Tax Resolution Services Warning
You may be looking to hire a tax resolution services company to help you with an IRS or state tax debt. As a NY tax attorney that handles tax problems on daily basis, too many of my clients come to me after paying thousands of dollars to a tax resolution company and being left in a worse off position.
Perhaps you heard a commercial on the radio or clicked on an internet ad about reducing your tax debt. It sounds great and you get connected to a persuasive " tax consultant..."
In this article, I address what you need to know about hiring the right tax professional to help you solve your tax problems and why you should likely avoid tax resolution services companies.
The Ads Making False Promises
You may have heard the commercials or searched the internet and found those persuasive ads by tax resolution services companies stating “that your tax debt can be reduced to pennies on the dollar.”
" We can settle your tax debt for a fraction of what you owe..."
"We have tax attorneys on staff..."
“ As seen as on TV, CNBC, CNN, ESPN etc.”
Massive Internet Advertising Budgets
If you look above this article when you did your search on the internet, you will see several advertisements from tax resolution services companies making these false promises and....
"Selling you the dream..."
Many tax resolution services companies have very aggressive sales tactics that prey on your desperation to solve a very serious tax problem.
In many tax resolution services companies, high pressure sales people are employed to work on the “front lines.”
On the front lines of many of these tax resolution services companies are “tax consultants” or salespeople that paid on a percentage of “what they are able to sell you.”
The tax consultant usually takes inbound calls from the internet, radio, and television.
Sometimes, the tax resolution consultant is transferred “leads” from a telemarketer (more about that later).
You Will Get Dozens of Federal Tax Lien Letters
If a federal tax lien has been filed by the Internal Revenue Service or a tax warrant by New York State ( tax lien depending where you live), dozens of tax resolution services companies will send you letters making claims of setting your back tax debt.
A federal or state tax lien, once filed, becomes a matter of public record.
There are mailing list companies that comply lists of individuals and businesses that owe money to the IRS of State.
These lists are bought by many tax resolution services companies.
How do I know?
Many taxpayers that I assist with tax problems at my tax law firm often come to the office with stacks of these letters making false promises.
You May Receive Calls from Telemarketers
If the letters aren't bad enough, many of these companies have telemarketersthat will harass you several times a day.
Once you tax lien is filed at the County Clerk's office, it is a matter of public records and you are on their radar.
It is their job to call you and transfer you to a “closer" (tax consultant, representative, etc), who will sell you their services.
Both the opener and the closer and paid a commission based upon the amount of money you pay the tax debt relief company.
This is a true "boiler room" (high pressure sales floor) environment. You either "sell the lead" or you are fired.
If you own a business that owes back taxes, you will receive even more of these calls.
Expect dozens of calls from Colorado, California, and probably New York too.
Two Facts That May NOT Surprise You
Many of these tax resolution services companies are “opportunity seekers” looking to take advantage of people with tax problems in desperate straights. In fact:
1. Many have gotten in trouble with the FTC and Attorney General.
These aggressive sales tactics and false promises have caused many of these operations to be shut down by the Attorney General in their respective states.
2. Many tax resolution services companies are owned by high pressure salespeople.
Many of these tax resolution services companies started in Colorado, spread to California, and they are now in New York as well as many other states.
When these companies get closed down by the Attorney General in their respective state, they open under a different name.
"Tax Consultants" Really?
The salespeople at tax resolution services companies are given titles such as “ tax consultant, representative, account representative,” etc.
Many of the salespeople have little to no training in representing taxpayers before the IRS.
Rather, many so called tax consultants are hired off the internet responding to job postings for “closers.”
If you ever watched movies like “ Boiler Room“ or The Wolf of Wall Street,” you get the idea of how many of these firms are run.
The tax consultant earns a commission between 10% to 30% of what he or she sells you.
They don’t care what they say to sign you up…it’s not as though they have a law license to lose.
8 Common "Sales Pitches" You Will Hear
Here are some of the more common claims that you will hear and what the claims truly mean:
“We’re the most successful (largest) tax resolution services company”
What successful usually means is successful for the owner(s). What largest usually means is that they handle a lot of volume.
What that usually means for you is that a salesman will either talk or meet with you to sign you up; a low level clerk will handle the paperwork; and someone with authority will “rubber stamp” the case.
You should probably forget about any personal attention to your case.
“We have served over 5,000, 10,000, etc. clients”
That may mean something if you are a national hamburger fast food chain but not if you want personal attention to your very important tax problem.
I don’t think that you want to be another insignificant number in an “assembly line” tax firm. How important do you think your matter is to them?
