A minority of tax relief firms charge an hourly rate. However, most tax relief firms charge a contingent flat fee meaning that you pay a flat fee provided that you follow instructions, comply with tax laws, provide requested documents, respond within a reasonable time, and so on. These firms may also offer services at an hourly rate on rare occasions, typically when it is difficult or impossible to estimate the number of hours needed to fix the problem.
Tax relief firms calculate the contingent flat fee by estimating the number of hours it will take to resolve your case multiplied by an hourly rate (considering other factors such as the severity of the tax problem, the recommended resolution strategy, and aggressiveness of the taxing authorities).
However, not all tax relief firms provide the same quality of work.
Many tax relief firms assign your case to an unlicensed “case manager” who performs the vast majority of the work with very little involvement from a licensed tax professional. Only three types of licensed professionals have unlimited authorization to practice before the IRS: attorneys, CPAs, and enrolled agents. Firms who utilize unlicensed “case managers” typically have a small number of licensed professionals on staff who sign off on certain documents, and do the minimum to convince the IRS or state that a licensed professional is, in fact, “handling” the case. It is not uncommon for firms who use this model to have several hundred clients or more per licensed professional. The result is that the licensed professional—who is “supposedly” in charge each case—has little or no idea about what is going on with each case.
Further, regardless of whether the tax relief firm uses a “case manager” or licensed professional, the “case manager” and licensed professional almost always obtained authority to practice before the IRS as an “enrolled agent”— something easily obtained (the person just needs to pass a test, no experience, no college degree, no law school admission, and no bar license required).
The going hourly rate for an enrolled agent averages about $130—$150. However, many tax relief firms bill out their enrolled agents at a much higher hourly rate, such as $250/hr. This allows them to charge their clients a relatively high fee, while paying their enrolled agents a relatively small amount. The result is often a high profit margin for the tax relief company, but poor value for their clients.
Unlike other tax relief companies, Fortress Tax Relief is the only significant national tax resolution firm in the United States where a licensed tax attorney personally handles every single case. Of, perhaps, greater importance, a Fortress attorney’s caseload is limited to about 100 active clients at any given time.
Although an experienced and skillful attorney’s going hourly rate averages anywhere from $350—$1,000, in order to compete with other tax relief firms, Fortress values its senior attorneys’ time at only $275 per hour by operating with a high volume, low profit margin business model. This allows Fortress to keep its fees competitive with other tax relief firms. With Fortress Tax Relief’s business model, clients can expect to receive the most bang for their buck (and better results) by putting a tax attorney in their corner.
The minimum flat fee that most tax relief firms will charge is around $1,500, though there are a few firms who will accept a case for less.
Many firms use 10% of the total tax liability as a rule of thumb for their fee. Fortress Tax Relief rejects that pricing methodology—particularly with higher dollar cases–as it can result in a fee that is grossly disproportionate to the actual amount of work that will be required to resolve a particular tax liability. Instead, Fortress offers a fair fee that takes into account the amount of work that will likely be needed in order to provide the agreed-upon service.
Tax relief fees often “pay for themselves” in that the amount of tax reduction/savings exceeds the fees paid. However, it is a short-sighted and flawed analysis to hire a tax relief company solely on the basis that the amount likely to be saved exceeds the fee. The IRS and state taxing authorities can and do levy bank accounts, seize assets, garnish wages, force companies out of business, and put individuals into situations where it is exceptionally difficult or impossible to keep roofs over their heads and food on their tables. Good tax relief service providers can dramatically reduce or eliminate the chances of these horrors, and the value of that can often dwarf the amount of the fee.
Fortress Tax Relief has caring and knowledgeable professionals on staff who would be happy to evaluate your situation and outline a solution for you at no charge. Pick up the phone and give us a call!