You owe the IRS money. You know you owe the IRS money. You may have even set up an installment agreement with the IRS that you have been faithfully paying for a while. But the next thing you know, your phone is blowing up, and your mailbox is overflowing with unsolicited ads from any number of the thousands of “tax resolution” or “tax relief” companies around the country.
The messages take many forms. Some seem to be nice and helpful – “we can help you reduce the amount you owe the IRS.” Others are more threatening—“call us now or your accounts will be levied.” Others are downright fraudulent. We have seen letters that purport to be sent from an IRS employee donning a slightly modified version of the seal of the Department of Treasury. Some even threaten you could be subject to criminal penalties if you don’t call right away. Most, if not all, are scams.
This is a different scam than the one identified by the IRS where the caller claims an IRS Agent is on his way to arrest you if you don’t immediately send a $5,000 gift card to a PO Box. These are actual, legal businesses, that use the public’s fear and intimidation of the IRS to bilk thousands of dollars from fearful taxpayers, often on false promises and hopes.
How did they find you; you might ask? Most of these firms spend their days combing the public records around the country looking for Notices of Federal Tax Lien filings (or contract with companies who do). Often times, they know about the lien before you get the official notice from the IRS. Your shock and surprise make you an easy mark.
Once they have you, they will use any number of tactics to get you to sign up with them. It might be the promise of saving you money. It might be the threat of possible criminal prosecution. Either way, the folks on the phone are not experts in what they are selling, nor could they help you with the problem. They are call-center salesman whose only job is to sign you up and get you in the door—and will tell you anything to make that happen.
Often times, they will offer you a flat fee arrangement – “we will help you out for $5,000, $6,000 or even $10,000.” While this may seem like a bargain, sometimes the best result they can and will get for you can be completed in a 30-minute phone call with the IRS; something you could easily do on your own with limited to no risk.
Other times, these tax resolution firms will actually make things much worse. We have seen instances where the path they take a taxpayer down precludes or hampers our ability to resolve the case on a more favorable basis. We have even seen instances where bad advice from a tax relief firm has brought the client under criminal scrutiny.
Don’t fall victim to these tactics. For sure, the IRS can be an intimidating creditor. But done properly by those who truly care for their client’s interest over their own, the IRS can be managed. Not everyone can settle their tax debt for pennies on the dollar, so work with a reputable professional with a lot of tax controversy experience who will provide honest and reliable advice on the best, and most efficient means of resolving your liabilities.