The majority of Americans are in debt.
While most people are in personal debt, such as medical or student loans, some are also in debt from back taxes.
Back taxes occur when you cannot pay your full tax bill. This may be as a result of improper budgeting, not understanding how taxes work or from unavoidable financial issues.
You’re likely aware that there are a number of tax relief companies that advertise their ability to pull you out of debt.
While reputable companies exist, scams abound.
Read on for information about how to spot a phoney tax relief company.
They Make Promises That Sound Too Good to Be True
Remember that old saying, “If it sounds too good to be true, it probably is”?
It applies to tax debt relief companies as well.
Some of them will offer to settle your debt for “pennies on the dollar,” which is a total misrepresentation.
The IRS will accept tax relief offers, sometimes for pennies on the dollar. However, they turn down most of these offers.
Tax relief fraudster tells you that they can settle your tax debt, often with a big down payment to them that can’t be refunded.
In most cases, the IRS will turn down their offer. This means you’ll be left with tax debt and out of pocket.
Tax Relief Companies That Make Outlandish Claims Are Likely Fraudulent
Have you ever been watching television or leafing through a magazine and seen a tax relief company state that they’ve never had an offer turned down?
If you have, run the other way.
That claim categorically is untrue. Every legitimate tax relief company will have the IRS turn down their offers on occasion. So, anyone who says otherwise is being patently dishonest.
Any legitimate tax relief company will let you know that some of their offers are turned down. However, they will work with you to make it less likely.
They Advertise on TV or on Billboards
Not every company that advertises on TV or on billboards is bad. They aren’t all scams, but you should be aware that a lot of them are.
Don’t use one of these companies without thoroughly checking them out first. Not only should you do your research by looking at online reviews, but you should also speak to others who have used them before.
Hearing first hand from a former customer who has no incentive to lie to you is your best bet for getting an accurate picture of the company.
They’re Not Actually Tax Relief Companies
Okay, this sounds super weird, but not all tax relief companies that advertise on TV and in other media are even tax relief companies. That’s why speaking to former clients and customers is so important.
Some of these companies are, in reality, marketing companies. Instead of providing you with the correct service, they’ll provide you with absolutely nothing and sell your information to other companies.
They do this by having you speak to them for a “consultation” and sending all of your info to a third party.
You’ll then get inundated with more tax relief companies that aren’t legitimate or are at least desperate enough to buy leads.
They Require Upfront Payments
If someone requires an upfront payment, especially if it is nonrefundable, you should run the other way. And never look back.
Often times, they’ll not only ask for an upfront payment, but they’ll also make a claim about how they’ll be able to get your tax written off without a problem. As we’ve already covered, there is no way a company can guarantee they will get the IRS to erase your debt.
They’ve Defrauded Other People
Some companies are just bad news. They operate under certain names, and once they have enough angry customers to run them out of town and tarnish their reputation, they change their names so they are no longer identifiable.
The IRS works to shut them down so that more people cannot be defrauded, but it is difficult when they’re elusive.
Because of this, you should be wary of any company that seems to have just started recently. Although new companies aren’t inherently scammers, they could be a new face of an old trick.
They Claim to Have Tax Attorneys and CPAs on Staff, but They’re a Tax Relief Company
Only a lawyer will have tax attorneys and CPAs on staff. A company that solely deals with tax debt relief will typically not have people with qualifications like this on staff.
If you need an attorney or a CPA to help you with your tax relief case, you should visit one instead of a tax debt relief company. They can help you out with your claims and ensure that you get the best outcome if the case has progressed to a level where you need legal involvement.
Avoiding scams with tax relief companies can be difficult if you don’t have a huge amount of experience with them or what to look for. However, if something “smells fishy” or you feel as though something might be “too good to be true,” be aware that it probably is.
Your gut feeling is almost always right, so listen to it. Your instincts, and a little know-how, can get you a long way.
If you have tax debt that you want to be absolved or help with, read our blog for more information and insight.