Research Before You Hire. Protect Yourself From Tax Settlement Scams

You may have read about some recent tax relief scams in the news.  Although there is no doubt that a competent tax professional can be a huge asset in reducing a tax bill or resolving an outstanding tax debt, taxpayers should be aware that there are tax settlement companies out there that actually compound existing tax debt issues. The bottom line is that, if advertised promises seem too good to be true, they probably are. While it is true that the IRS offers numerous tax settlement options for taxpayers who have outstanding tax liabilities, these options have specific qualifying criteria and are not granted automatically.

Several tax settlement scams have made the news recently. Among them is American Tax Relief of Beverly Hills, a tax settlement firm that was charged by the Federal Trade Commission with making false promises to consumers and cheating them out of more than $60 million.  The company charged up-front fees of up to $25,000 and then didn’t deliver the advertised tax relief. Two other tax settlement companies that have been charged with similar infractions are TaxMasters and Roni Deutch, a California tax attorney. The Attorneys General in Texas and Minnesota charged that most of the calls made to Taxmasters’ toll-free number were answered by sales people who made unrealistic promises in order to trick customers into paying large up-front fees of anywhere from $1500 to $9000. Along those same lines, the Superior Court of California ordered Roni Deutch, who calls herself the Tax Lady on late night television commercials, to reimburse dissatisfied customers who were billed $1600 to $4000 for tax relief they never received.

Many unethical tax relief services have popped up in response to the growing need for tax debt resolution services created by the current economic downturn. In light of recent news headlines identifying tax settlement scams, it is clear that any taxpayer who is looking for help should do the necessary research before hiring a company or individual advertising tax resolution assistance. While the assistance of a qualified tax professional can be an invaluable asset in negotiating with the IRS to resolve a tax debt issue, it is important to do the necessary footwork before deciding who to hire.