What do these IRS “Tax Settlement” Companies Do?
Without naming or putting them all in one category, many of these “tax settlement” outfits and their “certified tax resolution specialists” operate largely the same way. While they claim to be staffed by a “dedicated staff of attorneys, CPAs and/or Enrolled Agents,” much of the initial and subsequent work is done by unlicensed salespeople.
Most of these establishments will ask how much tax you owe and take a fee upfront, without verifying your income or assets. While this may be perfectly legal, or their disclosure documents may protect them against any claims of fraud by their clients, I find the ethics of such a practice extremely questionable at best. If they don’t know your income, living expenses and value of your assets, they will not know if you qualify for an Offer in Compromise.
Once they’ve collected the fee, they may make certain filings with the Internal Revenue Service that temporarily stop any wage garnishment or levies on bank accounts. Many times, that is about the extent of their helpfulness. Interest and penalties continue to accrue, the outfit pretends to be working on your case, and depending on how many times you call them back, will make confusing requests for documentation from you, claim they never received what they need to process your case and then close your case. Eventually, the IRS reinstates the wage garnishment and/or bank levies, and you are right back where you started, and have lost any fees you paid them.
It’s ultimately up to you how you choose to resolve your back taxes. While these companies may play on your desperation and gloss over the seriousness of your situation, I prefer to be realistic, and might not always tell you what you want to hear because that wastes your time and mine. I will, however, always tell you what can most likely and not likely be done to settle your federal and/or state taxes and get your financial life back in order.
Contact us for an appointment today – 646-374-2TAX (2829) or (847)-595-0TAX (0829).