Debt Reduction Advice | Debt Reduction Advice

The tax season is here and this is the time of year consumers can expect to hear terms like “tax settlement specialist”. According to the advertisements this is someone who can help you settle a tax debt for pennies on the dollar. If the image of a snake oil salesman comes to mind, you would be pretty close to the truth.

Just because someone uses the word “tax” in their advertisement does not mean they are legitimate. In the minds of many consumers, no one would claim to serve as an intermediary between them and the Internal Revenue Service unless the company is honest and legitimate.

It is this kind of thinking that costs consumers millions of dollars every year in fees paid to companies they believed could help them get a tax debt settled. Though the idea of settling a tax debt for pennies on the dollar sounds wonderful, making it happen is extremely difficult. The IRS will only negotiate up to a point, and unless you are someone like Secretary of the Treasury Timothy Geithner, you will have to pay most or all of your tax bill.

Paying someone who is not a tax attorney to negotiate an IRS settlement is unnecessary. The IRS guarantees you legal representation should you need legal help in certain matters and are unable to afford hiring an attorney. But even more importantly, the IRS has a plan called offer-in-compromise where you ask them to let you clear a tax debt for less than the amount due.

All the tax settlement specialist is doing is selling consumers an offer-in-compromise. First of all, the offer-in-compromise is not accepted very often. The IRS seems to take the stand that if you can afford to pay part of the debt then you can probably pay all of the debt by making payments.

Second is the fact you can fill out your own offer-in-compromise and do not have to pay someone else to do so. In the opinion of consumer advocates, the businesses offering tax settlements are little more than consumer scams. The IRS rejects 75 percent of the offer-in-compromise applications no matter who makes the request.

The IRS can afford to wait. That’s the bottom line. It may take you a lifetime of payments to clear your tax debt, but the IRS does not care. They are not motivated to accept the offer-in-compromise. That’s why it is a virtual scam to tell people you can help them get their tax debt settled for pennies on the dollar. The odds of that happening are quite low.

How do you avoid this type of scam? First, you should avoid giving your money to anyone who only does tax settlement work through offer-in-compromise. Second, you should make your own offer-in-compromise. Third, you should never pay anyone fees that can amount to several thousand dollars unless you understand exactly what you are paying for. Blind trust will get you scammed every time.

To be honest, the IRS will probably come to believe you can pay your tax debt if you can afford to hire someone to help you get it settled. In other words, using a tax settlement specialist could cost you money for very little service and hurt your negations with the IRS.

Tax Specialist Scams Are Still Scams is a post from: Thistle Debt Consolidation