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Quick answer: Tax relief companies negotiate with the IRS for people who owe back taxes. A legitimate one can save you real money and stress when your case is complicated. Many people, though, pay thousands for things they could have done free on IRS.gov, like a payment plan or first-time penalty relief. Start with the free options below, hire help when your situation calls for it, and walk away from anyone who guarantees results before reviewing your file.
What tax relief companies actually do
A tax relief (or tax resolution) firm acts as your representative with the IRS. Under a power of attorney (Form 2848), a credentialed representative can talk to the IRS for you, pull your account transcripts, and negotiate. The main tools they use are the same ones available to you:
- Installment agreements (payment plans), including plans for balances over $50,000 that need a financial statement.
- Penalty abatement, including first-time abatement and reasonable-cause requests.
- Offers in Compromise (OIC), which settle a debt for less than the full amount when you can’t realistically pay it all.
- Currently Not Collectible (CNC) status, which pauses collection when paying would leave you unable to cover basic living expenses.
- Stopping levies and garnishments and handling liens.
- Filing unfiled returns, often the first step, since the IRS won’t negotiate until all required returns are in.
What you can do yourself for free
| Situation | Free or low-cost route |
|---|---|
| You owe $50,000 or less and can pay over time | Set up a plan online at IRS.gov. It’s free for short-term plans and $22 for long-term plans with direct debit. See our IRS payment plan guide. |
| You got hit with penalties but have a clean three-year history | Ask for first-time penalty abatement. You can request it by phone or in writing. |
| You think you qualify to settle for less | Run the IRS’s free Offer in Compromise Pre-Qualifier tool on IRS.gov before paying anyone to file one. |
| You’re stuck, facing hardship, or the IRS isn’t responding | Contact the Taxpayer Advocate Service, an independent office within the IRS that helps for free. |
| Lower income and in a dispute with the IRS | A Low Income Taxpayer Clinic (LITC) offers free or low-cost representation. |
When hiring a tax relief firm makes sense
- You owe well over $50,000 and need a payment plan that requires a financial statement.
- The IRS has started levying your bank account or garnishing wages.
- You have several years of unfiled returns.
- You have business payroll tax debt, which the IRS pursues aggressively.
- You realistically can’t pay and an Offer in Compromise or CNC status may apply. Both take careful financial documentation.
- You simply don’t want to deal with the IRS yourself and the cost is worth it to you.
Red flags
- Guarantees of results, or “pennies on the dollar” promises before anyone has reviewed your finances. Most Offers in Compromise are not accepted, and no firm can promise one will be.
- Big upfront fees before any investigation of your account. A reasonable firm pulls your IRS transcripts first and tells you your realistic options.
- No credentialed representative. Only enrolled agents, CPAs and attorneys can represent you broadly before the IRS. Ask who will actually work your case and check their credential. CPAs are licensed by state boards, attorneys by state bars, and enrolled agents by the IRS.
- Pressure to stop talking to the IRS or to skip filing returns.
- Vague pricing. Get the fee structure in writing: what the investigation costs, what resolution costs, and what happens if they can’t help.
The Federal Trade Commission and state attorneys general have taken action against tax relief companies that charged large fees and delivered little, so do your homework before you sign.
A tax resolution firm to consider
Community Tax
Community Tax is a tax resolution firm whose team includes CPAs, enrolled agents and tax attorneys. It offers a free first consultation and charges a flat fee for the initial investigation, where it reviews your IRS account before recommending a strategy. It also offers tax preparation, bookkeeping and payroll services. As with any firm, get the full price of the resolution work in writing first.
Get a free consultation with Community Tax →
Affiliate link: we may earn a commission if you sign up through it, at no extra cost to you.
If your situation is just a straightforward payment plan and you’d rather not do the paperwork, 97tax (affiliate link) prepares the IRS payment plan application for a one-time fee. That’s a much smaller service than full tax resolution.
Questions to ask before you hire anyone
- Who exactly will handle my case, and what is their credential (EA, CPA or attorney)?
- Will you pull my IRS transcripts before recommending anything?
- What is the total cost, broken down by investigation and resolution?
- What happens to my fee if the IRS rejects the outcome you pursue?
- Could I do this myself on IRS.gov? (A good firm will tell you honestly.)
Frequently asked questions
Are tax relief companies worth it?
For complex cases, like large balances, levies, unfiled years or business payroll taxes, a credentialed firm can be worth the cost. For a simple payment plan, usually not: you can set one up on IRS.gov in minutes for $0 to $22.
Can a tax relief company really settle my debt for less?
Only through programs the IRS already offers, mainly the Offer in Compromise, and only if your finances qualify. The IRS’s own Pre-Qualifier tool will tell you whether it’s worth pursuing.
Will the IRS stop collecting while a firm works my case?
Some actions, like requesting an installment agreement or filing an Offer in Compromise, generally pause levies while they’re pending. That isn’t automatic just because you hired someone.
Related: What to do if you owe the IRS · How to set up an IRS payment plan
This is general information, not legal or tax advice. Last updated October 27, 2026.