9 Tips to Avoid Unethical Tax Relief Companies to Settle Your IRS Debt
Because the IRS is increasing enforcement to unprecedented levels, there’s been an increase in the number of unethical tax relief scams preying on people who owe back taxes. This year we’ve already seen rising numbers of consumer complaints about these scams. In tough economic times, it’s especially important to not ignore IRS problems. Taxpayers must realize that they have to be careful when choosing a tax professional to resolve their back taxes and IRS problems.
Here are 9 tips for protecting yourself from tax resolution scams.
Tip #1: Beware of tax firms that overstate their success rate.
Avoid tax relief firms that overstate their success rate. According to Consumer Affairs, it’s not uncommon for firms to misrepresent their ability to provide help. In some instances, companies will misrepresent their staff’s professional skills and experience in addition to failing to provide promised services. Look for a firm that puts potential clients through a rigorous in-depth interview process to find out if they qualify for an IRS tax settlement – and will not allow a client to retain their services unless the taxpayer is a legitimate candidate.
Tip #2: Know what questions to ask before you hire your tax representation.
There are a number of important questions to ask your prospective tax attorney before hiring them on as your IRS battle-mates. In order to ensure that your tax attorney will be working in your best interest instead of simply charging you enormous service fees, you will need to treat your research process as you would a job interview.
Tip #3: Hire a firm that is responsive to your needs.
A tax attorney is responsive and will make sure you don’t pay a penny more than what you owe. They will take over all communication with the IRS and make sure you stop clocking interest and penalties. Unfortunately there are companies out there that won’t take you calls, don’t respond to the IRS and make your back taxes troubles much worse than if you never hired the unethical tax relief professional.
Tip #4: Qualified tax resolution professionals provide immediate relief through Power of Attorney. When you get tax help from a certified tax professional, you get the benefit of them working completely on your behalf and will file a tax Power of Attorney (POA) with the IRS. This will provide you with immediate relief because from this point on the IRS will be required to contact them instead of you. A separate POA may be required for any State problem.
Tip #5: Beware of firms that guarantee results without even seeing your information.
One of the hallmarks of an unethical tax company is someone who promises you a specific outcome without an in depth review of your specific tax matter. Every situation is unique and the IRS agent on the other side of the table is always an unknown factor. There are no guarantees in life. Anyone who gives you a guarantee is unrealistic and unprofessional at best, or a scam at worst. A Certified Tax Resolution Specialist will get to know their client’s specific problem and educate them on options for their specific case so that they have realistic expectations.
Tip #6: Know when to work directly with the IRS to resolve back taxes.
If your back taxes debt is less than $15,000, most tax specialists won’t take you as a client. A Certified Tax Resolution Specialist wants to create a win-win situation, where the taxpayer gets needed tax relief and they earn their fee. If your back taxes debt is relatively small (less than $15,000), most often you can work directly with the IRS to resolve you back taxes.
Tip #7: Understand the costs associated with resolving your specific IRS problem.
Unethical tax companies will often low-ball their representation fees, quoting a seemingly low cost but neglecting to you tell you that the average Offer in Compromise takes 6-10 months. Additionally, because a high percentage of Offers are rejected by the IRS, these cases often have to go to the appellate level – at which point these firms will then turn around and hit the client with additional appellate representation fees. Look for firms that charge a fixed fee for their tax resolution services and can explain exactly what will be involved with achieving a settlement for your specific IRS problem.
Tip #8: Know the truth about Offer in Compromise tax settlements.
A Certified Tax Resolution Specialist has a track record of success with the IRS. You get that success rate by negotiating realistic Offers in Compromise with the IRS. An IRS tax relief scam might give you an impressive number of Offers In Compromise they have filed, but the number of OICs a tax resolution firm files is not what matters. Find out what percentage of their Offers in Compromise are accepted by the IRS (their success rate). Because Certified Tax Resolution Specialists are usually realistic with the cases they file, they often have the best track record for getting Offers in Compromise accepted.
Tip #9: Know the difference between a tax specialist and a Certified Tax Resolution Specialist (CTRS)? Tax specialist has no meaning. What matters is being a Certified Resolution Specialist. Certified Tax Resolution Specialists are certified by the American Society of Tax Problem Solvers. The ASTPS is a national, not-for-profit organization of professionals who specialize in representing taxpayers before the IRS.
In order to obtain this certification, licensed professionals (tax attorneys, CPAs and enrolled agents) have to take and pass an exam administered by the ASTPS, prove directly related experience in the tax resolution niche (two years), and be a CPA, tax attorney or enrolled agent in good standing with their respective state that licenses/regulates them. A Certified tax Resolution Specialist is uniquely qualified to successfully solve IRS problems – from negotiating tax settlements and IRS payment plans to removing or modifying IRS and bank levies – day in and day out. So whether you are looking for a tax attorney or a firm comprised of attorneys, CPAs, and enrolled agents you can research the ASTPS site and click on Find a Tax Problem Solver to determine if they are Certified Tax Resolution Specialists.
To combat tax resolution scams, you’ve got to arm yourself with knowledge. But your best insurance to protect you from tax resolution scams is getting someone you know you can trust on your team.
For more information on how to resolve your back taxes and remove IRS bank levies, visit for a free tax relief consultation or call 866-IRS-PROBLEMS.