5 Telltale Signs You’re Dealing With a Tax Relief Scammer
Written by
Ashley Donohoe
Edited by
Amber Barkley
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If you’re behind on your taxes, getting the notice from the IRS and facing more costs in interest and penalties can seem overwhelming. You might consider tax relief companies if you’re not sure how to handle your situation with the IRS directly or if you’re already having issues like wage garnishments or liens.
Unfortunately, the Federal Trade Commission cautioned that some tax relief firms offer false promises, charge expensive fees and potentially leave you in a worse tax debt situation. To help protect yourself, watch out for these five telltale signs that you’re dealing with a tax relief scammer.
Next, check out which scams you should watch out for as you file your taxes.
Unsolicited Contact
If you get some communication from a tax relief company you’ve never interacted with, you’re likely dealing with a scammer, according to the Texas Office of the Attorney General. It might come in the form of an email or a text with a link to apply for immediate tax relief through a special program, or an IRS impersonator might call about settling your unpaid taxes.
If it were a legitimate company, you’d likely be the first to reach out, and you’d have a thorough consultation before the company moves forward with any tax relief plan. So, avoid interacting with random businesses or supposed IRS agents who contact you unsolicited — and never give them your private information.
Upfront or Confusing Fees
It’s normal for tax relief companies to charge fees for their services. According to CBS News, you might pay up as high as $1,500 for an initial investigation, plus between $1,000 and $10,000 for tax resolution.
However, the Minnesota Attorney General’s Office warned that upfront fees aren’t legal. Scammers might want a hefty sum before working on your case and mention a money-back guarantee to help relieve your nerves. Unfortunately, you could end up both losing your money and never getting tax relief, so look for companies with free consultations and plans.
Confusing fees are another red flag for a tax relief scam. A company might quote you a flat rate but include fine print excluding certain services you’ll need, or you might pay a monthly maintenance fee that drags out without any tax relief results. Always ask for the details upfront, verify the refund policy and avoid working with firms that don’t clearly disclose costs.
Pushy Tactics
The Michigan Department of Attorney General noted that tax relief scammers often use pushy tactics, like saying you must handle your tax debt now so the IRS doesn’t put a lien on your house or take your pay. Plus, the IRS warned some scammers even turn to threats of arrest, which usually won’t happen just for falling behind on your taxes.
Some other red flags to watch for include tax relief companies not wanting to answer questions, saying their programs are only for a limited time or pushing you to provide personal information or money immediately. Legitimate companies will answer your questions and not intimidate you into deciding to work with them.
Unrealistic Promises
Legitimate tax relief companies can help you negotiate your tax debt amount, apply for a more budget-friendly installment plan or seek other relief options the IRS offers. However, they can’t claim that you won’t need to pay most of your tax debt or promise that the IRS will approve you for a non-existent hardship program or wipe all your interest and penalties.
You’ll need to submit documentation to the IRS and meet any requirements for the tax relief option you’re seeking. So, don’t fall for tax relief scammers who get your hopes up, take your money and leave you disappointed. The IRS recommended using its online tools to see if you qualify for relief programs, like an offer in compromise or penalty abatement.
Questionable Companies
If you can’t find the company’s information and customer reviews from reputable sources, like the Better Business Bureau, consider that you’re probably dealing with a tax relief scammer. The same applies if you can’t confirm the tax relief company is legitimate and licensed through the state department of commerce or attorney general’s office.
Otherwise, be suspicious, even if the tax relief company seems to have a professional website with positive testimonials and claims of having credentialed tax experts and attorneys on staff. You might be dealing with an illegal company that set the site up to trick taxpayers out of money.
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