The ‘Fine Print’ of Tax Relief Options

What the Advertisements Don’t Tell you

By Greg Daer

April 7, 2025

Unfortunately, there are a lot of advisements in the ‘tax relief’ industry that strongly insinuate, if not outright guarantee that you can save money by hiring a tax relief company. Sure, it can happen, but there are a lot of terms, conditions and qualifiers to saving money with the IRS. As a tax professional, I always look for ways that I can save my clients money, but it’s NEVER something that I will guarantee. I explore First-Time Penalty Abatement options (or reasonable cause if a client may qualify).

A lot of ads will tell you about all of the ‘programs’ that the IRS has that allow people to have a “Fresh Start.” Yes, the IRS does have different resolutions available for taxpayers. That’s very true. But, again, there are terms, conditions and qualifiers for them. If you’re applying for a resolution option based on an inability to pay, you’ll have to show the IRS that you don’t have an ability to pay, which generally will require you to be able to provide the IRS with documents to prove your financial condition. Tax liens are often filed as a standard procedure when you’re obtaining a relief program in which you disclose your finances.

Some tax relief companies will tell you everything that you want to hear so that they earn your business, and then “discover” later on that you’re not a good candidate for what they implied that they could do for you… and unfortunately, it’s often very costly. One of the most heavily advertised relief options is a tax ‘settlement’, or more properly known as an IRS Offer in Compromise. If you haven’t heard one of those radio ads saying that you can “save pennies on the dollar”, you’re probably good at avoiding commercials. Offers are very possible, but a lot of people simply don’t qualify. For a ‘Doubt as to Collectability’ offer, you’d basically have to prove to the IRS that you don’t have sufficient earning potential, future earning potential, and equity in assets (retirement accounts, house, cars, boats, etc.) to pay back what you owe the IRS. This type of resolution can easily exceed a year to explore. It’s not simple, it’s not easy. I’ve heard so many horror stories where a tax company will submit ‘bogus’ offers that they know will ultimately be denied by the IRS just so the ‘tax relief’ firm that a client is working with can collect a large fee, then charge more money to try another option when the offer is denied. What’s more, the Collection Statute Expiration Dates (CSEDs), which is the legal timeframe that the IRS has to collect on a period of tax liability are tolled/frozen while an account has a pending offer. Even if an offer is accepted by the IRS, taxpayers must file and pay all taxes on their future tax returns on time and in full for at least the following 5 years after the acceptance of an offer, otherwise the tax liability can be reassessed to a taxpayer’s account.

If you’re able to, it’s generally best to just full-pay taxes, as penalties/interest accrue on a taxpayers account while there is an outstanding balance. But, if you’re not, like a lot of people aren’t, make sure you talk to an honest tax professional that can help you understand what the drawbacks of a resolution program are.