FTC Halts Tax Relief Fraudsters
The Federal Trade Commission filed a complaint last week with a federal judge to halt what was reportedly an organization devoted to tricking people out of money by promising to help with tax debts.
Tax Debt, Debt Relief Scams and You
Like so many other debt relief scams, this one is particularly difficult to stomach because it preyed on consumers who could least afford to lose the money they allegedly paid to the fraudsters. According to the FTC, here’s how the scam worked:
- False promises of debt help: In TV, radio and Internet ads, the company (called American Tax Relief LLC) reportedly claimed that it could settle consumers’ back tax debt for only a portion of the total amount. The company also apparently referred to part of the IRS’s tax code that allows, in very limited circumstances, an “offer in compromise” for citizens truly unable to pay the taxes they owe.
- Fake “tax consultants”: When victims called the company’s toll-free line, they were reportedly connected with fraudsters posing as tax analysts and told, in almost every case, that they could qualify for one of the IRS’s “special programs.”
- Hefty upfront fees: Before offering customers the help they promised, sources note that the company charged large upfront fees (ranging from $3,200 to $25,000).
- No real help: Because the company was offering a service it could not realistically provide to so many people, it never actually gave customers any significant benefit for their payments.
Tax Debt Is Non-Dischargeable in Bankruptcy
Like child support, federally funded student loans and criminal fines, tax debts are typically non-dischargeable in bankruptcy court and are otherwise very difficult to eliminate in any way besides paying them. If you’re struggling to make payments on back taxes, you may have some options:
- Installment payment plans: These plans, which individual taxpayers can arrange with the IRS, work much like any installment loan. They let those who are struggling financially catch up on their tax debt by making smaller payments over a period of time. While this may translate to paying more in total (because of interest rates and penalty charges), it’s often a workable alternative for those who cannot afford a single lump payment.
- Offer in compromise: These agreements are much rarer because they involve the IRS settling a debt with a taxpayer for less than the total amount the taxpayer owes. Generally speaking, only those in extreme financial circumstances will qualify for offers in compromise.
Lavish Living: Insult to Injury
Perhaps the most galling part of the fraud case halted at the FTC’s request is that the alleged fraudsters were reportedly living lavish lifestyles: driving expensive cars, residing in pricey homes, and paying for it all with ill-gotten funds from people struggling to stay afloat financially.
Similar Posts:
- Bankruptcy Alphabet – O is for Offer in Compromise
- FTC Halts Robocall Credit Card Scam
- Mortgage Scammers on the Loose
- The Importance Of Debt Management
- Be Wary of Credit Repair & Debt Settlement Promises
Leave a Reply