Tax relief companies are advertised all over the radio. Most have terrible reviews and lots of complaints. Let’s take an in depth look at these tax relief companies from the perspective of an industry insider.
What Are Tax Relief Companies?
Tax relief companies are professional services firms that are meant to help people deal with back due tax debt. These themes are common among most of the firms:
- Often advertised on the radio and television with claims of settling tax debts for pennies on the dollar.
- You will see them in high ad placements above actual law and CPA firms for Pay Per Click campaigns
- Many are based in California and Colorado
- Most of them do tax preparation
Below you can see a video of our presentation or continue reading for the written version of our tax relief companies rundown.
The biggest downside of a tax relief company: Your case can get abandoned at any time
Most tax relief firms are not law firms, CPA firms, or owned by an Enrolled Agent. If they run into financial difficulty, there is no obligation to complete your case because the owners are not professionally licensed.
Here are some examples of situations that commonly happen with tax relief companies:
Example 1: ABC Tax Relief has bad sales four months in a row and has to close. They close and all the clients are left hanging in IRS collections. (This happened with Nationwide Tax Relief, Blue Tax, and others).
Example 2: This is a real life example. American Tax Relief was shut down for fraud. While the IRS might have put some collection holds on cases, they are not finishing up Offer In Compromises for the clients. Clients were left to resolve on their own.
Common Questions and Answers Regarding Tax Relief Companies
Here we’ll go through some of the most common questions regarding tax relief companies.
Should you hire a tax relief company?
The simple answer is no. The reason being tax relief companies close all the time and leave the clients’ cases unresolved. There is no liability beyond the company itself which typically is some type of corporation or LLC. If you hire a tax attorney to complete your case they are obligated to complete it or they can get suspended or disbarred.
Are tax relief companies legitimate?
Sometimes yes and sometimes no. There are a lot of companies out there that do little to no work on the case. The majority of tax relief companies are not doing a thorough job on cases. They also can close at any time without any liability since the owners are mostly not licensed practitioners. There are some tax relief companies that do complete client cases and are legitimate, but still are not the best option for resolving your tax case.
What are the best tax relief companies in 2021?
Currently, we would not recommend any tax relief company since they can close on you at any time without liability. You are better off hiring a tax attorney to help resolve your tax case.
Let’s take a look at a list from The Balance and see why it’s not an accurate list. The Balance lists Tax Defense Network as it’s top choice. Now click here to see how bad their Yelp reviews are. All one star ratings for the multiple Yelp pages Tax Defense Network has.
Then their second choice is Community Tax. While Community Tax has a decent rating, instantly in their list of reviews on Google there is an example of them not being thorough:
Do tax settlement companies really work?
Can I negotiate with the IRS myself?
Yes and in many simpler cases there is no benefit to hiring a tax releif company or even a tax attorney. If you have very low income and no assets you can easily get a settlement on your own. For many people the best solution is one of the IRS Fresh Start payment plans and those can easily be done yourself.
Make sure to check out our free back taxes help guide for information on setting up your own Offer In Compromise, payment plans and penalty abatements.
Tax Relief Companies vs. Tax Law Firms and CPA Firms
When a licensed professional is hired to complete your case they have to complete it or they can get their license revoked. That is not the case with tax relief companies.
If you hire a tax law firm to do your case we are obligated to complete it. Our sales for the month do not determine whether or not we can complete your case. See below an example of a law firm handling your case, even when things go bad.
Example: Rick owns a tax law firm with several attorneys practicing tax relief. Sales are down and the firm may go broke. Rick is still obligated to complete your tax case even if he now lives in his mom’s basement.
Lawyers have to complete your case or get reprimanded. A tax relief company owned by a non-licensed person can just close since they have no professional license and no legal obligation to complete your case. The obligation to complete your case dies with their corporation/LLC.
Most tax relief companies have AWFUL reviews
Considering hiring a tax relief company? Do a search for their Yelp or Google Places page. Check out their reviews. What you find might surprise you.
These companies used to use negative SEO to try and push down review pages that they do not control. Those strategies are getting beaten as time goes on and search algorithms get smarter.