“As seen on TV, CNBC, CNN, and ESPN…”
An advertisement or famous paid spokesperson does not make you credible. Anyone can pay for an advertisement.
They want you to believe that these prominent news stations endorsed the company. Meanwhile, they just paid for an advertisement on the station.
You must do your due diligence.
“The new tax law will make it easier on you….”
They want you to believe that a miraculous new law has been passed that will make the IRS friendly and accept anything you offer them.
That’s their way of getting you to think that they can achieve great results.
While tax laws do change all the time, these claims are typically not true.
“We are tax debt settlement specialists.”
Everyone that I speak to wants to “settle their tax debt.” The bad news is that not everyone qualifies.
The good news is that every tax problem has a solution and there are several solutions available to protect your interests.
While an Offer in Compromise is an excellent option, it doesn’t fit every case.
Any strategy, or combination of strategies, if they don’t fit your case, can cause more harm than good, and cost you unnecessary expenses to boot.
Just as in medicine, the wrong prescription can make you even sicker.
There are many providers of services who will submit your Offer in Compromise forms. These cut-rate “Offer Experts” do little more than mail the forms that you prepare to the IRS.
Anyone can mail in an IRS form. When you are paying a professional, you should get expert guidance, even if it’s not what you want to hear.
Not all of the available options are right for everyone. Real professionals don’t use a “one-size-fits-all” approach to force a single solution on every case.
“ We have tax attorneys on staff.”
When you review a website of the tax resolution services firm, you should look to see if the tax attorney that will be handling your tax problem. is listed on the website.
If the tax attorney is not listed on their website, you should ask “why not?”
The reason why is because many tax firms subcontract the work out.
During your initial consultation, you should ask to either speak to or meet with the tax attorney that will be handling your tax problem case from beginning to end.
If they give you the run around, hang up the phone.
"We’ll be able to solve your tax problem for a fraction of the amount owed…”
That may be possible after a thorough analysis ….but every person’s situation is different.
The tax consultant wants you to believe that everyone falls into the same situation.
“We’ll be able to immediately tell you how much we can save you….”
This is usually a bait and switch.
If they are not doing a THOROUGH ANALYSIS, then how can they possible know what your situation is and which of the all the available options is best for you.
That’s like a doctor giving you a prognosis without even examining you. If they can predict what the IRS will settle your case for, they should really be in the fortune telling business.
IRS Consumer Warning
It’s gotten so bad that the IRS issued a CONSUMER WARNING regarding these unfounded claims” which states in part:
The Internal Revenue Service today issued a consumer alert advising taxpayers to beware of promoters’ claims that tax debts can be settled for “pennies on the dollar” through the Offer in Compromise Program.
Such promoters make money by inappropriately advising indebted taxpayers to file an application for an offer in compromise with the IRS, promising unrealistic results, even when the taxpayers do not meet the requirements of the program. This bad advice costs taxpayers money and time…
“This program serves an important purpose. But we do warn taxpayers to watch out for unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” said IRS Commissioner Mark W. Everson. “Taxpayers should not be duped by high-priced promises.”… (emphasis added)
Should I hire a tax attorney?
Not all tax problems require the assistance of a tax attorney.
However, here are three common scenarios that routinely require professional assistance of a tax attorney:
1. Threat of an IRS levy, wage garnishment, or federal tax lien
2. You have unfiled tax returns
3. You owe money to the IRS and you cannot pay it
There are about ten to eleven steps that a tax attorney must perform in order to solve your tax problem under the best possible terms:
Submit a power of attorney and speak to the taxing authority about your tax problem ( not necessary if you are representing yourself)
Stop aggressive collection activity against you and/or your business
Review your collection notices and letters to determine the status of your tax matter and possible appeal rights
Obtain your tax transcripts on your behalf from the taxing authorities to determine whether the tax debt is correct and what the taxing authority will do next
Analyze and review your tax transcripts for expiration of the collection statute
Determine if the IRS have the right information on you
Make sure that all your tax returns are filed ( If not, we must file the tax returns a.s.a.p)
Review of your financials to determine your best tax resolution options
Protect you from further collection activity and negotiate a levy removal if there is a levy or garnishment in place
Implement the best tax resolution option for your specific situation
Negotiate with and fight the taxing authority to get the best possible tax resolution for you
Three Quick Tips
Be extremely careful what you say the taxing authorities. You will be likely asked to divulge financial information.
The IRS is not your friend and the person you are speaking to on the phone represents the interests of the IRS, not yours. In other words, don’t disclose information that you are not asked.
Don’t lie. At this point, you are probably only facing tax debt issues. You don’t want to make your back tax problem a criminal tax problem.
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