Are tax relief companies legit?

June, 05 2025 by Kathryn Brahaney, EA

Can a Tax Debt Relief Company Really Help Me?

What to Consider When Choosing a Tax Debt Relief Company: Green Flags, Red Flags, and Questions to Ask a Tax Debt Relief Company in Making Your Decision.

If you’re facing a significant amount of tax debt owed to the IRS or your state tax agency, the process of seeking help can often be overwhelming. You likely have seen or heard advertisements online or on the radio with the promise of help, a fresh start, or the option to fix your tax debt. And of course, the promise of a “quick fix” can seem appealing. However, can these companies actually provide helpful relief to someone in your situation?

Simply put, some companies can provide relief, while others may not be able to deliver on their promises. Navigating the tax debt relief space to find a company that fits your needs and has your interests at heart requires caution, knowledge of best practices versus the common pitfalls in the industry, and the review of a company’s past performance when making a decision that is best for you.
 

Green Flags - Here Is a Checklist of Best Practices That Your Tax Debt Relief Company Should Hold:

1. Tax Professionals on Staff with the Proper Credentials to Represent You Fully: An Enrolled Agent (EA), Certified Public Accountant (CPA), or Tax Attorney should be the person representing you before the IRS. Each of these professionals has educational and testing requirements to obtain and keep their status of being admitted to practice before the IRS. This also means each of these classes of professionals is held to a high standard of ethics under the IRS’ Circular 230, and could face penalties, disbarment, or serious consequences if they do not adhere to the IRS’ guidelines. You want someone experienced and credentialed to best represent you before the IRS or your state tax agency.
2. Transparent and Reasonable Fee Breakdown: Most tax debt relief companies will charge a fee for an investigation of your situation and consultation, as this requires time, analysis, and review of your documents and finances. While requesting payment for a consultation or investigation beforehand is standard, requiring a large amount of money for the promise of a settlement before a tax professional has reviewed your tax returns, finances, or letters from the IRS or state tax agency is not a best practice and does not represent your interest.
3. Multiple Resolution Options: Your tax professional should consider options that include but are not limited to an extension of time to pay, installment agreement, and currently non-collectible status in addition to an offer in compromise. While the IRS accepts some offers in compromise, there are many alternatives for tax debt relief that are available to most taxpayers. Your tax professional should consider the bigger picture and review your financial situation to best assess your options.
4. Consistent Communication and Follow-Up: Your tax professional will be responsible for responding timely to requests, verifying they are presenting accurate information, and keeping you in the loop of progress and any determinations made. You want to ensure your tax professional has a great record for consistent communication. Related to this, making sure your tax professional maintains sensitive records, like tax returns, through a secure method is important. For example, a trusted tax professional understands that accepting tax returns via email is not a secure way of obtaining your records, as email can easily be breached or hacked. Make sure your tax professional uses secure methods of communication and has procedures to keep you up to date on the progress of your case. You should also receive copies of any contracts in writing, and records of what is being sent to the IRS should be available at your request.
5. Good Reviews and Reputation through Third Parties: Verifying your tax debt relief company is accredited and has a positive rating with the Better Business Bureau (BBB) Accreditation is important. You can also review websites like TrustPilot to understand previous and current clients’ experiences with the tax debt relief company. This allows you to make sure you are choosing a company with which other clients have also had a positive experience.

Red Flags - Here are Signs that a Tax Debt Relief Company Lacks Credibility and Should Be Avoided:

1. Guarantees Your Offer in Compromise (OIC) Settlement Will Be Approved: While the IRS does have an Offer in Compromise process, no company can or should guarantee the approval of an OIC with the IRS.
2. High-Pressure Sales Tactics: Being rushed or pushed to decide without all the facts, options, or an opportunity to have your questions answered is a sign that a company probably does not want you to think over your options and should be avoided.
3. No Mention of Tax Professionals who are Admitted to Practice Before the IRS: Your tax debt relief company should share if an Enrolled Agent, CPA, or Tax Attorney will be representing you. If the person representing you is not admitted to practice before the IRS, they will not be able to represent you fully before the IRS.
4. Exorbitant Fees Without Explanation: Being required to pay an exorbitant fee without a clear explanation of why said fee is being charged and the services included is a reason to be concerned. The service you are receiving in exchange for the costs you pay should be clear, and you shouldn’t receive pushback when asking questions you have on what is and is not included in your cost.
5. No Online Presence, Better Business Bureau or Other Third-Party Reviews Available: If a tax debt relief company does not have an official website, online presence, accreditation with Better Business Bureau or positive reviews that can easily be found with an internet search or via the community, this might be a red flag. You may need to investigate the company further to gauge if they are a credible and trusted resource.

Questions to Ask Before Committing to a Tax Debt Relief Company:

1. Who will be representing me? Are they an Enrolled Agent, CPA, or Tax Attorney?
2. What steps will you take to review my case?
3. What tax debt relief options will you consider for my case?
4. What are your fees, and what do they cover?
5. Do you have third-party websites with client feedback, like TrustPilot or other platforms with reviews from clients?
6. Can I review our contract before making payment?

Closing Thoughts –

Not all tax debt relief companies are illegitimate, but those who are legitimate can provide relief and results that give you peace. To protect yourself, stay informed on best practices and indicators that a tax debt relief company is not credible. Relief from tax debt can be stressful, but with the right help, it can be achieved. Owing taxes can be scary, but you don’t have to navigate the resolution process alone. The experienced tax professionals at TaxAudit’s Tax Debt Relief services are ready to help guide you through the process of resolving your tax debt and offer a free consultation. Click here to get help from one of our tax professionals today.