Where there’s money to be made, there will be people looking to make it unscrupulously, thus the origin of the Latin phrase caveat emptor (let the buyer beware).
Sadly some of the most often targeted people are those who are desperate to relieve themselves of the burden of a debt. Shady operators know this and they know a lot of people are particularly vulnerable when it comes to IRS debt. With that in min d, here’s a guide to avoiding tax debt relief scams.
If It Sounds too Good to Be True
Most of these people tout opportunities to “settle your IRS debt for pennies on the dollar…” And while there are a number of companies out there offering legitimate federal tax tips and help, predators hide behind this line too.
In many cases, these people will ask you to pay fees up front, which monies may or may not go toward settling your debt. In many cases, this money goes straight into their coffers and you’ll never hear from them again. Or, they’ll string you along for a few months, then tell you the IRS refused your claim and as you should have noted in the contract, those upfront fees are not refundable.
Signs of a Scam
An honest debt relief company will only ask for payment after it has settled debts on your behalf. In other words, they’re probably not on the up and up, if they’re asking for payment first. Moreover, if they’re promising a drastic reduction in the amount you’ll have to pay, or saying they’ll fix it so you’ll have to pay no penalties and or interest—yeah—that’s a red flag too.
Legitimate companies will ask why your IRS account is in arrears before trying to help you. A lawful company will also take the time to assess your financial situation before making any pronouncements. Third party companies claiming to be affiliated with the U.S. government, or stating they are contacting you on behalf of the IRS, are not to be trusted.
Any contact touting IRS tax debt relief is likely to be a scam as well. Yes, the IRS does have an offer in compromise, but you don’t need a third party organization to enroll in it. All you have to do is contact the IRS. You can learn more about the tax debt compromise program scam at FreedomDebtRelief.com
Thwarting Scams
Before agreeing to work with anyone in this regard, ask about the refund policy. Again, bearing in mind legitimate debt relief companies do not ask for payment before they provide a service. Do some background checking first with the consumer protection division of the Attorney’s General office in your state. Your local Better Business Bureau (BBB) will also have notations of any negative information about a company.
Try to gauge the nature of the company by asking how many lawyers; CPAs and accounts are staffed there. Ask about the number of salespeople they have as well. A high number of salespeople might mean they’re more interested in getting clients than helping them. Are those salespeople paid a salary, or do they work on commission?
Finally, always ask for references and check online review sites.
Go Directly to The IRS
Many people avoid going straight to the IRS, because they’re afraid of waking a sleeping bear. However, the IRS already knows about you if you’re in arrears. Your best bet is to try to work something out with them.
The IRS’s Taxpayer Advocate Service (TAS) has an online presence for federal tax tips, or you can reach them by phone at 877-777-4778. The TTY/TTD number is 800-829-4059. The sooner you get in touch with them, the less it will ultimately cost to resolve your problem.