Beware of Tax Help Scammers

Eva Rosenberg of SmartMoney recently wrote about why you should avoid tax relief firms like Roni Deutch, Tax Masters and J.K. Harris and those unamed scammers (they just have 800 numbers because they don’t want you to know who they are because then you can do some research about them and discover the record of grievances against them) appearing on late night and early morning television:

Let’s look at recent court cases filed against television and radio advertisers, preying on your fears, your insecurities, and your tax terrors. All cases involve national tax resolution firms who have misled troubled taxpayers.

On April 22^nd, the California Superior Court froze the assets of Roni Deutch for shredding documents in defiance of a court order, and not giving refunds to clients, as ordered. IRS has also hit her with a $183,000 lien. Trial is set for July.

Minnesota Attorney General Lori Swanson filed suit accusing Houston-based TaxMasters of fraud and deception. Texas filed suit alleging the company unlawfully “engaged in false, misleading, and deceptive acts and practices.” Florida is investigating them, too.

Florida is also investigating JK Harris for allegedly violating a 2008 settlement with Florida and 17 other states over misleading sales tactics.

If there’s a TV advertiser promising that you can pay pennies on the dollar, you can bet there will be consumer complaints and investigations sooner or later. The IRS even publishes an alert. Why? Not everyone qualifies for offers in a compromise. But some of these firms will sell them to anyone desperate enough to pay.

Firms under investigation tend to operate on the health-spa-marketing principal. That’s where you sign up everyone you can, knowing the members will lose interest in working out in a week or two, or three. But they are forced to keep making the payments all year due to contractual obligations.

Sounds pretty awful, doesn’t it? This isn’t a gym situation. People with tax debt face intense problems. Their wages are being garnished; bank accounts are seized; other assets might be put up for tax sale. They’re in trouble. Often, the tax problems result in chemical depressions – or are caused by depression, illnesses, divorce, or other personal tragedies.

Ms. Rosenberg has these predators figured out.

Before you hire someone to help you with your tax problem read this post I wrote a few years ago Tax Scam Warning.