When Settling Tax Debt: “If it seems to good to be true, it probably Is.”

The continuing slow economy has put many taxpayers behind on their bills and taxes.  If you owe back taxes, read this post before seeking help from a late-night television advertiser promising they can help you pay less that you owe to the IRS.

According to the MarketWatch article, Who Wouldn’t Want to Pay ‘Pennies on the Dollar’, there are numerous civil lawsuits filed against tax-resolution companies that have promised consumers relief after pocketing thousands of dollars in fees, but have not delivered.  In the last 12 months, three such firms have shut down – TaxMasters, JK Harris, and Roni L. Deutch.

Many of these tax-resolution companies employ commissioned telephone sales persons rather than tax experts to “advise” clients, putting the delinquent taxpayer further in the hole for services that do not resolve their problem.

What to Do?

If you owe a significant amount of back taxes, research your options before writing anyone a check.  If you owe $50,000 or less, you may qualify for an installment agreement with the IRS. Talk to your tax adviser first.