Tax Settlement Scams: An Insider’s Guide to Finding a Licensed Professional
🛑 TL;DR: How to Spot a Tax Relief Scam
If you’re in a hurry, here is the “cheat sheet” to vetting any tax company:
- Check the “Who”: If the website doesn’t list the owners or specific licensed professionals (Enrolled Agents, CPAs, Attorneys), walk away.
- Ignore the “Rating”: A high BBB rating can be bought by simply responding to complaints. Read the actual reviews instead. Bad reviews from BBB are likely accurate. If someone other than a client writes a bad review, you can contact BBB, and they will verify, and if they can’t, the review is removed. You cannot, however, get a review removed from BBB. You can only respond to it
- Ask for Credentials: If you aren’t talking to a licensed pro with years of experience, you’re talking to a commissioned salesperson in a boiler room.
- The “Fresh Start” Reality Check: “Fresh Start” is not a settlement for less than what you owe. It provides for more flexible options for repayment. The only true way to settle for less than you owe is an Offer in Compromise, which requires a strict financial deep dive.
- No Quote Without Data: If they give you a “settlement amount” before looking at your financial documents, it is a scam.
Here are 7 rules to help you deal with tax relief company scams. 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, they all fall somewhere between mediocre results and outright SCAMS. I am going to give you a checklist 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 About Tax Relief Company Scams
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: Audit the Website to Avoid Tax Relief Scams
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 that does 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 in 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 taxes. 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 someone claims to be an expert, they should be able to prove it. Before moving forward, ensure they can answer the following:
- Proven Track Record: Have they personally settled $50,000,000 or more in tax debt?
- Educational Background: What is their specific tax-related education?
- Professional Experience: How many years of experience do they have in the tax settlement field?
- Strategic Insight: What is their expected resolution for your case, and what specific financial analysis led them to that conclusion?
- Verified Licensing: Are they a licensed professional, such as an Enrolled Agent, CPA, or Attorney?
Expert Insight: If you are speaking with someone who is unlicensed—like a former delivery driver turned “consultant”—you have no legal recourse if things go wrong. If they lack these credentials, MOVE ON.
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 the IRS.gov page, 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.
The “Fresh Start” Myth vs. Reality
Most of the ads you hear on the radio use the term “Fresh Start” as a catch-all for “forgiving your debt.” This is a classic tactic used to avoid tax relief scams that over-promise and under-deliver.
What is the Fresh Start Initiative?
In reality, the IRS Fresh Start Initiative was a series of changes made to the tax code to make it easier for taxpayers to manage debt. It didn’t create a “magic wand” to disappear your taxes; it simply adjusted the barriers to entry for existing programs.
Fresh Start vs. Offer in Compromise (OIC)
It is vital to understand the difference between a marketing buzzword and a legal tax resolution:
| Feature | Fresh Start Initiative | Offer in Compromise (OIC) |
| Primary Purpose | Updates IRS collection standards and payment terms. | A legal agreement to settle debt for less than the full amount. |
| Tax Reduction | Helps avoid liens and makes monthly payments easier. | Can reduce total debt to “pennies on the dollar” if you qualify. |
| Qualification | Broad; available to most taxpayers under certain debt limits. | Strict; based on “Reasonable Collection Potential” (assets/income). |
| Marketing Use | Used by “boiler rooms” to bait-and-switch clients. | The actual program used for debt settlement. |
Don’t Fall for the “Bandido” Marketing
Terms like “New IRS program forgiving millions” or “IRS Bandidos are knocking” are designed to trigger fear.
- The Truth: The “Fresh Start” program isn’t new—it was launched in 2011.
- The Catch: While it made the Offer in Compromise easier to get, the IRS still requires a deep dive into your financial life. If a company promises you a “Fresh Start” settlement without looking at your bank statements or assets first, hang up the phone.
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.
Confused by the fine print?
Don’t get caught in a boiler room. Talk to a licensed professional today.