Tax Resolution Scams on the Rise: How to Avoid Tax Settlement and IRS Debt Relief Scams

Because the IRS is increasing enforcement to unprecedented levels, there's been an increase in the number of unethical tax resolution scams preying on people who owe back taxes. This year we've already seen rising numbers of consumer complaints about tax resolution 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 relief professional to resolve their back taxes and IRS problems. Here are 9 tips for protecting yourself from tax relief scams including how to choose a qualified Certified Tax Resolution Specialist or expert tax attorney.

Tax Relief Scam Tip #1: Beware of tax resolution firms that overstate their success rate.

One way to protect yourself from an unethical tax resolution firm is to avoid tax resolution firms that overstate their success rate. According to Consumer Affairs, it's not uncommon for firms to misrepresent their ability to provide tax help. In some instances, companies will misrepresent their staff's professional skills and experience in addition to failing to provide promised services. It's important that Americans beware of tax relief firms that overstate their ability to reduce IRS debt. Look for a Certified Tax Resolution Specialist 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 tax resolution services unless the taxpayer is a legitimate candidate for tax relief. This ethical and honest approach to tax resolution will guarantee that the Certified Tax Resolution Specialist you choose, chooses you too.

Tax Relief Scam 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 resolution firm 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. Here questions to ask before you hire your tax representation.

Tax Relief Scam Tip #3: Hire a firm that is responsive to your needs.

A Certified Tax Resolution Specialist is responsive and will make sure you don't pay a penny more than what you owe. A Certified Tax Resolution Specialist will take over all communication with the IRS and make sure you stop clocking interest and penalties. Unfortunately there are tax resolution scam 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. In addition to having a multi-year track record of success, Certified Tax Resolution Specialists have to keep up both continuing education and a high success rate with a wide variety of tax cases.

Tax Relief Scam Tip #4: Qualified tax resolution professionals provide immediate relief through Power of Attorney.

When you get tax help from a Certified Tax Resolution Specialist, you get the benefit of them working completely on your behalf. The Certified Tax Resolution Specialist 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 your Certified Tax Resolution Specialist instead of you. If they should happen to contact you, all you need to do is politely request that they contact your Certified Tax Resolution Specialist directly and provide them with the phone number. A separate POA may be required for any State problem.

Tax Relief Scam Tip #5: Beware of firms that guarantee results without even seeing your information.

One of the hallmarks of the tax resolution scam 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 tax resolution scam at worst. A Certified Tax Resolution Specialist will get to know their client's specific problem and educate them on tax resolution options for their specific case so that they have realistic expectations.

Tax Relief Scam 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 Certified Tax Resolution 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 the Certified Tax Resolution Specialist earns 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. Check out: Tax Attorney Tips: How To Beat an IRS Audit Without a Tax Lawyer.

Tax Relief Scam Tip #7: Understand the costs associated with resolving your specific IRS problem.

Tax resolution scams 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.

Tax Relief Scam 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.

Tax Relief Scam 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 relief 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.


Michael Rozbruch, one of the nation's leading tax experts, is a Certified Tax Resolution Specialist (CTRS), licensed CPA in the state of Maryland and CEO & founder of Tax Resolution Services. He teams up with an expert staff of tax attorneys, CPAs, and tax relief professionals to help individuals and small businesses solve their IRS problems with tax liens, unfiled back taxes, offers in compromise, wage levies, tax relief, delinquent re...

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