Tax Resolution Services Work
Step 1: Free Consultation
Many tax resolution firms offer a free initial consultation where they review your tax situation and explain your options.
Step 2: Investigation and Analysis
If you decide to hire a tax resolution service, they will:
- Gather your financial records
- Contact the IRS on your behalf
- Determine the best resolution strategy
Step 3: Negotiation with the IRS
Your tax resolution professional will negotiate directly with the IRS to set up a payment plan, reduce penalties, or settle your debt.
Step 4: Implementation and Compliance
Once an agreement is reached, your tax resolution service will help you stay compliant, ensuring you make payments on time and file future taxes correctly.
Final Thoughts
If you’re struggling with unpaid taxes, facing an audit, or dealing with IRS collections, hiring a tax resolution service can help you reduce penalties, negotiate payment terms, and prevent wage garnishments or bank levies.
However, if you have a small tax debt and can handle communication with the IRS yourself, you may be able to set up a payment plan or request penalty relief without professional assistance.
The most important thing is to act quickly—ignoring tax debt can lead to increased penalties, interest, and enforced collections. By working with a reputable tax resolution service, you can resolve your tax issues, regain financial stability, and move forward with confidence