Beware of scammers: “Fix your tax debts for pennies on the dollar” IS too good to be true.

BEWARE HIGH-VOLUME TAX HELP ADVERTISERS

Evening TV commercials offering to help taxpayers with tax debts.They promise to help you solve your delinquent tax problems. But are they legit?

High volume advertisers typically collect hefty retainer fees from a large number of burdened taxpayers, make quick, superficial efforts to protect the taxpayers, often accomplish nothing – then change their names and come back the next week with more high-volume advertising. Some evenings five or six different advertisers make their pitch on local T.V.

Some legitimate professionals can, indeed, help a burdened taxpayer – halt abusive IRS or state tax collection – intervene between the tax collector and the taxpayer – and in some cases reduce the balance owed and arrange payment plans.

But in too many cases they rely on volume – signing up large numbers of taxpayers, processing the cases quickly – too often with superficial efforts that bring no lasting results. After a brief delay, the tax collectors come back with a roar with seizures of property and income.

High-volume advertisers’ typical solution is to propose a compromise  – called an “offer in compromise” – with the Internal Revenue Service. An OIC can, in some cases, bring real results. And state tax collection may in some cases bring similar benefits. But in fact the tax collectors reject most offers.

An offer-in-compromise can substantially reduce the balance owed on back taxes, based on the taxpayer’s income and assets.
The typical high-volume advertisers are not lawyers, and lack the knowledge that attorneys have to achieve real results.
For example, non-attorneys often fail to consider discharging back taxes in bankruptcy. Some of these so-called tax relief experts don’t even know that in most cases delinquent taxes can be discharged in bankruptcy.
Only an attorney can represent taxpayers in bankruptcy, and typically only attorneys know the rules for discharging back taxes.

Bankruptcy has certain advantages over an offer-in-compromise. For example, while the IRS decides whether or not to accept an offer, it has no say in whether the taxes are wiped out in bankruptcy. And, often merely submitting an OIC does not halt tax levies on taxpayers’ paychecks and bank accounts, but filing bankruptcy immediately stops all tax collection, and again the IRS has no say in the matter. In some cases tax collectors must refund assets it seized, such as the taxpayer’s car. This is because while tax collectors are governed primarily by tax regulations, they are subject to bankruptcy rules that often over-ride the tax laws.

Non-attorney tax help firms can bring lasting results. But be wary of high-volume, high-advertising offers made on evening television. Consider consulting a local tax-help attorney first.

Call us and we’ll talk about the options to fix your tax debt.
This article was written by Morgan King, Esq., a California tax and bankruptcy attorney.  He has taught tax-bankruptcy rules to attorneys and enrolled agents across the nation, and is the author of the highly respected book, Discharging Taxes in Consumer Bankruptcy Cases, as well as books on IRS offers-in-compromise and IRS collection due process. He has practiced law for 45 years with a broad range of legal services.
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