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TAXPAYERS: BEWARE OF MISLEADING PROMISES FROM TAX RELIEF FIRMS

With each new tax filing season, 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 misaleading or patently false claims and offers to assist taxpayers with 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 thousands of dollars, these companies allege they can reduce or even eliminate your tax debts and stop back-tax collection by applying for 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 these tax relief companies. These companies oftentimes claim a tax attorney will handle a taxpayer's case, when in fact, this rarely happens. They also make misleading or false promises of IRS levy releases, or settlements for "pennies on the dollar."

Many taxpayers who have filed complaints with the FTC reported that, after signing up with some of these companies and paying thousands of dollars in upfront fees, the 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 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 of the law firm Howard & Howard Attorneys PLLC, who handles client matters involving federal and state tax controversey, cautions taxpayers do their homework before hiring one of the tax relief companies.

"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.

Attorney Monti further suggests that, "Taxpayers should do their homework and look for client reviews. Confirm the experience and education of the tax professional before handing over a large upfront fee. A little bit of time and effort invested initially, may ultimately save a taxpayer significant time, money, and aggravation in the long-run."