Tax Litigation Law Office of Scott Kauffman
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Tax relief companies rarely live up to their promises

“We’ve helped thousands of people settle their tax debt for a fraction of the amount owed.” You may have heard this type of claim or a similar one on the radio, television, a billboard or the internet. All you have to do is pay the company an upfront fee and they take care of the rest.

Last month, the Federal Trade Commission issued an advisory about these companies. Many taxpayers have filed complaints with the FTC after paying thousands in fees to these companies and getting no tax relief. These companies rarely refund fees and often just leave people in deeper financial distress.

When the size of a tax bill is unexpected, it can be impossible to pay in full. Doing nothing about the problem will only make it worse as penalties and interest increase the amount due.

Installment agreements can help

Programs are available from the IRS that may help. You can file an Installment Agreement Request with your return. When you owe less than $10,000 this will avoid further collection efforts (i.e. a tax lien or levy). However, it does not stop interest from accruing on the amount that you owe.

Streamlined installment agreements are also available when a tax debt is between $25,000 and $50,000. This allows you to repay the amount due in monthly payments over six years.

Settling for less than you owe

When circumstances prevent you from ever being able to pay a tax bill in full, an offer in compromise may provide the answer. This program was expanded under the IRS Fresh Start initiative, but it is still difficult to qualify for this program.

In many circumstances, an OIC might not be the right option even if you would qualify.

The tax settlement companies seem to refer to this program in their advertising, but they do not share that few people actually qualify. This is where the advice from a tax attorney is invaluable. An attorney can review your situation and provide a candid assessment of whether you might qualify before you waste money on fees for something that will not help.

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