Tax Settlement Scams: An Insider’s Guide to Finding a Licensed Professional

Let’s just say there are a lot of Johnny Come Lately in the Tax Relief space, and they have a particular model. In my opinion, there all fall somewhere between mediocre results and outright SCAMS. I am going to give you a check list of how to vet all tax relief companies. We are getting so many calls these days about different companies, and how they have charged thousands of dollars with no results and I research every one of them.

My 33 Years of Experience in Tax Settlement/Law/Finance: What You Need to Know

I am the principal of Tax Relief Advisers. I have a Juris Doctor in Law and an undergraduate degree in Finance. I am an IRS Enrolled Agent and have completed most of the training for Certified Managerial Accounting designation. I have been in the tax settlement space since 2013. I have operated several companies over the last 33 years and estimate over 4000 clients with Legal, Financial, and Tax Issues, AND you can always reach me directly if you have an issue. My personal contact information, as well as my business partner, Lisa Kugel, EA is clearly posted on our website—email, fax, direct phone, and address, and we provide this to call clients when we onboard.

Rule #1: Do some research (Audit the Website Before You Dial).

Go to the website before you call. Find out where the company is located. Does it tell you who owns the company? Does it say how long they have been in business? If the website starts with how much do you owe, MOVE ON.

Rule #2: Reread Rule #1

Rule #3: The Truth About Reviews

Reviews used to be a good way to determine how a company operates. This is what I would say: read the reviews and ignore the rating. BBB, I think is the best of the group because they contact the reviewer and verify. You can trust the bad reviews are accurate on BBB. After all, companies don’t hire people to write bad reviews. The only exception to an inaccurate bad review would be a competitor, etc. However, these can be easily removed because you can dispute that they are not a client, and BBB will verify. And BBB will not remove a bad review unless you can show it’s fake. 

The only thing I disapprove of with BBB is all you must do to maintain a high rating is respond to the review. One of the very largest companies out there now runs about 45-50% BAD reviews yet has an “A” BBB rating. So read the reviews. 

What I would say about YELP is YIKES, and Trustpilot, etc., are essentially paid reviews and they will remove whatever you want if you pay them $1200 month.

Aggregators are companies with names like Consumer Voice, Investopedia, Consumer Affairs, that give you a list of the 10 best tax relief companies, or 10 best dog washers etc. If you pay them $1500 a month they will put you on top of the list. 

Recently, a prospect told us he was talking to XYZ, and they were #1 with Forbes. Forbes has a company called Forbes Advisor this exact thing. Pay them, and they say you are number one and have Forbes branding. Here is the link: https://www.forbes.com/advisor/taxes/best-tax-relief/

I looked at XYZ’s website looks like a $500 website and could not find any information about the company. Some of them refer to our founder. Might want to call and ask if the founder has an ankle bracelet….?

Rule #4: Avoid the “Wall Street” Boiler Rooms

Do not call a company from a radio or TV spot. If you are thinking about calling, refer to Rule #1 before you do. The large companies saturating the market today are Wall Street backed groups. Mostly based Southern California (nothing against CA)

Their business model is this: hire commissioned salespeople who work in a boiler room and read from a script. Typically, they have no tax training. The issue is they don’t know a lot about ethics or tax. They are trained to SCARE the taxpayer. How do we know—because they call us for jobs and tell us how they worked. We don’t hire them, and we don’t have salespeople. We have Licensed Professionals and you’re never going to hear scare tactics or talk to someone who doesn’t know the IRS rules. So, you are off to a bad start with these other groups. The person who is selling you doesn’t know the problem, and you can’t set expectations. They want to charge as much as they can and get your credit card number.

Once you are a client, you may get assigned to a “manager” whom you likely will never be able to get in touch with. Who will be working your file—someone who is making $15-$20 an hour, mainly to collect information to prep taxes. The communication often breaks down, and nobody with serious credentials or the ability to do any kind of deep analysis is ever going to see your file, and you will never get a refund.

Rule #5: Demand Credentials from Anyone You Talk To.

If you are going to call yourself an expert tell me why you are an expert. Have  you personally settled $50,000,000 or more, what is your tax related education, what is your experience, what is your expectation of a resolution and how did you come to the conclusion.

Are they an Enrolled Agent, CPA, Attorney, ex-pizza delivery driver? If they are not licensed MOVE ON. You have no recourse if you are talking to an unlicensed person.

Rule #6: If the Settlement Isn’t in the Agreement, It Isn’t Real

The most abuse I see is the claim to be able to settle debt with the IRS. I have called fifty of these companies posing as a client. They don’t ask for any financial information, just how much I owe, and then they tell me how much they can settle for. Kind of hilarious since the settlement is based on financial condition.

A few interesting notes:

• The only settlement program the IRS has where you settle your debt completely for a reduced amount is the Offer in Compromise. It has been around a long time. Check out Wikipedia, as it offers a pretty good overview.
• Fresh Start does not settle a tax debt for an amount less than what you owe specifically. It is not “I owe $100,000, I will give you $1500.” That is an Offer in Compromise, but Fresh Start sounds good for marketing. Who doesn’t want a Fresh Start? Fresh Start allows for taxpayers to manage and reduce tax debt with more flexible terms, but it has amount owed limits. Fresh Start also made some modifications to the Offer in Compromise program making it easier to get an OIC.
• New IRS program forgiving millions, settle for pennies on the dollar, get a Fresh Start, IRS cracking down on delinquent taxes, the next knock on your door might be the IRS Bandidos, all good marketing copy but not very truthful.

Rule #7: Look for Personal Experience, Not Marketing Generalities

Ask for credentials. Because you likely don’t know much about this process, you can’t evaluate the accuracy of what you are being told unless you research. If you are getting generalities, a quick fix, or no clear expectation MOVE ON. Ask how big the company is and how long in business as I will assert larger companies provide little support and communication after you sign up.

There are some good providers out there, but they’re hard to find. Usually they are smaller and can’t spend millions on advertising. Who do you think is paying for all those TV and Radio ads? 

This process shouldn’t be scary; you are already stressed. There are many options for dealing with IRS issues, but you need someone with experience and a background. This industry shouldn’t be about taking advantage of people who are in a difficult situation. It should be about people and communication. About Value.