The Internal Revenue Service has issued a warning to taxpayers about unnecessary services that charge “excessive fees.”
Unscrupulous “mills” are charging excessive fees to resolve tax debts through the IRS Offer in Compromise program. These mills will often use “aggressive” marketing techniques to make incorrect claims of guaranteed settlements when, in reality, no such service is needed, and high fees can be charged.
While an Offer in Compromise is a legitimate program offered by the government agency that helps qualifying taxpayers settle tax debts for less than the full amount owed, these agreements are made directly between the taxpayer and the IRS, with no third-party involvement required.
“Taxpayers should be cautious of aggressive marketing that can mislead them,” IRS commissioner Danny Werfel said in a news release issued Thursday. “Many OIC mills charge steep fees, give false assurances and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money paid for bad results.”
Offer in Compromise is one of several ways to help taxpayers with outstanding tax debts who are struggling financially. An application is assessed based on a person or employer’s ability to pay, income, expenses, and asset equity.
A stock image of U.S. currency. The IRS frequently warns taxpayers regarding scams that could result in losing money.
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There are several requirements for qualifying, including not being in open bankruptcy proceedings and having an active extension to file your tax returns.
While some may not meet the requirements for an Offer in Compromise, there are other options for taxpayers struggling with their tax obligations, such as long- and short-term payment plans for individuals.
Short-term payment plans are available for taxpayers with a total balance of less than $100,000 in combined tax, penalties and interest. These plans offer the debtor an extra 180 days to pay the balance in full.
A long-term payment plan is for taxpayers with a total balance of less than $50,000 in combined tax, penalties and interest. If taxpayers qualify, they can make monthly payments for up to 72 months.
The IRS frequently issues warnings regarding scams that could steal money from taxpayers. Earlier this year, the IRS warned about a range of scams using “fear and deceit to exploit” elderly Americans.
Fraudsters have been found to impersonate IRS agents to target “unsuspecting individuals” with a focus on senior citizens. America’s elderly are tricked into “making immediate payments through unorthodox methods such as gift cards or wire transfers under the pretense of resolving fictitious tax liabilities or securing false refunds.”
First issued in 2002, the annual Dirty Dozen campaign lists 12 common scams that taxpayers and professionals should watch out for. Offer in Compromise mills have appeared on several lists over the years.