They can’t hide customer experiences forever. The truth gets told. Bad services and products get weeded out over time due to internet reviews. These companies exist because the average age of a tax relief customer is older than almost all other services and products. Many of them are not looking at internet reviews and just hear Rush Limbaugh or another radio personality recommend it.
TrustPilot and Consumer Affairs review sites are garbage and manipulated
You will see tax relief companies promoting these sites as legitimate review sites. They mean nothing.
Currently Icon Fitness is in the process of suing Consumer Affairs over their review process and will win (if they have not already.)
TrustPilot is not trustworthy at all. It is pushed huge and you can tell the reviews are fake and negative ones are removed. Yelp is probably the most trustworthy source right now for reviews, although they are manipulated to a degree too based on if you pay Yelp.
Why are Yelp and Google reviews negative while Trustpilot and Consumer Affairs show positive? Because Trustpilot and Consumer Affairs = garbage.
But what about their BBB Accreditation for Tax Relief Companies?
The BBB means nothing. Any open business can get BBB Accreditation buy paying a fee (usually $500). You can file a BBB complaint against a company that is not BBB Accredited anyway.
Tax relief companies love to throw the BBB out their or some of these other professional organizations because the BBB used to mean something in the old days. Well now it does not. Most real people are going to give reviews on Yelp or Google Places. Check those. That’s your new BBB.
When the tax relief company closes, the BBB does not come and save you.
Let’s look at some tax relief company reviews!
We will look at some complaints for tax relief companies and their Yelp pages.
I picked two random tax relief firms. Both use radio advertising and one is very popular nationwide. Anyone considering hiring any tax relief firm (even a law firm or CPA firm) should look up their reviews.
There are a lot of poor quality lawyers and CPAs too. This industry is plagued with complaints and people getting ripped off. It is just more likely to happen with a tax relief company.
Take a look below at the screenshot from the Optima Tax Relief Yelp page.
Now lets take a look at the below complaint about Optima Tax Relief.
The problem is companies like Optima are just not producing happy customers consistently. So are almost all the tax relief firms that are not owned by licensed professionals. There are some exceptions, but they are few and far between. See another Optima Tax Relief complaint below.
In the above example, Lavinia just go no response from anybody for 2 months. Much different experience then you get at a tax law firm. When we work cases here at TRP, we provide an update by the end of the next business day on your case. Some tax relief companies do not even call IRS collections to request a hold on activity. This can create other issues like wage garnishments that would not have happened had the company taken the proper steps in an IRS collections case.
Let’s look at another tax relief company’s complaints. See the below screenshot from the 911 Tax Relief Yelp page. Boy do they have some unhappy clients.
You would not buy any product that had 2.5 stars, so why would you buy the services of a tax relief company with such a low rating? Below are warnings from Joshua M. and Alfonso D. about 911 Tax Relief.
People still hire this firm because people are not informed. They just hear the radio ads and call in. The jingle hooks people in and the salesperson closes the deal. The client gets left with sub-par service or the company closes on them completely later like American Tax Relief, which the FTC was still sorting out this year.
Since tax relief companies do not rely on referrals, good reviews, or content-based advertising, they have very high client acquisition costs.
Tax relief firms dump a ton of money on advertising. Some law firms do to. We mostly rely on client referalls, people finding out positive reviews, and Google search to acquire clients, all which cost almost nothing. On the other hand, most tax relief companies are paying for:
- Expensive radio and television ads.
- Live call transfers from lead services. These run from $45 to $200 per call.
- Internet leads $25 to $40.
- I have been told the average client acquisition cost for many tax relief firms is about $1,500. This means they pay $1,500 in advertising costs to acquire one client. That’s a big CAC.
All of this goes into your case fee and is why tax relief companies are usually more expensive than real tax law firms or CPA firms.
How do tax relief companies like Optima Tax Relief calculate fees?
Most are going for 10-12% of your total tax due, but many have a minimum fee and other fees that can be worked in. Optima usually charges about $900-1000 to do a case review, which does not actually involve any work on your case. Then they try to get 10% of your total tax debt on top of that. We have heard some pretty wild fees from Optima based on conversations with clients that have subsequently hired our firm after speaking with one of Optima’s unlicensed “tax consultants.”
