DIY vs Tax Professional: How to Resolve Your Tax Problem on Your Own

Unpaid tax debts or unfiled tax returns can quickly turn into a nightmare. And you may face more penalties, interest, wage garnishments, or bank levies. To resolve your crisis, you should take action as soon as possible. Otherwise, your options will diminish with each passing day. What are you planning to do?

Hire a tax pro or handle it on your own. Each approach has its pros and cons, but how will you decide? The choice ultimately depends on the complexity of your tax situation, the financial stakes involved, and just how much patience you have for dealing with the famously time-consuming IRS. Tackling it solo might save you some money, but be prepared—it could also leave you pulling your hair out.

DIY Tax Debt Relief: 5 Steps to Resolve Your IRS Issue 

You do not need a professional tax firm for every case. That is why, we are here to guide you through the steps to help you.

1. Review Every Letter from the IRS

Ignoring IRS notices will not make the issue go away. It is far easier to resolve an IRS issue early before the IRS takes aggressive action to collect. That is why you should review and take timely action on every IRS notice you receive. 

The IRS initiates contact through regular US mail. In exceptional and rare circumstances, the IRS may call or visit your home or business. If this happens, you can verify the legitimacy of the interaction by asking the IRS employee for their official badge number.

2. Call the IRS

First, you need to determine why the IRS believes you owe money and confirm the amount.

• Gather all your documentation before you call.
• Use the first call to gather information. Then resolve the issue step by step, often over a series of calls with the IRS.
• Confirm the “balance” or total amount owing, as well as the balance for each year.
• Clarify whether the amount owing is from tax returns you filed or that the IRS filed for you.
• Find out which tax return(s) resulted in an amount owed.
• Find out which missing tax returns need to be filed.
• Ask for the expiration date for each balance.
• Ask the IRS for a “hold time” of 30–120 days (so they will delay collections during that time).
• Confirm what you must do to get into compliance with the IRS.
• Wait times are long—up to three hours—and there’s a high probability you will be disconnected. Be patient in your conversations with IRS agents, too. Their priority is to collect as quickly as possible, and you may find the experience frustrating.
• Their priority is not to protect you; it is to collect. Keep asking questions to make sure the answers are accurate and consistent. IRS agents can sometimes take advantage if you do not know your rights.

For personal tax debts, the IRS contact number is 800-829-1040, 7 am to 7 pm local time. 

For business tax debts, the IRS contact number is 800-829-4933, 7 am to 7 pm local time.

3. File Back Taxes

When a tax return is missing, the IRS will file your federal tax return (Substitute for a Return or SFR) on your behalf using W2s and 1099s from your employer(s) and other payers to complete the filing.

When the IRS files an SFR, they never claim the deductions you are due, so you end up with more taxable income, a higher tax rate, and a higher tax liability.

Even though you never filed the return and may not even be aware of the SFR, they can bill you for back taxes and failure-to-file penalties — not to mention interest on late payments.

Step 1: Determine Which Tax Returns You Need to File:

The IRS requires you to file returns for the last six years.

That said, you should file to replace any SFRs that resulted in an amount owed. Sometimes that means filing taxes from seven, eight, nine, or more years ago. 

The IRS has ten full years to collect a tax debt, and specific circumstances can extend that window. So, be sure that your tax returns are accurate for all years associated with an IRS tax debt.

Step 2: File Your Back Tax Returns

You have three options: purchase online tax prep software, hire a tax expert, or file tax returns by hand.

• Obtain the right tax return forms.
• Gather documentation.
• Complete and mail your return.
• Follow up with the IRS.

Note: Detailed explanations about these processes are in our PDF guide.

4. Negotiate (with Caution)

You may or may not need to proceed with negotiations. If any of the following is true for you, skip negotiations and go to payments. 

1. You agree with the amount IRS says you owe, and
2. You can afford to pay in a single lump sum, or
3. You can afford to pay the amount over 72 months.

However, 

1. You believe you should not have to pay the amount, or
2. Your tax situation is complicated.
3. The IRS has assigned a revenue officer

Whatever the reason for your IRS negotiations, you can expect the process to extend over several months. During that time, the IRS may require you to collect and submit financial statements (above and beyond those in your tax returns). You may have to argue for exceptions, such as special monthly expenses or allowable income.

