Consumer Protection

Tax Resolution Services


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Tax relief companies claim they can reduce or even eliminate your tax debts and stop collection of back taxes by applying for legitimate Internal Revenue Service (IRS) hardship programs. The truth is that most taxpayers do not qualify for such programs. The tax relief companies do not usually settle the tax debt and in many cases, do not even send the necessary paperwork to the IRS.

If you owe back taxes and do not know how you are going to pay the debt, do not panic. Instead, consider your options. If you are having trouble paying bills, it is often better to try to work out a payment plan with the creditor yourself than to pay someone else to negotiate a plan for you. The same is true when you owe back taxes to the IRS or the State.

Taxpayer tips

If you owe back taxes and you are having trouble meeting your tax obligation:

  • Read your notices from the IRS or the Arkansas Department of Finance and Administration. Ask about collection alternatives.
  • Save yourself some aggravation by ignoring promises from companies that say you are “qualified” or “eligible” for a tax relief program to resolve your tax debt. Only the IRS can make that determination.
  • Walk away if a company requires a fee in advance for tax relief services. Check them out with the IRS

IRS help for taxpayers

If you cannot pay your taxes or your payments are late, the IRS charges you penalties and interest. It also has tax relief programs to help people who owe back taxes:

  • An Installment Agreement is generally available to people who cannot pay their tax debt in full at one time. The program allows people to make smaller monthly payments until the entire debt is satisfied.
  • An Offer in Compromise (OIC) lets taxpayers permanently settle their tax debt for less than the amount they owe. The OIC is an important tool to help taxpayers in limited circumstances. Taxpayers are eligible only after other payment options have been exhausted and their ability to pay has been reviewed by the IRS.
  • In very limited circumstances, the IRS may offer penalty abatement to people who have not paid their taxes because of an unusual hardship. If the taxpayer meets very narrow criteria, the IRS may agree to forgive the penalties. Interest abatement is even more limited and is rarely provided.

According to the IRS, you can apply for an Installment Agreement, OIC or penalty or interest abatement without the help of a third party. If you prefer third-party assistance in negotiating with the IRS, only certain tax professionals — Enrolled Agents (federally-authorized tax practitioners who can represent taxpayers before all administrative levels of the IRS), Certified Public Accountants (CPAs) and attorneys — have the authority to represent you. Their services should involve a face-to-face meeting where they explain your options and their fee structure.

The Taxpayer Advocate Service is an independent organization within the IRS that provides free help to people who are experiencing financial difficulties or who need help resolving a problem with the IRS. Call (877) 777-4778 or visit IRS.gov/Advocate.

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