Web Desk
If you owe back taxes, receiving an IRS notice and facing mounting penalties can feel overwhelming.
Many consider tax relief companies for help, especially when dealing with wage garnishments or liens.
However, the Federal Trade Commission (FTC) warns that some tax relief firms make false promises, charge high fees, and may leave you in a worse financial position.
To protect yourself, watch for these five signs of a tax relief scam.
1. Unsolicited Contact
Legitimate tax relief companies do not randomly contact individuals. If you receive an unexpected email, text, or call from a company claiming to offer tax relief, be cautious.
Some scammers even impersonate the IRS, urging immediate action.
A reputable company will not pressure you to sign up without a proper consultation.
Avoid sharing personal information or engaging with businesses that contact you out of the blue.
2. Upfront or Hidden Fees
While tax relief services come at a cost, be wary of companies demanding large upfront fees.
According to CBS News, an initial investigation may cost up to $1,500, with tax resolution fees ranging from $1,000 to $10,000.
However, the Minnesota Attorney General’s Office warns that upfront fees are illegal. Scammers may promise money-back guarantees to ease concerns but often fail to deliver results.
Additionally, some firms include hidden charges, such as maintenance fees, without providing clear service details. Always ask for full disclosure of costs before committing.
3. High-Pressure Tactics
Tax relief scammers often use fear to push victims into quick decisions. They may claim the IRS will seize your home, garnish your wages, or even have you arrested.
The Michigan Attorney General’s Office notes that legitimate tax firms will not use such aggressive tactics.
Be cautious of companies that refuse to answer questions, insist their offers are time-sensitive, or demand immediate payment.
Trustworthy firms provide clear answers and allow you to make informed decisions.
4. False Promises
While tax relief companies can negotiate with the IRS for better payment terms, they cannot guarantee total debt forgiveness or special hardship programs.
The IRS does not wipe out tax debts entirely without thorough documentation and qualification.
Scammers often lure victims with unrealistic claims, promising drastic reductions in taxes owed.
Instead, check the IRS website to see if you qualify for legitimate relief programs like an Offer in Compromise or penalty abatement.
5. Suspicious Company Information
Before working with any tax relief company, verify its legitimacy through trusted sources like the Better Business Bureau.
A real firm should have a verifiable track record, proper licensing, and positive independent reviews.
Even if a company has a professional website and glowing testimonials, it may still be fraudulent.
Be wary if you cannot confirm its credentials with the state’s department of commerce or attorney general’s office.
Protect Yourself from Scams
To avoid falling victim to a tax relief scam, always:
Research the company thoroughly.
Avoid unsolicited contacts and high-pressure sales tactics.
Never pay large upfront fees.
Verify all claims before agreeing to services.
Use official IRS tools to explore genuine relief options.
By staying vigilant, you can protect your finances and avoid falling prey to fraudulent tax relief schemes.
