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Get Help Settling a Tax Debt

Consumer protection experts offer advice to an individual in trouble with the IRS.

Q.      These last few years have been very difficult for me financially. 

To make matters worse, I now find myself in trouble with the IRS over my back taxes and unfiled returns. I cannot allow any more time to pass; I am being penalized and the amount is becoming outrageously high. 

I have read and, also have heard on the radio, advertisements by companies offering tax relief and that these companies could help me to get the penalties I have incurred reduced. 

I was hopeful until my friend told me to be careful with these types of companies, because what they advertise may be a scam. What can you tell me?  D.D., Telford

A.      These tax relief companies do claim that they can reduce or eliminate your tax debt and back-tax collection by applying for IRS hardship programs on your behalf. They will ask that you pay up front for their service, which could be thousands of dollars.

The fact is that most taxpayers don’t even qualify for the programs these fraudsters promise. The truth is that many of these companies do not settle your tax debt and, in most cases, do not file the paperwork required by the IRS requesting your participation in the IRS hardship programs, even if you do qualify.

Doing business with one of these companies could actually leave you even further in debt. There have been complaints reported that, after signing up with one of these companies, the companies took even more of a consumer’s money by making unauthorized charges to their credit cards or withdrawals from consumer’s bank accounts.

Our first word of advice; don’t panic but, instead, consider your options. When you are having difficulty paying your bills it is often a better idea to try and work out a payment plan with the company/creditor yourself. You don’t necessarily need to pay someone else to negotiate this for you. It is the same when you owe money to the IRS.

The IRS’s help for taxpayers includes an "Installment Agreement" program that is generally available to people who cannot afford to pay their debt in full, thus offering people the option of making smaller, monthly payments.

There are a few other programs that might be better suited for your situation. You can call the IRS at 1-877-777-4778 to speak to an independent Taxpayer Advocate Service representative or visit irs.gov/advocate.

There are similar programs for state tax relief. State by state information can be found at nasact.org.

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