Be wary of companies promising to negotiate with the IRS on your behalf. Many are fraudulent. How To Avoid Getting Scammed By Fake Tax Relief Services.
By now most people have filed their tax returns or asked for an extension. While this provides a momentary respite from tax worries, nagging thoughts lurk in the back of many business owners’ minds: Will I get audited? Will the IRS dispute the amount I owe? For most people this is just normal anxiety associated with the unpleasantness of taxes. But for many people—especially small business owners—this mantra becomes reality.
In 2009 the IRS audited 1,425,888 returns which represent a little over 1 percent of total returns filed. 99 percent of these audited returns were for individuals, including those that don’t file a separate return for their business but instead attach a Schedule C to their returns. If you are audited or if the IRS arrives at a different conclusion than yours with respect to your tax bill, you have a problem. You could owe thousands of dollars and may not have the means to pay. What do you do? Most people would try to find a solution. Enter the tax resolution industry.
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What the tax resolution companies promise
Tax resolution companies—TRCs—promise to represent you and negotiate on your behalf with the IRS. The implicit promise is that by engaging one of these companies you will pay the IRS far less than the amount you actually owe. Many claim that they can negotiate your liability down to “pennies on the dollar.”
These claims are unrealistic. In many cases the tax resolution companies are engaged in fraudulent activities. Either way, it is very difficult for them to justify their exorbitant fees. Most recently Tax Masters, a leading tax resolution company based in Houston, was sued by the attorneys general of Texas and Minnesota for deceptive business practices. The company charges customers between $2,000 and $8,000 in fees to “stand between them and the IRS.” In 2010 they generated over $45 million in revenues.
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