The Deals That Are Really Too Good To Be True
For many people, the IRS is the most difficult of all creditors to deal with. In recent years, the IRS has stepped up efforts to collect pending back taxes from individuals and businesses. When someone fail to pay their back taxes, the IRS takes whatever steps are necessary to recover the money, including eventual seizure of assets and bank accounts. This dilemma has helped to sprung up a new type of business that preyed mainly on those who are weakened by the threat of IRS action. Known commonly as tax resolution or tax settlement firms, these businesses play heavily upon the fear of delinquent taxpayers, promising a lifeline of professional help to cope with their tax debts and make their problems go away. But are these firms really deliver what they promise?
There are many reputable tax resolution companies that work really hard to provide actionable solutions to people with back tax problems. Unfortunately, not all so-called tax relief organizations provide effective resolutions or any help at all. Some are downright exploitative. With IRS increasing enforcement to unprecedented levels, many scam tax relief firms have been exposed taking advantage of people seeking tax assistance.
The Biggest Tax Relief Scams in History
Remember Patrick Cox, the big red bearded TaxMasters founder? How about J.K.Harris? Who can forget the “Tax lady”, Roni Deutch? You have probably seen their late night commercials. You would have heard their radio ads. They usually start with words, “Settle your tax debt for pennies on the dollar”, “Are you being audited?”, “If you owe $10,000 or more in back taxes". These scam companies typically claim that they will defend you against the big bullies at the IRS and settle your debt at the fraction of the amount owed.
They all used the same business model and ended up facing similar problems: deceptive business practices, misleading advertisements, failed to disclose refund policies, demanding thousands of dollars as upfront fees but failed to provide genuine help, not understanding or knowing the facts about their client cases, and lied to their client about the results accomplished. These are just a few of the major complaints. There are over 1,000 complaints with the Better Business Bureau (BBB) for their tax resolution scams.
While there is no doubt that the IRS can make your life miserable, these firms could compound your tax woes even further. Have you wondered what happened to these companies? The big three J.K. Harris, Roni Deutch and Tax Masters have either been shut down by regulators, forced to file bankruptcy, have Attorney General problems, or otherwise went out of business.
Protect Yourself from Tax Resolution Scams
While there is a pressing need for struggling taxpayers to find relief from their tax problems, it is important that they have to be very careful when hiring a tax resolution firm or professional to resolve their IRS problems. It is more important than ever to learn how to spot and protect yourself from tax relief scams. Here are few tips to identify those scam firms that aren’t working out for your best interests and how to choose a qualified tax expert.
- Beware of tax relief companies that offer guaranteed results or promises that do not make sense.
- Ask to speak directly to the tax professional working on your case, not the sales people.
- IRS tax settlement programs such as Offer in Compromise and Penalty Abatement are not for everyone. Stay away from companies that assure 100% success but do not tell you about the bar to qualify for such programs.
- Avoid firms that claim it has the direct power to stop IRS collection efforts.
- Do research about the company – Find how many cases they have actually settled.
- Ask questions directly to the professional about their experience, credentials, and case resolution procedures.
- Checkout their BBB rating.