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A reader keeps hearing commercials about "settling back taxes."

2 minute read

Question: I hear these commercials on the radio for tax relief. One of them has Alan Thicke, the ’80s TV actor. He says “the IRS is cracking down this year, you need to take action now.” He says his “team” can get me the “best settlement possible.” How is that so? Is this a scam?

— Brian in Arizona

Howard Dvorkin CPA answers…

Howard Dvorkin on how to get out of debt fastFirst, the IRS isn’t cracking down “this year” — it cracks down every year. If you owe back taxes, the IRS will find you. If not today, then soon.

Second, there are many legitimate firms that can help you negotiate with the IRS for back taxes, tax liens, and tax penalties. Then again, there are many who promise much more than they deliver, and charge much more than they should.

So what should you look for in a firm that promises to settle your tax problems?

Five key questions…

  1. Are they experienced tax attorneys? If not, they can’t really help you. A law degree is not enough.
  2. What does the Better Business Bureau think? Don’t go anywhere that doesn’t have an A-plus rating from the independent BBB.
  3. What do satisfied customers think? The best firms actually post video testimonials.
  4. Do you get a plan or a promise? We’re all familiar with sales talk: the hype, the vague reassurances. The best firms give you the facts in plain English.
  5. Do they want you to pay in advance? That’s the telltale sign of a disreputable firm. In fact, a reputable firm will answer all your questions about pricing, but never charge you up front.

If you don’t want to spend hours sifting through tax attorney websites, Debt.com offers referrals to legitimate firms that not only obey all the rules I cited above, they also must sign Debt.com’s Code of Ethics.

I always urge people with tax problems to carefully consider seeking help. Frankly, the IRS doesn’t care if you seek help, and it doesn’t care if you receive bad advice. It simply wants to resolve issues as fast as possible, since it has a huge backlog of cases and an ever-shrinking staff to work through them. So if you do hire a flimsy firm, you could end up owing the IRS more money.

Just to stress what’s at the end of the video: If you receive a suspicious IRS letter, go to the U.S. Treasury’s scam alert webpage to learn more. You can also call 800-366-4484 to report it. If you’re concerned about these scams in general, and about identity theft in particular, I suggest you read Debt.com’s report on Identity Theft Basics.

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Have a debt question?

Email your question to editor@debt.com and Howard Dvorkin will review it. Dvorkin is a  CPA, chairman of Debt.com, and author of two personal finance books, Credit Hell: How to Dig Yourself Out of Debt and Power Up: Taking Charge of Your Financial Destiny.

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About the Author

Howard Dvorkin, CPA

Howard Dvorkin, CPA

I’m a certified public accountant who has authored two books on getting out of debt, Credit Hell and Power Up, and I am one of the personal finance experts for Debt.com. I have focused my professional endeavors in the consumer finance, technology, media and real estate industries creating not only Debt.com, but also Financial Apps and Start Fresh Today, among others. My personal finance advice has been included in countless articles, and has appeared in the New York Times, the Washington Post, Forbes and Entrepreneur as well as virtually every national and local newspaper in the country. Everyone should have a reason for living that’s bigger than themselves, and besides my family, mine is this: Teaching Americans how to live happily within their means. To me, money is not the root of all evil. Poor money management is. Money cannot buy happiness, but going into debt always buys misery. That’s why I launched Debt.com. I’m glad you’re here.

Published by Debt.com, LLC