5. Set Up Payments & Keep Current

The IRS will allow you to repay an amount over 72 months or less. Your options are to pay a lump sum (and get out of debt immediately) or set up installment payments. 

If you divide the amount owing by 72 months and realize that the monthly payments are unaffordable, you should try to negotiate lower installment amounts.

Once you have finalized a plan to pay the IRS, be sure to make every single payment. Even missing one payment can void your entire agreement. In this situation, call the IRS for an extension on a payment. They may agree to defer the payment as an exception.

Pros of DIY:

• Save money: Without hiring an expert, you can handle simple tax issues. It will save you from paying for professional fees.
• Personal control and learning: You gain hands-on experience with the IRS procedures. You also improve your financial awareness.

Cons of DIY:

• Risk of costly mistakes: A simple mistake, such as misreporting income or missing a deduction, can result in extra penalties, interest, or a rejected IRS resolution. In complex situations, these errors may cost more than hiring a pro.
• Stress and time commitment: Long calls with IRS agents, confusing forms, and complex tax laws can be time-consuming and stressful.

DIY vs Hiring a Tax Relief Firm

“Should I handle my tax debt problem myself, or should I hire a professional? So, which one makes more sense for my case? Which one is more helpful?”

Probably, you have many questions. Of course, both scenarios have their own advantages and disadvantages.

Cost Comparison

Hiring a tax pro costs a few hundred to several thousand dollars, depending on your case’s complexity. On the other hand, DIY tax resolution can save you that fee.

However, avoiding these initial costs can be costly. A missed deadline or a small filing error could lead to more penalties, interest, or even legal trouble. Worse, the IRS may reject your self-negotiated terms. 

A tax pro helps mitigate these risks, as they have the expertise and experience.

Time and Effort

While resolving your tax issues by yourself, you often spend much more time on the whole process. Understanding tax laws, navigating IRS procedures, making multiple calls and filing forms: all take weeks or even months.

In contrast, tax relief firms streamline this process, drawing on years of daily experience resolving tax matters and dealing directly with the IRS. Their established connections and familiarity with common roadblocks allow them to overcome challenges more efficiently, saving you time and frustration.

Free DIY Resources

There are free tools and resources to support you in the DIY process.

IRS Filing Resources: You will find tax filing guides provided by the IRS.

Tax preparation software is a great option for filing recent returns. It helps ensure your filings are accurate and complete. 

Lastly, most tax relief firms offer free initial consultations. They can help you understand your tax situation.

Tips for a Successful DIY Approach

• Stay organized: Keep all your IRS notices, tax forms, and financial records in one place. 
• File on time: Missing deadlines can lead to extra penalties and interest.
• Review all IRS communications: Read all IRS letters and respond quickly to avoid escalation.

When to Use a Tax Relief Firm

Many taxpayers can follow the steps above and avoid serious IRS collections forever. However, that is not always the case. You may need professional help for your more complicated tax issues.

If you can say “yes” to at least one of these, you are facing a serious IRS issue and need a tax expert on your side:

• You have an IRS debt of $10,000 or more and cannot pay the amount over 72 months.
• The IRS has levied your wages or bank account, and you need to get it stopped fast.
• An IRS revenue officer is mailing you notices, calling you, or visiting your home or your business.
• You have many years of unfiled tax returns and expect to owe back taxes (not to mention penalties and interest).
• The IRS has prepared one or more substitute tax returns for you.
• Your tax returns are complicated, with multiple sources of income.
• You have business-related tax debts, such as outstanding payroll taxes.
• The IRS has sent you a notice that you underreported your income.

The steps are the same, but in situations like the above, it pays to have a professional take care of it. There is too much at stake financially, and the risk of errors is too high if you “DIY” in these scenarios.

Still, Cannot Decide? 

From filing paperwork to negotiating with the IRS is never an easy task. Yet, the first step is to understand your specific situation. Then, the decision between DIY and hiring a tax relief firm comes down to your unique and specific situation.

Whilst the DIY route may work for simple tax issues, the expertise provided by a tax relief firm is invaluable for complex or high-stakes IRS problems.

We have been helping Americans get through difficult tax situations since 1967. In the past five years, we have helped more than 700 clients across the country resolve over $58 million of IRS tax debt.

We hope you find this guide helpful. If you need someone to talk to, contact us for a free, confidential, no-obligation consultation.