Tax Relief Scams: Spotting & Avoiding an IRS Tax Relief Scam

As consumers continue to struggle with mounting tax problems, and the IRS steps up enforcement, some unscrupulous tax relief agencies increasingly are taking advantage of unsuspecting taxpayers looking for assistance with their tax problems. If you need help dealing with your tax issue and choose to enlist the assistance of a tax relief agency, make sure that you choose your agency wisely, and guard against tax relief scams that may end up costing you even more.

The following are some common characteristics of tax relief agencies that might be scams.

• Requires Full Payment From You Upfront – An unsavory tax relief agency often will require you to pay the entire fee upfront before the agency begins work on your case. This type of agency may ask you for credit card or bank account information before asking you anything else about your case. Asking for full payment of the agency’s fees upfront is a red flag that may indicate an IRS tax relief scam.
• Guarantees You Relief No Matter What Your Situation – Every person facing tax problems has a unique situation. While tax relief agencies may be able to help you in some circumstances, there are other situations where they will be unable to help you. It is also highly unlikely that you will end up repaying only a small amount of a large amount owed (be very weary if they promise an offer in compromise settlement). Do not believe a tax relief agency that promises you relief no matter what your situation.
• Accepts All Tax Relief Cases – Tax relief agencies that take on the cases of all taxpayers seeking help are likely simply trying to make money. As mentioned above, no tax relief agency can provide real assistance in every case. Any tax relief agency that promises to do so is not being truthful with you.
• Offers You a 30-Day Money Back Guarantee – Again, no tax relief agency can provide a taxpayer with relief in every set of circumstances. Any agency that offers you such a guarantee is probably not legitimate.
• Makes All the Decisions For You – Any good tax relief agency should thoroughly analyze your case and explain all of your options. The ultimate decision as to how to handle your tax problem should be made by you, not by a tax relief agency so that you are totally aware of all risks and consequences of the decision that you are making.
• Offers You a Fee that May Increase Throughout Your Case – Reputable tax relief agencies typically charge you a set flat fee that does not change throughout your case. Tax relief scams often charge you a low initial fee, only to require additional fees as your case requires further action or lasts for a longer period of time.
• Exhibits Bad Ratings or Comments by Consumers – The Better Business Bureau often will list legitimate, successful tax relief agencies as having high ratings. Likewise, agencies who operate scams or otherwise illegitimate tax relief agencies will not have high ratings with companies like the Better Business Bureau or online resources that list consumer reviews of tax relief agencies.
• Contacts You Through a Cold Call – Legitimate tax relief agencies do not contact random taxpayers in order to solicit their business. Rather, those agencies wait to directly hear from taxpayers who need help. If a tax relief agency is soliciting your business, it is one indication that it might be a tax relief scam.
• Pressures You to Quickly Accept Their Services – Tax relief agencies that seek to scam people tend to use high-pressure rush tactics in order to get you to use their services. By not giving you time to change your mind, giving you quick deadlines to accept their assistance, or warning you of the dire consequences that you could face without their help, these scam operations try to get your money upfront, even if they ultimately are unable to assist you with your tax problem.

Avoiding tax relief agencies with the above characteristics will greatly increase your chances of selecting a legitimate tax relief agency that can provide you the best assistance available for your particular situation. Taking the time to discover whether any of these red flags exist in different tax relief agencies before committing to a certain agency is essential to achieving the best outcome for your case.