Beware Tax Debt Relief Scams

The Truth About “Tax Resolution Companies.”

If you’ve decided to hire a tax professional to help with your tax debt, your first thing that might come to mind is one of those tax debt relief advertisements you’ve heard on TV or the radio. These ads usually make one or more of the following claims:

  •   “We’ve helped thousands of people settle their tax debt for a fraction of the amount owed.”
  •    “We stop wage garnishments, levies, property seizures, and unbearable monthly payments.”
  •    “We can significantly reduce your tax debt. Call for a free consultation.”

To the unsuspecting taxpayer, these claims sound very attractive. However, you should be very wary of these claims and the tax debt relief companies that use them. More often than not, these companies are looking to scam people like you out of their money with false promises and dishonest practices.

Many of these companies shut down after thousands of complaints are filed against them, only to reopen six months later under a new name.  Several of these companies were so egregious that the US Department of Justice stepped in and closed them down, and even filed criminal charges in some cases against the owners.  Some you might of heard of in the news include:

  • J.K. Harris: At one time the nation’s largest tax resolution company, J.K. Harris was sued by more than 20 state attorney generals for charging clients unethical fees and promising clients they qualified for debt relief programs when in fact they did not.
  • American Tax Relief: Shut down in 2010, American Tax Relief used deceptive trade practices and charged clients up to $25,000 each for tax relief services they never provided.
  • Tax Masters: Tax Masters became a publicly traded company in 2010, but was later sued by the Texas Attorney General on behalf of over 1,000 clients who the company had defrauded with deceptive advertising and billing practices.
  • Roni Deutch: Known in California as the “Tax Lady,” Roni Deutch was disbarred for deceptive trade practices and sued for $39 million by 4,000 former clients.

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