Bill Comes Due for Bogus Tax Relief Company

If you owe back taxes, you may be tempted to turn to companies that claim they can reduce or eliminate your tax debts and stop back-tax collection by applying for IRS hardship programs. The truth is that most people don’t qualify for the programs these fraudsters hawk, their companies don’t settle the tax debt, and in many cases they don’t even send the necessary paperwork to the IRS.

The FTC recently settled a case against American Tax Relief, which bilked consumers out of more than $100 million by falsely claiming it could reduce their tax debts. Under the settlement, the scammers are banned from telemarketing and selling debt relief services, and must surrender more than $15 million in cash and assets to settle charges that they violated federal law.

If you’re having trouble meeting your tax obligation, here are a few tips:

  • Read your notices from the IRS or your state comptroller. Ask them about collection alternatives. The IRS has information online about the collection process and payment options, and videos on their YouTube channel. You also can contact the Taxpayer Advocate Service, an independent organization within the IRS that provides free help to people in financial difficulty or who need help resolving a problem with the IRS. Call 1-877-777-4778 or go online.  
  • Ignore promises from any company that says you are "qualified" or "eligible" for a tax relief program to resolve your tax debt. Only the IRS or your state comptroller can make that determination.
  • Walk away if a company requires a fee in advance for tax relief services. Check them out with the IRS.
Tagged with: debt, IRS, scam, tax
Blog Topics: 
Money & Credit

Comments

Your post paints the picture with too broad a brush. There are ethical tax relief firms that help their clients through Offers in Compromise and other ways. Calling the Taxpayer Advocate is not enough to resolve a problem. Without professional assistance, many people would be unable to resolve their tax problems.

I certainly agree that consumers need to be wary. Any firm that assures a taxpayer that his or her tax can be reduced, before viewing the person's tax records and full financial disclosure, is acting improperly. Like with many products, consumers looking for tax help need to ask the right questions and research the companies they speak with, in order to find the right one. In American Tax Relief's case, they had an "F" rating with the BBB for a long time.

You obviously don't work with taxpayers who are struggling. These people need LOTS of help. Filing multiple years tax returns, filing financial statements and hardship appeals, etc. The work load is immense, so it is fair to charge a fee in advance - PLUS, many of these appeals WOULD NOT be approved unless a POA/CPA/EA was the spokesman and author. We have had countless offers approved primarily because we were the agent of initiative and documentation. Yes, it is necessary to warn people of fraudulent firms, but the good firms out there actually help. We speak from millions of dollars in experience.

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