What does tax relief for your small business mean? Or you might ask, “What do tax relief companies do?” These companies advertise that they can work with the IRS to get you the best deal possible.
These companies charge thousands of dollars in exchange for tax relief services.
While they may be less successful than you, they have several advantages in offering tax relief services.
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Deductions To Reduce the Tax Bill
In a nutshell, tax deductions reduce your tax bill by reducing your taxable income. There are two main types of tax deductions: standard and itemized.
Standard deductions reduce your taxable income by a certain percentage, while itemized deductions reduce your tax bill. For example, a $1,000 deduction can lower your tax bill by $240, depending on the deduction.
The standard deduction applies to most taxpayers, but the difference between itemized and standard deductions is substantial.
1. Standard Deductions for Tax Relief
The standard deduction is available to all taxpayers, depending on their filing status. On the other hand, itemized deductions allow you to deduct expenses such as medical expenses, as long as the total dollar amount is less than the standard deduction.
In addition, costs such as charitable giving or buying a home are eligible for itemized deductions.
However, these expenses must fall into certain dollar limits to be eligible. The same is true of refundable tax credits and employer withholdings.
2. Tax Relief For Small Business Owners – Self-Employed Deductions
If you are self-employed, you can reduce your tax bill in many ways. For example, self-employed people must pay the employee’s share of Social Security taxes, but you can deduct half of these payments by itemizing them on your tax return.
Other ways to reduce your tax bill include contributing to a qualified retirement plan (SEP) or a self-directed individual pension. If you have a SEP, you can also deduct excess contributions to the project.
3. Offer in Compromise for Debt
An Offer in Compromise (OIC) is a type of debt resolution that allows a taxpayer to reduce a large tax bill to a smaller one. The IRS can accept or reject an OIC, but certain conditions must be met to receive this tax relief.
In recent years, 40% of OICs have been taken.
First, the offered amount must reflect the taxpayer’s “collection potential.” The IRS has specific regulations regarding what constitutes “collection potential.”
This means that a lower offer may result in more savings for the taxpayer.
While an Offer of Compromise can be a good option for some taxpayers, it is not for everyone. An Offer in Compromise must only be considered when the taxpayer cannot pay the total amount and is unlikely to be accepted without professional tax assistance.
Thirdly, it must be submitted in writing. An Offer in Compromise should be submitted on IRS Form 656. The offer must be signed under penalty of perjury, and the legal basis for the compromise must be stated.
The Offer must also specify how much the taxpayer can pay and what terms they’d agree on. Finally, the Offer should include all required information.
4. IRS Fresh Start Program for Relief from Taxes
The IRS Fresh Start tax relief program is a popular option for individuals with unpaid taxes. More than 10 million people are eligible for tax relief through this program annually.
However, many people don’t know they are suitable for this program and write themselves off. You should know a few things if you find yourself in this position. Here is a brief overview of the program.
The Fresh Start program is an excellent option for those who owe the IRS more than $15,000. But you may have difficulty making the payments since you have years of back taxes. Thankfully, this program allows you to make smaller monthly payments, which can help you maintain a budget.
However, to qualify, you must have a good credit score and not be in default on your tax payments.
5. Tax Relief Programs From the IRS
If you have a large debt and cannot afford to pay it, the IRS will help you find a plan that will work for you. The IRS can reduce your penalties by reducing your total tax debt. Penalty abatement can save you a significant amount of money over time.
This tax relief program is available to individuals who have fallen behind on their payments and need help to catch up. You can even apply for a penalty abatement through your local IRS office.
The best part is that requesting this tax aid program is entirely free.
1099 Changes for 2025 – IRS Tax Relief Programs
Here are the key 1099 changes for 2025 that affect small businesses. The 1099-K threshold drops to $600 for payments processed by third-party networks, so many casual sales and side gigs will trigger a form.
