One of the most common questions we get, if not the most common, is about how much it will cost to fix tax problems. The short answer is, it’s complicated. But nobody likes this answer, and we will do our best to help give you more information.

Based on our experience, we have a general idea about the average fees required to work on tax problems with the IRS and the Colorado Department of Revenue. But asking about professional fees without specific details, knowledge, and precise information is similar to asking how much a car costs without knowing the year, make, model, color, features, etc.

The number of people with tax problems may not be as small as you may not think. According to the IRS Data Book for 2023 (the most recently available version at this time), the IRS actively worked on, communicated with, or closed a remarkable number of taxpayer cases. This includes, but is not limited to the following examples:

• The IRS assisted nearly 60.3 million taxpayers via correspondence, helplines, or through Taxpayer Assistance Centers.
• The IRS closed 582,944 audits.
• The IRS closed more than 1 million cases under the Automated Underreporter Program.
• The IRS closed 252,098 cases under its Automated Substitute for Return Program.
• The IRS received 30,163 offers in compromise and accepted only 12,711 offers.
• Taxpayers established nearly 2.7 million new installment agreements.
• The IRS Appeals Officer closed 81,471 cases.

Regardless of how common tax problems may be, there is no magic wand to wave, or a one size fits all solution available. Fixing tax problems requires knowledge of complex tax laws and applying those to your specific situation to respond to requests from the IRS, or Colorado Department of Revenue.

We understand that making a decision about hiring a professional to help with your tax problems is not an easy one and should not be made lightly. With this in mind, it is important for you to have a better understanding about possible fees and expectations before deciding who to hire, or if you should try to conquer the problems on your own.

Before diving into the nuts and bolts of what to expect, it is important to pause and discuss the types of fee structures available. We offer a variety of fee structures for helping with tax problems.

First, is an hourly rate structure. This is where you would deposit a predetermined amount of funds into our trust account. Then as work is completed, we track our time in tenths of an hour and issue an invoice on an approximately monthly basis for the work performed on your behalf during that time. The hourly rate structure typically requires that a minimum balance be maintained in your trust account throughout representation.

Next, is a flat fee structure. This is where we agree to perform specific work for a specified fee. This could be all inclusive for the total service from the beginning until the end. Alternatively, it could be an agreement to perform certain tasks for a certain price and as the steps of work are completed those portions of the fees would be earned by our firm.

Last, is a hybrid structure. This could involve a portion of the work being done for a flat fee while other portions are completed on an hourly basis. This is generally reserved for tax problems that have several different issues that require concurrent attention.

The specific fees and fee structure will be based on the specific needs and details of your tax problem and would be detailed in the contract to provide representation.

Below is information about the steps we could take to help fix tax problems, if retained for representation, including general guidance about our average fees.

Phase 1: Compliance and Investigation

After the free initial consultation and completion of the engagement process, you enter Phase 1 of tax problem representation.

This phase is intended for us to research and investigate your tax problems with the IRS so that we become knowledgeable about your specific situation and can provide you with a better understanding of the options available for helping you with your tax problem. This initial phase of representation is also used to determine if we are the best fit for further representation in the next phase of work.

For Phase 1, the average fee for the work involved at this stage is $3,825.00. Please note that this serves as an average fee and is subject to change based on the specific details of your situation which may include the type of tax problem you are facing and the complexity of your tax problem or situation.

Phase 2: Negotiation, Resolution, and Conclusion

After the work required in Phase 1 has been completed, and it is agreed that our office is the best fit for further representation to help you with your tax problem, we proceed to Phase 2 of tax problem representation.

This phase is extremely detailed and nuanced because this is the portion of the case where we do an even deeper dive into your situation and prepare the resolution proposal tailored to your circumstances. Much of the work in this phase is preparation before submission. By working hard to present a complete package that helps connect the dots before submitting it to the IRS or Colorado Department of Revenue, we have found that the additional negotiations required to finalize a resolution can be significantly reduced.

This phase can involve any of the solutions to tax problems offered by the IRS and Colorado Department of Revenue. These may include, but are not limited to an Installment Agreement (payment plan), Offer in Compromise (settlement), Penalty Abatement (reduction of penalties), and many others. These resources are discussed in more detail in other articles available on our website.

As the type of work involved in Phase 2 of tax problem representation varies greatly depending on the complexity of your tax problem, the total amount the IRS or Colorado Department of Revenue claim is owed, the complexity of your personal situation, the response timeline required, and many other variables, so do the fees for the work involved at this stage. Depending on the specifics involved with your tax problem, the average fee involved at this stage would generally start at $5,000.00. Please note that this serves as an average fee and is subject to change based on the specific details of your situation which may include the type of tax problem you are facing, the complexity of your tax problem or situation, and the type of resolution involved.

The above examples and details are not intended to be all inclusive of every type of solution available and are provided as a starting point for expectation and budgeting purposes only. This information is for reference and does not represent legal advice about your situation, guidance about how you should work to fix your tax problem, or legal fees for performing services for you. In order to provide you with information directly related to your situation, an initial consultation would be required.

There are many other tools and resources available that may apply to your tax problem that are not discussed in detail here.

For help navigating your tax problems and negotiating a resolution, contact the experienced tax team at the Business Law Group. Our team is ready to help you by taking the burden of dealing with the IRS and helping you navigate your tax problem to find a resolution tailored to your situation. Call us at (719) 355-8840 or email info@businesslawgroup.us to get started today.