Finance Globe

U.S. financial and economic topics from several finance writers.
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"Tax Relief" Operation Halted

A “tax relief” operation based in Beverly Hills has been halted from doing business by a federal judge at the request of the Federal Trade Commission, the agency reported on Tuesday.

The FTC accuses American Tax Relief, LLC of ripping off financially distressed consumers - to the tune of $60 million - by fraudulently promising they can reduce the taxpayers’ debt to the IRS.

Not surprisingly, the company’s own California state business license was suspended last year for not paying its own taxes, the FTC reports.

According to the FTC, the company’s website stated, “The IRS is currently accepting a fraction of back taxes owed to them (sic) for those who qualify. The IRS is allowing the people with delinquent tax liabilities a ONE-TIME opportunity to settle the debt ONCE AND FOR ALL. But at the same time, the IRS does not advertise, promote or even voluntarily suggest this program.”

The site has been taken down since the FTC has filed charges.

“We’ve made it a top priority to go after scammers who try to exploit the financial hardship of others,” said David C. Vladeck, Director of the FTC’s Bureau of Consumer Protection. “For people having a tough time paying their taxes, the last thing they need is to lose more money to a fraud.”

Consumers who responded to nationwide TV, radio, and internet ads were told they could pay a fraction of the state and federal taxes owed by hiring American Tax Relief for up-front fees ranging from $3,200 to $25,000.

The company claimed they could remove tax liens and stop wage garnishments, bank and tax levies, property seizures, and “unbearable monthly payments.”

The FTC alleges that virtually all consumers who spoke briefly with American Tax Relief “tax consultants” were falsely told they qualified for a tax relief program and that the company could help them significantly reduce their tax debts.

The “Offer in Compromise” is the only program in which the IRS will allow a tax debt to be settled for less than the amount owed. But the IRS only allows this in very limited circumstances - only after the taxpayer’s other payment options have been exhausted and their ability to pay has been thoroughly reviewed.

Other consumers were told they could qualify for a “penalty abatement.” But in reality, the IRS only considers letting the taxpayer out of late payment interest charges and underpayment penalties if there is a “reasonable cause” for the late payments - death, serious injury, or natural disaster.

In truth the only program that most taxpayers would truly qualify for is the installment payment plan, and taxpayers can easily arrange this themselves. As a matter of fact, the IRS offers it when they send a taxpayer a bill.

The FTC said that American Tax Relief’s deceptive claims and rip-offs continued even after federal authorities seized money from bank accounts and a Ferrari from the company’s owner earlier this year in April. A lien was also placed on two residences in the seizure, including a $3.4 million mansion.

One of the company’s owners was also leasing six vehicles at the time - a Rolls Royce, a Bentley, two Porsches, and two Mercedes-Benz.

The FTC lawsuit seeks to win restitution for the consumers who were duped by the fraudulent claims made by American Tax Relief, but charges are not a ruling that the company and its owners violated the law, the agency said.

Stories like this remind us that we should always be very cautious about who we do business with; any company, legitimate or not, can have a TV commercial or an official-sounding name.

Check with your Better Business Bureau before handing over your money. Browse the web to find consumer reviews on a particular company, even if you’ve heard of the company before. TV ads or jingles may make companies seem familiar - even if they’re a rip-off.

And finally, report these scam companies to the BBB and the FTC if you feel you’ve been victimized. Eventually these crooks are found out, but it takes consumers who speak out to do it.

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Saturday, 04 February 2023

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