Tax Relief Scams: Avoiding and Recognizing an IRS Tax Settlement Scam

Few people like owing money to others. When the money you owe is to the IRS and you are subject to aggressive collection methods, the situation becomes much more serious. There are many tax relief companies which promise to fix your tax problems and get you back on track again, however not all of these companies operate on the up-and-up. Unfortunately, these businesses remain in operation because taxpayers turn to them in a panic and fail to see the warning signs that things may not be as they seem. Here are a few tips to help taxpayers recognize and avoid tax relief scams.

Guaranteeing You Pay Less

Does the tax relief company promise to settle your tax debts for less before learning of your individual situation? Do they guarantee a certain amount of savings? Taxes are a complicated issue with many exceptions, conditions and restrictions which make each situation unique. While many cases may be similar in nature, it is impossible to know exactly how things will turn out without first reviewing your information. If the company promises otherwise,they are likely only interested in your money

BBB Rating

Before you entrust a company with your money, it is important to research the company and learn how past customers rate their experience. If there are issues in the past, you can almost guarantee you will experience the same issues while working with the company. A great place to start is the Better Business Bureau. If the company is listed, consider the rating, the reason for the rating and the type of complaints that have been reported by previous customers.

One Size Fits All Promises

Does the company promise to resolve all of your tax problems before learning of your individual situation? Do they guarantee a certain amount of savings? Taxes are a complicated issue with many exceptions, conditions and restrictions which make each situation unique. While many cases may be similar in nature, it is impossible to know exactly how things will turn out without first reviewing your information. If the company promises otherwise, they are likely only interested in your money. The most common promise they offer is to settle your tax debts through an offer in compromise. This program is rarely accepted and only a very small percentage of people that owe taxes actually qualify for it. If a company even mentions this program before hearing about situation in detail then it is very likely they are not a reputable company.

Upfront Payments

Tax relief companies are in business to legitimately help taxpayers resolve their tax issues. While no one expects services for free, you should avoid companies which require payment for the first consultation or full payment in advance prior to any services being provided. If asked for full payment in advance, consider this a warning sign that you are probably dealing with a tax relief scam instead of a reputable tax relief company.

You Are Not Updated Regularly

While it may be nice to think about handing over some cash and never having to think of your tax problems again, it is not recommended. Many tax relief scams encourage clients to sit back, relax and let them take care of all your problems. Unfortunately, while you are breathing a sigh of relief that your tax problems are a thing of the past, the scammers could have moved on to their next target. A reputable company will ensure you are actively presented with feasible resolution options you have, and keeping you up-to-date on all activity until the tax problems are resolved.

They Contact You Out of the Blue

If you are struggling with back tax issues and don't know where to turn for help, a call from a tax relief company may seem like a blessing. In reality, unsolicited correspondence is nothing more than a sales pitch, and skilled sales people know how to read a customer and what things need to be said to make a sale. Taxpayers are encouraged to research several companies as well as initiate the communication to avoid heavy handed sales pitches delivered by a cold call.