Tax Resolution Services that is shown on Rush Limbaugh’s show was charging a $1,500 fee if the case goes beyond one year. Good chance if you have a self employed Offer In Compromise it is going past one year. That firm has since been sold and changed its name due to bad reviews.
They almost all charge way too much for tax returns. The one I worked at charged $450/year for basic W2 returns and that was in 2008. Some tax attorneys charge too much too for basic tax returns. If you have a basic W2 sometimes it is easier to just do it yourself or have a non-tax relief CPA do it.
The interesting thing about the fees tax relief companies charge is they are not based on how much work is involved. Some cases do not qualify for an Offer In Compromise and at our firm those cases end up being much cheaper. At tax relief companies you typically pay the same regardless of the result or resolution sought.
Hourly tax law firms are often cheaper than tax releif companies
Wall and Associates puts out advertisements that state you should not hire a tax attorney because they are too expensive. Hearing from a client that almost hired them, they actually charge more than we do. More expensive may be true for some tax attorneys because paying an attorney to learn is an expensive process. Many tax attorneys are not really “tax relief” experts and I have seen them do terrible jobs on tax relief cases. Tax planning or preparation is not the same as tax relief.
Have you heard of a “jack of all trades, master of none?” That is a lot of lawyers. Tax is a huge area. There is no way one person can master it all. In general do not hire attorneys that practice multiple areas of law. Chances are they are not really great at any of those areas.
The truth is when you hire an experienced tax relief attorney, you will end up paying less total in case fees in almost any situation vs. a tax relief company.
You can do it yourself!
Getting a garnishment released and an Offer In Compromise accepted can be difficult but it is not magic.
The truth is almost anything an attorney can do technically you can do it yourself if you are representing yourself. We offer a complete do it yourself tax help guide that explains a lot of these processes
However, doing it yourself can be a headache and time consuming. Is it worth the time to sit on hold and to learn how to do it? Or just get it handled right away? The decision is up to you.
Can’t afford help?
I always tell people if you cannot afford help at all, have no assets, and are barely making it: most the time you can just send the settlement in and complete required tax returns. Our guide explains the whole process start to finish.
Should I hire a tax relief law firm to do it for me?
If you are not sure what you qualify for, do not want to do it yourself, or have a business, you are best off hiring a tax relief law firm to do it for you. You save the time and headache of dealing with it and you ensure the best result. Some law firms will also help you prep your own settlement for a smaller fee too (we do that).
Paperwork is required to get garnishment releases, tax returns done, and Offer In Compromises accepted.
A lot of firms do not tell you in the sales call there will be some paperwork required on your part to get tax relief going. Usually it is not that hard to get: proof of some expenses, bank statements for the last three months, your last paystub or your last tax return. Sometimes a profit/loss statement for your business.
We get people that call us all the time that you hire an attorney and it is magic. It can be magical if you get the paperwork to us. $245,000 of debt settled for $100 magical. $00.004 on the dollar.
These tax relief companies come and go. So many have closed in the past 10 years, it is hard to trust one to stay open. Here’s a list of tax relief companies that have closed on their clients leaving them in the dust:
- JK Harris
- Blue Tax
- Nationwide Tax Relief
- American Tax Relief
- 411 Tax Relief
- Tax Incorporated
- Professional Tax Care
- Titan Tax Relief
- National Tax Corp.
- Associated Tax Resolution
- Power Tax Relief
- Progressive Tax Group
- Union Consulting / New Century Tax Consulting
- Limon Whitaker & Morgan Tax Advisors
- Tax Network of America
- Pinnacle Tax Advisors
- National Tax Solutions
- United Tax Group
- Ameristar Tax Centers,
- U.S. Tax Liberty
- Tax Network USA
I am sure there are a lot more closed tax relief companies out there as well. All of them leaving clients with unresolved cases when they close.
The truth about tax relief companies is you are better off doing it yourself or hiring a tax law firm to do it for you. For a case evaluation with one of our attorneys that are experts in tax relief, submit a request for us to call you on our Contact Us page.