Radio stations across the country, especially in the south are deluged with companies that claim they can work with the IRS to reduce your tax debt. Can tax debt relief companies reduce your tax debt?
The short answer is maybe. Companies that claim they can reduce your tax debt are legal. However, it is important to be careful when choosing a “tax debt relief” company as there are several companies including those that appear major and who run many commercials on radio stations, that make promises they cannot keep, and some even completely scam taxpayers.
You Are Most Vulnerable When You Are Financially Desperate, There are scammer companies out there who depend on your lack of judgment…
When choosing a tax debt relief company,
- Be sure to do your research.
- Make sure the company is licensed and bonded
- The company must have a good reputation
You can start by checking resources like Google Bard for complaints against the company and Yelp. In Bard… type in a question like “Have there been complaints against (name of company)?” Also, make sure you ask about the company’s fees and how they determine the amount of your tax debt that can be reduced. MOST IMPORTANT ask for what they promise in writing. If they refuse, RUN!
Keep in mind there are some companies that pay people to give them fake positive reviews on Yelp to offset the complaints, you can almost always detect the paid comments when they are very brief or it’s overkill. Honest comments or people who have been taken advantage of will almost always be very detailed.
It is also important to be aware that there is no guarantee that a tax debt relief company will be able to reduce your tax debt. But there IS a guarantee that they will charge you which could make your situation WORSE. The IRS has strict rules about tax debt relief, and not all taxpayers are eligible.
If you are considering hiring a tax debt relief company, be sure to get everything in writing. This includes the company’s fees, the services they will provide, and the amount of your tax debt that they expect to reduce. You should also keep copies of all correspondence with the company, including emails, letters, and phone records.
Here are some tips for avoiding scams by tax debt relief companies:
- Be wary of companies that ask for upfront fees.
- Avoid companies that make promises that seem too good to be true.
- Be careful about giving out your personal information, such as your Social Security number or taxpayer identification number.
- Think twice about signing over Power of Attorney to a company, this means the IRS will not be able to talk to you if you have questions about your own taxes or to verify that they are doing what they claim they can do.
- If you are unsure about a tax debt relief company, you can report them to the IRS and your local or state agencies, again, check Google Bard for resources to file complaints.
- If the state agency or license board agrees with your claim and holds the company responsible, you can use that evidence to sue them.
If you are struggling to pay your taxes, there are other options available to you.
You can contact the IRS directly to discuss your options. Many people fear dealing the the IRS or other tax agencies but for the most part, they only come after you when you ignore them, they are almost always willing to work with you if you reach out to them.
In addition, several of these deceptive tax companies make false claims that they can help you reduce your taxes and there is no guarantee that they can do that. If they ask you for Power of Attorney and a payment plan each month while they work on your taxes, this can be a HUGE red flag considering that everything that they claim they can do YOU can do for a lot less money and time.
The money that you are paying them monthly could be going towards a payment plan with the IRS. It does not take months to work out a payment plan with the IRS as many of these companies claim, they may be stringing you along to collect as much money as possible and you could very well end up with no results or WORSE than when you started.
The IRS may be able to set up a payment plan or offer other relief options. You can also contact a tax professional, such as an enrolled agent or certified public accountant, for help. An enrolled agent is BEST In situations like these as they are required to keep up with current IRS laws and statutes.
“It’s impossible to reach the IRS by phone and it takes too long…”
You can actually fax (yes people still fax) them for a much faster response or have them call you back per their automated system, make sure you write down the agent’s name and number for future reference and for a letter indicating the conversation you have had with them and call in the middle of the week, either very early in the morning when they open of later when they close, some of them stay open past 5 pm unbeknownst to many.
If you are not satisfied with the resolution an IRS agent gives you, you can call back and get a completely different resolution from another agent that may be more to your ability and resources. The agents have autonomy as to how they can create payment plans and more.