If you file 10 or more information returns, including W-2, 1099-NEC, 1099-MISC, and 1099-K, you must e-file them. To stay compliant, use the IRS IRIS portal or approved software.
Keep your vendor W-9s current, since TIN and name mismatches can lead to penalties and backup withholding. Mark your calendar, 1099-NEC is still due to recipients and the IRS by January 31.
More Tax Changes in 2025 For Small Businesses
Small businesses will see a few key tax shifts in 2025. Bonus depreciation drops again; most new assets qualify for only 40 percent upfront, so plan larger buys and cash flow with that in mind.
Section 179 expensing remains strong but adjusts for inflation, check the new limits before year end. The qualified business income deduction stays for 2025 and is set to expire after this year unless Congress extends it, so pass‑through owners should time income and deductions.
Tax brackets, the standard deduction, and payroll caps rise with inflation, which affects estimated taxes and payroll budgets. R&D costs still require amortization, not immediate expensing, which can raise taxable income.
The IRS has been tightening third‑party payment reporting on Forms 1099-K. Watch the final 2025 threshold and prepare your bookkeeping. Update mileage rates, per‑diem amounts, and state PTE tax rules early, then adjust pricing, payroll, and quarterly estimates.
How To Apply For Tax Relief
- Start by filing any late returns and reading every IRS or state notice.
- Confirm the balance, interest, and penalties.
- Pick a relief path that fits: a payment plan (Form 9465 or the IRS Online Payment Agreement), or an offer in compromise for unaffordable debts (Forms 656 and 433-A/OIC),
- Penalty abatement for first-time relief or reasonable cause, or currently not collectible status if you cannot pay now.
- Gather proof of income, expenses, assets, and debts, such as bank statements, leases, payroll reports, and medical or disaster records.
- Complete financial forms (Form 433-A, 433-B, or 433-F) with accurate numbers.
- Submit the proper forms online or by mail, then make required payments while your case is reviewed.
- Reply to IRS requests by the deadline,
- Keep copies of everything, and
- Set up EFTPS or auto debit to avoid default.
- If you want support, hire a licensed pro (EA, CPA, or tax attorney) and authorize them with Form 2848.
Conclusion: Tax Relief Services
Effective tax relief services should cut debt, stop penalties, and restore compliance. For small shops and solo owners, that means accurate filings, realistic payment plans, and steady communication with tax authorities.
Pick a licensed pro, such as a CPA or enrolled agent, check credentials, and ask for transparent fees and a written plan. Keep your books tight, track deadlines, and respond fast to notices so progress sticks.
Want a simple checklist or referral list? Please let us know what you need, and we’ll add it to the Small Biz Tipster blog.
Small Business Tax Relief FAQ
What does “tax relief” mean for a small business?
Tax relief reduces the amount you owe, the pace of collection, or penalties and interest. It may involve payment plans, penalty relief, settlements, or compliance time.
Which IRS programs help small businesses that owe back taxes?
Key options include installment agreements, Offer in Compromise, penalty abatement, and currently not collectible status. The IRS Fresh Start initiative made some of these easier to qualify for.
How do installment agreements work?
You pay what you owe over time, usually monthly. The IRS offers short-term plans, long-term plans, and streamlined options if your balance is under certain limits.
What is an Offer in Compromise, and who qualifies?
An OIC lets you settle for less than the full amount if you cannot pay in full. The IRS reviews your income, expenses, equity, and future ability to pay, then decides if the offer is acceptable.
Does interest ever get removed?
Interest continues until the tax is paid. The IRS only reduces interest if it resulted from errors or delays.
What records should I gather before seeking relief?
Collect recent tax returns, notices, bank statements, profit and loss statements, balance sheets, payroll records, asset lists, loan statements, and accounts receivable and payable. You will also need proof of necessary business expenses.
How long does tax relief take?
Simple payment plans can be set up in days. Offers in Compromise or complex cases may take several months or longer, especially if the IRS requests more documents.
