As tax deadline approaches, IRS warns of companies offering to help settle debt

The BBB has a guide to help protect yourself from tax scams
Published: Apr. 5, 2023 at 3:40 PM CDT
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InvestigateTV - The Internal Revenue Service (IRS) on Wednesday issued its ‘Dirty Dozen’ list of tax scams for 2023. In its overview of common schemes, the IRS warned taxpayers to be wary of companies that offer to help settle debt.

That warning was all to familiar to Emmitt Jordan, who found himself owing money to the IRS.

While contemplating how he was going to pay what he owed, he heard ad from a tax resolution company on the radio saying it could help decrease his tax debt.

“So, I called. They asked me about my situation,” Jordan explained. “And I told them what happened, and they say—okay you qualified. Our fee is $6,300.00.”

But that wasn’t the only bill he received from the company.

“I get a different phone call from a different person,” Jordan said. “He said now I’m handling your situation. He said we need to set up an escrow account for when we settle with the IRS, your money will already be there.”

In total, Jordan says the company asked him to pay $15,000 for its services. He said a representative with the company told him he qualified for a loan to pay off what he owed them.

After yet another call from a different representative, Jordan called IRS directly. He was shocked when he was told there was no record of the company calling on his behalf.

He then called the company back, asking for a refund and for the loans to be canceled. While the company agreed to cancel the loans, they delinked to return the $15,0000 he already paid them.

Melanie McGovern with the Better Business Bureau (BBB) echoed the IRS’ warning about advertisements from unknown tax resolution companies. She said while Jordan’s experience may not constitute a scam, it is a stark reminder to read the fine print and know what you’re signing up for.

“A lot of it is buyer beware, and if you have an issue with the IRS, the people to deal with is the IRS,” McGovern explained. “Go directly to the IRS. They have people on their staff who work with people who owe taxes.”

InvestigateTV contacted the IRS about Jordan’s issue. The government agency pointed to an alert on its website, which advises consumers to be wary of costly promoters advertising settlements with the IRS for “pennies on the dollar.”

The IRS also wanted to remind people that if you owe back taxes, you can apply for an online payment agreement.

We contacted the tax resolution company by phone and email to ask about Jordan’s situation, and to explain its tax settlement services.

The company directed all inquiries to a spokesperson for a reputation firm, who disputed Jordan’s version of events. The spokesperson did not address the company’s practice of providing tax relief services, despite multiple requests for comment.

By speaking out, Jordan said he hopes he can get his issue resolved and that others learn from his experience.

You can report tax fraud directly to the IRS here. The agency also publishes consumer alerts for tax scams and a guide for how to tell if someone contacting you is actually from the IRS.

The BBB also has a guide to help protect yourself from tax scams.