Warning Signs of an IRS Tax Resolution Scam Company

Warning Signs of an IRS Tax Resolution Scam Company

Dealing with the IRS can be super stressful, especially if you owe back taxes. You may be tempted to hire a tax resolution company to help you negotiate with the IRS and settle your tax debt. But beware – some of these companies are total scams! Here’s how to spot the warning signs of a shady IRS tax resolution company.

They Promise Unrealistic Results

If a tax resolution company claims they can make your IRS tax debt go away completely or settle it for just pennies on the dollar, they’re probably lying. The IRS has very strict rules and procedures for settling tax debt through programs like Offer in Compromise. No company has some secret method to make the IRS bend the rules for you.

I’m not saying it’s impossible to settle with the IRS for less than you owe. But a realistic company will explain the IRS rules and give you a reasonable expectation of your chances, not promise a miracle.

They Want Large Upfront Fees

Many scam tax resolution firms will ask for very large upfront fees before doing any actual work on your case. We’re talking thousands of dollars. They may say these fees are for “retainer,” “administrative costs,” or “advanced work.”

Reputable companies typically charge affordable monthly fees, or fees based on the actual services they provide as they do work on your case. Giant upfront fees are a red flag.

They Ask You to Lie or Mislead the IRS

Obviously, you should never lie to the IRS! But some shady tax resolution companies actually encourage or advise their clients to fudge the truth on documents submitted to the IRS. They may tell you to under-report income or assets, exaggerate expenses, fail to disclose important information, and so on.

This type of fraud can land you in even more hot water with the IRS if discovered. Only work with an ethical tax resolution firm that is 100% truthful in all IRS communications.

Their Staff Lack Proper Credentials

Competent IRS tax resolution requires specialized legal, accounting, and tax expertise. Make sure any firm you consider hiring has licensed attorneys, CPAs, and enrolled agents (EAs) on staff. Ask for proof of their licenses and credentials.

Also do some research to confirm their licenses are legit and active. Scam companies may claim fake credentials or use “retired” professionals who no longer have active licenses.

They Won’t Provide References

Reputable tax resolution firms should be able to provide references from past clients who can vouch for their services. If a company won’t give you any names of previous customers you can contact, it’s wise to be very cautious.

Check out online reviews too, but take them with a grain of salt. Scam companies often pay for fake positive reviews to hide their shady track record.

They’re Aggressive and Pushy

Tax resolution scammers tend to use high-pressure sales tactics, trying to scare you into hiring them right away before you have time to thoroughly research them. They may say things like “Act now before the IRS garnishes your wages!” or “This is a limited time offer!”

A reputable firm will give you time to evaluate your options, check them out, and make an informed decision. High-pressure tactics are a big red flag of a potential scam.

Their Address is a PO Box

Most scam tax resolution firms operate virtually and only provide a PO box address, not a real street address. They want to be untraceable once they take your money and run.

Search online to find the company’s actual physical location and office. Beware if you can’t confirm a real street address and suite number.

Their Website is Amateurish

Scam tax resolution companies often have poorly made websites with spelling errors, bad grammar, broken links, and other signs of amateur work. A professional firm will have a high-quality, polished website.

Pay attention to little details on their site. If it seems sloppy, that could indicate the company itself is sloppy and unprofessional.

You Can’t Find Much About Them Online

Do thorough online research on any tax resolution company you consider hiring. Search for reviews, complaints, information about their staff, and anything else you can dig up.

Shady firms may scrub the internet to remove negative information. Limited online presence is suspicious – it means they likely changed names or try to avoid scrutiny.

They Make IRS Threats Against You

Unethical tax resolution companies may try to intimidate you by making up threats of dire IRS consequences like jail time or property seizures. They use scare tactics to pressure you into hiring them.

The IRS will not throw you in jail or seize your assets without extensive due process. Don’t fall for intimidation ploys – walk away from any firm that tries them.

Trust Your Gut Instinct

Sometimes a company just feels “off” – the staff seem shifty, the office looks rundown, their mannerisms make you uneasy. Always listen to your gut!

Tax resolution scammers are masters of manipulation and persuasion. But they often give off a bad vibe that you can sense if you pay attention. Go with your instinct if something feels wrong.

Finding a reputable tax resolution firm takes diligence. But it’s well worth the effort to avoid becoming the victim of a scam. Protect yourself by researching thoroughly and watching for these warning signs of shady behavior.

The IRS offers tips on choosing a tax return preparer and avoiding scams. Do your homework so you can find an ethical tax resolution firm to help you.