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When facing a tax debt, there are many emotions that a person will experience: nervousness, fear, worry, and finally a frantic race to resolve the problem. While it is great to be aggressive in attacking your tax issue head on, there is a downside to blindly choosing the first company that appears to know what it is talking about. That downside is being one of the thousands of victims some unethical tax debt companies take advantage of annually. There are many ways to recognize a tax scam before falling for the trap, several red flags you can look out for that are considered to be scam signs. Being able to identify them is the surest way to protect yourself from tax debt company scams.
– Research the Company
As with anything, investigate who you are about to hire. These are your finances, and you should be extra cautious about just hiring anyone in order to steer clear of a tax scam.
1. Look into the company’s background. Do they have any suspicious business connections? Are they involved in any lawsuits?
2. Find out who is employed with the company.
Do they have tax attorneys, enrolled agents, and certified public accountants on staff?
3. Check out any accreditation, associations, or memberships the company may have.
Are they a member of a professional association? Are they accredited by the Better Business Bureau, and if so, what is the grade they currently possess?
4. Consider how long the company has been in operation.
Have they been in business for over ten years? Were they just incorporated a few years ago?
5. Examine the company’s online reputation, and how it responds to clients’ complaints.
Is there a theme to the online complaints? Do the complaints seem legitimate? Does the company have a department to handle complaints?
– Talk with the Company
Most tax debt firms, legitimate or not, offer free consultations for taxpayers. Do not hesitate to call a company and inquire about their services. Use this time to ask as many questions as possible and gauge how the company operates. This is also a great way to identify other indicators of a tax scam.
1. Listen to the resolutions being offered for your tax problem.
If a tax consultant only offers an Offer in Compromise as a solution, then the company is not engaging in ethical business practices. The resolution should be tailored to your specific tax problem.
2. Ask about the fee structure of the company.
Do they charge retainer fees? Do they have hidden costs within their contract?
3. Understand that NO ONE should ask for identification or credit card numbers over the phone.
Do they ask for a full Social Security number or credit card number over the phone? This kind of information should only be given in writing, and you should always make a copy of the paperwork for your records. Trying to resolve your IRS tax debt is stressful enough without the added worry of if the tax debt company you’ve employed is really working to help you or help themselves. This does not need to be a problem. Specialized and reputed companies can assist taxpayers by conducting a bulk of the research on behalf of you. They take into consideration accreditation, memberships, professional staff, customer service, and background, and we compile our experience during the consultation to grade each company on a scale of A to F. With a little extra effort researching and a keen ear when speaking with the consultants, you should be able to weed out the frauds and avoid a tax scam altogether.
About the Author: This is an article by www.consumertaxreports.org who brings awareness to the ‘tax relief’ industry and provides a reliable resource for all taxpayers. Taxpayers need to be aware of whom they are investing their hard-earned money with and before they decide, they need to verify!