FTC warns some tax-debt relief firms may make false promises and charge fees
The FTC warned that some tax-debt relief companies may promise to cut bills to “pennies on the dollar” without reviewing a case, then charge fees and do little or nothing.
The Federal Trade Commission warned Thursday that some tax-debt relief companies may promise to wipe out tax bills for “pennies on the dollar,” charge fees and do little or no work for consumers who owe back taxes.
The agency said people seeking help with overdue taxes can end up worse off. According to the FTC, some companies collect service fees without providing real assistance, leaving consumers with more debt to local, state or federal tax authorities.
In its Consumer Alert, the FTC pointed to a nearly $10 million settlement with the owners of American Tax Service as an example of the conduct it is warning about. The FTC said ATS mailed letters that impersonated the government and told recipients to call by a deadline or risk property seizure.
The agency also said ATS advertised on TV, radio, online and podcasts. Those ads led to sales calls that made false promises about resolving tax debt, the FTC said.
The alert did not say all tax-debt relief companies are deceptive. It said people who owe back taxes may be able to get real help, but they should be wary of firms that make promises before reviewing a tax situation or ask for fees up front without clear work being done.
The FTC said consumers who spot a scam should report it at ReportFraud.ftc.gov.
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Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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