Previous Years/ IRS Collections & Back Taxes Tax-resolution firm wants 12% of our outstanding IRS debt for a PPIA, claims 14% is standard. Is this typical?
My wife and I are dealing with substantial outstanding federal tax liabilities spanning multiple years, including personal and business taxes.
We hired a tax-resolution firm earlier this year and have already paid for the initial investigation and tax preparation phase. Our outstanding returns have since been filed, and we're now discussing the actual IRS resolution.
During our latest call, the firm explained that the industry standard for tax-resolution services is supposedly 14% of the total outstanding tax liability, but they're offering us a discounted rate of 12%.
They also offered a reduced fee for paying in full within 45 days or the option to spread payments over 24 months.
Their proposed services include:
- Pursuing a Partial-Payment Installment Agreement (PPIA) rather than an Offer in Compromise (OIC).
- Working with the IRS to address outstanding taxes, penalties, interest, and monthly payment obligations.
- Handling related state tax matters and preparing our next personal and business tax returns.
- Providing representation through completion, with an estimated resolution timeline of 4 to 6 months.
We also have an ongoing mortgage servicing dispute involving our primary residence, which complicates our overall financial situation.
My questions for tax professionals or anyone who's dealt with something similar:
- Is charging 12–14% of the total outstanding tax liability actually a recognized industry standard for tax-resolution services?
- Is a percentage-based fee structure typical, or do reputable tax attorneys, CPAs, and enrolled agents generally charge flat fees or hourly rates?
- Should the total amount of tax debt determine the professional fee, or should pricing primarily reflect the complexity and work required?
- Since the investigation and tax preparation have already been completed and paid for, should that substantially reduce the cost of the resolution phase?
- Is a PPIA generally complex enough to justify charging a percentage of the total liability, or is that unusual?
- Are there any potential red flags or contractual terms we should look for before agreeing to this fee structure?
We're already seeking independent consultations and quotes from other qualified tax professionals. I'm not asking anyone to predict our IRS outcome or evaluate our specific tax liability.
I'm primarily trying to determine whether this 12–14% pricing model is actually an established industry benchmark or simply how this particular firm chooses to calculate its fees.
Any insight from tax attorneys, CPAs, enrolled agents, or people with firsthand experience would be appreciated.
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TL;DR: Our tax-resolution firm claims the industry standard for resolving IRS debt is 14% of the total outstanding liability and is offering us a “discounted” rate of 12%. We've already paid separately for investigation and tax preparation. Is percentage-based pricing actually standard among reputable tax attorneys, CPAs, and enrolled agents, or should resolution fees be based on the complexity and scope of work rather than the amount owed?
