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Tax Defense Network

Tax Resolution Companies and Offer in Compromise

May 10, 2013

Taxpayers who have tax debt often use tax resolution companies to help resolve their debt. Legitimate tax services provide accurate information to taxpayers in advertisements and during the initial consultation. Fraudulent tax services, on the other hand, manipulate facts to dupe taxpayers into hiring their services.

The IRS debt payment plan that many scam tax services, such as Tax Masters, American Tax Relief and Roni Deutch, abused to trap customers was an Offer in Compromise. It is an IRS debt reduction plan where taxpayers can get a substantial reduction in their debt if they qualify.

Fraudulent tax companies only tell taxpayers half of the story, and do not reveal that an Offer in Compromise has strict qualifying factors that few taxpayers are eligible for. Before qualifying a taxpayer for a debt reduction plan, such as an Offer in Compromise or a Partial Pay Installment Agreement, the IRS takes into account all assets and income sources of the taxpayer. The IRS suggests selling assets or taking a loan to fulfill the tax debt in cases where doing so would not put taxpayers in a financial crisis.

As tax debt reduction may sound appealing to taxpayers with tax debt, fraudulent tax companies use the plan to exploit the vulnerability of taxpayers with little financial resources. These companies charge bloated upfront fees, and after pocketing the money, neglect the case, sometimes complicating it because of their incompetence or carelessness.

Before contacting a tax resolution company, taxpayers should know the basics of IRS payment plans and what they can hope to achieve. Authentic tax services will always present a realistic picture of what it can do for its clients. Taxpayers must look for honesty and transparency before hiring a tax company for a tax debt resolution

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