Hiring a Tax Resolution Firm vs DIY: A Cost-Benefit Checklist

Quick framing

When you get an IRS notice, the decision to hire a tax resolution firm or go DIY shapes expense, stress, and outcomes. Professional help can reduce liability and administrative burden, but it costs money. DIY can save fees but risks costly mistakes and missed opportunities. This article gives a practical cost‑benefit checklist, timelines, red flags, and step‑by‑step guidance so you can choose with confidence.

Why this decision matters

Tax problems compound quickly: penalties and interest grow, liens or levies may follow, and unresolved issues can harm credit or business operations. The IRS provides tools like installment agreements and Offers in Compromise (OIC), but applying those correctly matters (see IRS guidance on Offers in Compromise: https://www.irs.gov/individuals/offer-in-compromise).

Author’s note: In my 15+ years helping clients, I’ve seen projects where a firm’s negotiation saved small businesses tens of thousands and others where a careful DIY approach recovered refunds with little cost. The key is matching the case to the right method.

Cost‑Benefit Checklist: How to decide

Below is a practical checklist you can run through. Score each item as High / Medium / Low for your situation.

1) Financial stakes (amount owed, potential penalties)

• High (>$25k): Favor professional help.
• Medium ($5k–$25k): Consider professional if issue complex.
• Low (<$5k): DIY often reasonable.

2) Complexity of issue

• Complex (multi‑year returns, business tax, payroll, trusts, possible fraud): Hire a firm or CPA with tax controversy experience.
• Moderate (amended returns, audits where documentation exists): Either route depending on comfort.
• Simple (one missing form, small tax bill): DIY workable.

3) Documentation quality

• Disorganized records, missing source documents: Professionals can craft a credible financial package faster.
• Well‑organized records: DIY is easier.

4) Time and emotional bandwidth

• No time or high stress: Hire a firm to manage communications and deadlines.
• Have hours to research and manage calls: DIY possible.

5) Risk tolerance for mistakes

• Low tolerance (penalties, criminal exposure, payroll tax implications): Hire
• Higher tolerance, willing to take the chance: DIY

6) Cost sensitivity

• Can afford professional fees relative to potential savings: Hire
• Fees would create financial hardship: Consider DIY and low‑cost help (tax clinics, Volunteer Income Tax Assistance)

7) Legal exposure

• If notices hint at fraud, criminal investigation, or large employment tax issues, consult an attorney or tax professional immediately.

Typical fees and timelines (industry ranges — 2025 estimates)

• Initial consultation: many firms offer a free or low‑cost intake (free to $200).
• Flat‑fee cases: $1,000–$6,000 is common for common issues (installment agreements, collection appeals). Complex cases (OICs, multi‑year audits) often exceed $6,000.
• Hourly representation: $150–$400+/hour for experienced tax attorneys or enrolled agents.
• Timeline:
• Installment Agreement: weeks to a few months.
• Offer in Compromise: 6–12 months typical for IRS processing.
• Audit resolution: several months to a year or more depending on appeals.

Note: These are ranges—not guarantees. Ask for an itemized fee schedule and written engagement letter.

What professionals do that matters (value checklist)

• Accurate preparation of forms (e.g., OIC applications, Collection Due Process requests).
• Building a financial disclosure package and realistic monthly‑income analysis.
• Negotiating directly with Revenue Officers or Appeals officers.
• Spotting eligibility rules or procedural missteps that would doom a DIY attempt.
• Rapidly assembling documentation under deadline pressure.

For detailed guidance on building an OIC financial package, see FinHelp’s guide to preparing a strong financial package for an Offer in Compromise: “Preparing a Strong Financial Package for an Offer in Compromise” (https://finhelp.io/glossary/preparing-a-strong-financial-package-for-an-offer-in-compromise/).

Also review broader pathways for tax debt relief such as installment agreements, OICs, and currently not collectible status here: “Tax Debt Relief Options: From Installment Agreements to Offers in Compromise” (https://finhelp.io/glossary/tax-debt-relief-options-from-installment-agreements-to-offers-in-compromise/).

A realistic DIY workflow (if you choose to go it alone)

1) Read the IRS notice carefully and note deadlines. Do not ignore correspondence (it can escalate).
2) Gather all returns, bank records, W‑2s, 1099s, and correspondence for the years involved.
3) Determine the correct remedy: pay, installment agreement, OIC, audit response, or appeal.
4) Use IRS online tools first: payment options and payment plan applications are available at IRS.gov (e.g., Online Payment Agreement).
5) If filing an OIC, follow IRS Form 656 and the OIC instructions closely; assemble a complete financial statement.
6) Track all communications in writing and keep certified copies of submissions.
7) If you feel out of depth at any point, pause and get an expert consult.

DIY resources: IRS.gov, Free File/Tax Software for simple corrections, and low‑cost clinics via IRS VITA/TCE programs.

Questions to ask a tax resolution firm (before you sign)

• Are you licensed (EA, CPA, or attorney) and can you provide credentials?
• Do you have experience with my particular issue? Can you share anonymized case outcomes?
• What exactly is included in the fee and what might be extra?
• Do you use staff or outside subcontractors for negotiations?
• What is your communication policy and how will I be informed of developments?
• Can you provide a written engagement letter and refund policy if goals are not met?

Red flags: guarantees of specific IRS outcomes, pressure to sign immediately, demands for full payment up front without a clear scope, and firms that ask you to stop communicating with the IRS.

Practical examples (condensed and anonymized)

• Example A (professionally beneficial): Small business with payroll discrepancies. Firm charges $4,200; negotiated penalties reduced by $28,000 through a penalty abatement and corrected returns. Net savings > fee.
• Example B (DIY success): Individual received a substitute notice. After research, corrected return filed and a $2,000 refund recovered. Time invested: many hours; direct cost: tax software $50.

These examples show both routes can be correct. The difference is predictable risk and financial tradeoffs.

When to get free or low‑cost help

• If income is under program thresholds, VITA/TCE programs or legal aid may offer free assistance.
• Nonprofit consumer counseling or bar association referral services can point you to low‑cost options.
• The Consumer Financial Protection Bureau provides consumer guidance on dealing with debt collectors and understanding your rights (https://www.consumerfinance.gov/).

Final decision checklist (actionable)

• If you scored High on financial stakes, complexity, or legal exposure → hire a qualified tax resolution professional (EA/CPA/attorney).
• If you scored Low across those categories and have time and records → consider DIY and use IRS resources.
• If unsure → get a paid consult (1–2 hours) with a credentialed professional to evaluate the likely ROI of hiring help.

Professional disclaimer and next steps

This article is educational and not individualized legal, tax, or financial advice. For a personalized assessment, consult an enrolled agent, CPA, or tax attorney licensed in your jurisdiction.

If you want practical templates, engagement checklists, or a one‑page questionnaire to present to firms, FinHelp has additional resources in our tax debt relief library (see the linked guides on Offers in Compromise and tax debt relief options above).

Author credentials: I have 15+ years advising taxpayers and small businesses on IRS disputes and negotiated outcomes; these recommendations reflect that experience and common IRS procedures as of 2025 (IRS, CFPB).