FTC WARNS OF DECEPTIVE PRACTICES
BY TAX RELIEF AGENCIES
With tax filing season just around the corner, hundreds of thousands of U.S. Taxpayer will face new or additional tax debts that they may not have the ability to fully pay. The U.S. Federal Trade Commission (FTC) is fully aware of the unscrupulous practices of many of the so-called "tax relief agencies" that make misleading, deceptive, or false claims to assist taxpayers with the resolution of unpaid federal tax liabilities owed to the Internal Revenue Service (IRS). The FTC notes that tax relief businesses commonly turn to radio, television, and the Internet to advertise help for taxpayers.
The FTC warns taxpayers, if you pay these tax relief companies an upfront fee, which oftentimes can be in the thousands of dollars, these companies allege they can reduce or even eliminate your tax debts and stop back-tax collection by applying for what are, in fact, legitimate tax relief programs offered by the Service. However, the FTC notes that, "...the truth is that most taxpayers don't qualify for the programs these fraudsters hawk, their companies don't settle the tax debt, and in many cases don't even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don't provide refunds, and leave people even further in debt."
There is a long, established history of taxpayers who have fallen unsuspecting victim to many of these tax relief companies. These companies oftentimes claim that a tax attorney will handle a taxpayer's case, when in fact, this rarely happens at all. In fact, many of the tax relief agencies are merely "enrolled agents" requiring nominal education and experience. Many taxpayers who have filed complaints with the FTC reported that, after signing up with some of these companies and in the tens of thousands of dollars in fees, many of the tax relief companies misappopriated their money by making unauthorized charges to their credit cards or withdrawals from their bank accounts. In fact, former tax relief outfits such as Tax Masters and American Tax Relief have been investigated and been brought up on criminal charges by the FTC and various states' attorney general's offices.
The Office of Professional Responsibility of the IRS investigates questionable practices in the tax debt resolution industry. The FTC suggests that taxpayers report problems to the IRS on Form 14157 (Complaint: Tax Return Preparer). The IRS Return Preparer Office will process the complaint and, if appropriate, submit it to the IRS Office of Professional Responsibility for investigation. You also may file a complaint with the FTC online or by phone: call 1-877-FTC-HELP. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Chicago Tax Attorney Cameron Monti, a Partner with the law firm Howard & Howard Attorneys PLLC, who handles client matters involving federal and state tax controversy and audit defense, cautions all taxpayers do their homework before hiring any tax professional.
"If a tax relief company makes any promise of relief or assistance that seems too good to be true, or they do not ask for any detailed financial information about your income, assets, and expenses prior to proposing options, you should be suspicious and proceed with caution," Monti warns. "It is not uncommon for taxpayers to receive misleading promises of abatement of penalties or tax settlements 'for pennies on the dollar.' Make no mistake - there are viable options for taxpayers to settle their personal income or business tax debts. Unfortunately, however, the trouble for most taxpayers is trying to sort through the seemingly endless amount of misleading claims from truth and reality."
Attorney Monti further suggests that, "It is strongly recommended that taxpayers do their due diligence and search for client reviews before hiring a representative. Be sure to confirm the tax professional has ample experience and education prior to handing over a large upfront fee or retainer. A little bit of time and effort invested from the outset, will ultimately save a taxpayer significant time, money, and aggravation in the end. Trust is key."
The FTC warns taxpayers, if you pay these tax relief companies an upfront fee, which oftentimes can be in the thousands of dollars, these companies allege they can reduce or even eliminate your tax debts and stop back-tax collection by applying for what are, in fact, legitimate tax relief programs offered by the Service. However, the FTC notes that, "...the truth is that most taxpayers don't qualify for the programs these fraudsters hawk, their companies don't settle the tax debt, and in many cases don't even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned. Adding insult to injury, some of these companies don't provide refunds, and leave people even further in debt."
There is a long, established history of taxpayers who have fallen unsuspecting victim to many of these tax relief companies. These companies oftentimes claim that a tax attorney will handle a taxpayer's case, when in fact, this rarely happens at all. In fact, many of the tax relief agencies are merely "enrolled agents" requiring nominal education and experience. Many taxpayers who have filed complaints with the FTC reported that, after signing up with some of these companies and in the tens of thousands of dollars in fees, many of the tax relief companies misappopriated their money by making unauthorized charges to their credit cards or withdrawals from their bank accounts. In fact, former tax relief outfits such as Tax Masters and American Tax Relief have been investigated and been brought up on criminal charges by the FTC and various states' attorney general's offices.
The Office of Professional Responsibility of the IRS investigates questionable practices in the tax debt resolution industry. The FTC suggests that taxpayers report problems to the IRS on Form 14157 (Complaint: Tax Return Preparer). The IRS Return Preparer Office will process the complaint and, if appropriate, submit it to the IRS Office of Professional Responsibility for investigation. You also may file a complaint with the FTC online or by phone: call 1-877-FTC-HELP. The FTC enters consumer complaints into the Consumer Sentinel Network, a secure online database and investigative tool used by hundreds of civil and criminal law enforcement agencies in the U.S. and abroad.
Chicago Tax Attorney Cameron Monti, a Partner with the law firm Howard & Howard Attorneys PLLC, who handles client matters involving federal and state tax controversy and audit defense, cautions all taxpayers do their homework before hiring any tax professional.
"If a tax relief company makes any promise of relief or assistance that seems too good to be true, or they do not ask for any detailed financial information about your income, assets, and expenses prior to proposing options, you should be suspicious and proceed with caution," Monti warns. "It is not uncommon for taxpayers to receive misleading promises of abatement of penalties or tax settlements 'for pennies on the dollar.' Make no mistake - there are viable options for taxpayers to settle their personal income or business tax debts. Unfortunately, however, the trouble for most taxpayers is trying to sort through the seemingly endless amount of misleading claims from truth and reality."
Attorney Monti further suggests that, "It is strongly recommended that taxpayers do their due diligence and search for client reviews before hiring a representative. Be sure to confirm the tax professional has ample experience and education prior to handing over a large upfront fee or retainer. A little bit of time and effort invested from the outset, will ultimately save a taxpayer significant time, money, and aggravation in the end. Trust is key."
TO SPEAK WITH TAX ATTORNEY CAMERON MONTI
CALL 630.334.7605
Cameron R. Monti is a Tax and Corporate Law Attorney and Partner of the Chicago office of the law firm Howard & Howard Attorneys, PLLC. Attorney Monti serves as an Adjunct Tax Law Professor at The John Marshall Law School in Chicago. He also serves as outside general counsel to business and corporations throughout the Midwest.