Tax Relief Gone Wrong: How One Social Media Post Exposed the Risks of Choosing the Wrong Help

Recently, we shared a tax relief insight on social media aimed at helping individuals struggling with tax debt understand the importance of getting real, qualified help. As often happens with our posts, it sparked a lot of engagement—though this time, for all the wrong reasons.

Why did this particular post strike such a nerve?

We explained that many clients come to us after working with tax relief firms who jump straight into proposing an Offer in Compromise (OIC)—a settlement strategy often marketed as “pennies on the dollar”—without fully analyzing the client’s financial situation per IRS guidelines. Even worse, one client was advised to refinance their home to pay the firm’s fees and provide a lump-sum OIC payment… all before a proper IRS-compliant financial review was ever done.

That’s not just bad advice. It’s predatory.

Rather than evaluating whether these taxpayers even qualified for relief using the IRS’s own Internal Revenue Manual (IRM) standards, these firms pushed cookie-cutter solutions based solely on what the client “looked like” on paper—not their actual financial reality. The outcome? The client ended up worse off and still in debt.

When we shared this insight, a self-proclaimed “tax relief expert” (from a non-CPA firm) publicly criticized us—claiming we misunderstood how IRS collection works and that “any amount of equity is collectible.” Let’s break this down with facts—not fear tactics—and show taxpayers how to make smart decisions when it comes to resolving their IRS debt.

Key Insight #1: Equity Doesn’t Always Equal Collectability

Under the IRS’s own IRM (specifically IRM 5.16.1.2.9), a taxpayer can be deemed Currently Not Collectible (CNC) even if they have equity in assets like their home. The key lies in how that equity is evaluated—and whether collecting on it would cause a financial hardship.

The IRS evaluates financial hardship based on your income and allowable living expenses—not just asset ownership. If your monthly expenses exceed your income, you may qualify for a “Currently Not Collectible” (CNC) status, which temporarily protects you from IRS collection actions.

Even if it appears you have home equity on paper (assessed value minus mortgage balance), the IRS allows for a more in-depth financial analysis under its Internal Revenue Manual (IRM). This analysis can reflect the real economic hardship you’re facing, especially when quick-sale value, deferred maintenance, and other factors are considered.

National Standards Matter

The IRS uses Allowable Living Expense Standards to determine whether someone is in hardship. These include:

• National Standards (for food, clothing, personal care, etc.)
• Housing and Utilities Standards, based on the taxpayer’s geographic location

These standards are updated annually and can actually work in favor of the taxpayer—especially in areas with a lower cost of living. For many Midwest clients we serve, the national standard amounts are higher than their actual expenses, reinforcing their hardship status.

Why the Form 433-A Matters More Than 433-F

In hardship cases, the correct financial disclosure form is Form 433-A, not the simpler 433-F. Why? Because 433-A requires assets to be valued at Quick Sale Value (QSV)—typically 80% or less of market value. This includes reductions for deferred maintenance, needed repairs, and market conditions.

When handled by a CPA firm experienced in tax representation:

• The home’s equity is discounted per QSV rules.
• True equity may be zero—or even negative.
• This impacts the IRS’s collection decisions dramatically.

Tax relief firms that skip this critical analysis often overestimate the home’s equity, misleading both the taxpayer and the IRS, and pushing taxpayers to unnecessarily refinance or liquidate assets.

Here’s the Real Math on Home Equity (Per IRS)

Let’s break down the proper equity calculation:

((Market/Appraised Value – Deferred Maintenance) x 80%) – Mortgage – HELOC = IRS Recognized Equity

So, if a taxpayer has a home with an 80% LTV mortgage, the IRS may determine they actually have no collectible equity when Quick Sale adjustments are made. In fact, many taxpayers with mortgages originating in 2020 or earlier now pay far less than market-rate rents, making forced sale or refinancing financially devastating.

The IRS won’t pursue equity if doing so increases the taxpayer’s hardship—a nuance most non-licensed tax relief firms overlook.

What Tax Relief Firms Get Wrong—And CPA Firms Get Right

Unqualified firms:

• Skip detailed financial analysis
• Push OICs without proper groundwork
• Recommend asset liquidation without understanding IRS hardship rules
• Charge large up-front fees without explaining risks

Qualified CPA firms like ours:

• Follow the IRS IRM to the letter
• Evaluate financial hardship accurately
• Understand the importance of QSV and proper valuation
• Help clients avoid unnecessary sacrifices

We’re not just trying to “settle your debt”—we’re working to protect your home, your assets, and your future by doing things the right way.

The Bottom Line: Be Smart With Your Tax Relief

If you’re facing IRS debt, your situation is too important to trust to an unqualified, commission-driven sales team at a tax relief firm. You deserve a licensed, experienced CPA firm that puts your financial reality first.

Before you sign on with anyone, ask:

• Have they reviewed your finances using IRS IRM standards?
• Are they using the correct IRS forms (like 433-A)?
• Are they explaining Quick Sale Value and hardship rules?
• Are they licensed professionals with fiduciary responsibility?

If the answer is no, walk away.

We’re here to offer fact-based, compassionate, and strategic tax relief guidance—not sell you a dream that turns into a nightmare.

Need help navigating your tax debt? Contact us today to schedule a Discovery Chat with a CPA who knows the IRS inside and out—and is on your side.