Taxmasters Latest "tax Relief" Company To Face Charges

Minnesota Attorney General Lori Swanson charged TaxMasters of Texas with bilking Minnesota residents out of more than $1 million.

Earlier this fall, a federal judge closed the doors on American Tax Relief after a lengthy investigation. State authorities have been aggressively pursuing other questionable tax relief companies too such as J.K. Harris and attorney Roni Deutch. Welcome now Tax Masters to the ranks of tax relief companies being prosecuted.

According to the lawsuit filed by Minnesota, TaxMasters uses deceptive ads to lure in clients. (How many clients haven't heard a tax relief pitch suggesting you can pay "just pennies on the dollar" to the IRS?) Once clients contact the company, high pressure telemarketers push folks to pay between $2000 and $10,000 in up front fees. Clients are promised that former IRS professionals will work on their case. According to the lawsuit, virtually no one works on their case.

These scams are particularly disturbing in that they target people already having financial problems. People who were laid off, have medical problems or are losing their house frequently are the same people having problems paying their taxes. By taking their last remaining savings, victims are left with no money and no tax relief.

How many people have been victimized by these scams? It is hard to tell but if the number of radio and late night TV advertising tax relief are any indication, plenty. Earlier this summer, California's attorney general claimed Roni Deutch scammed Californians alone out of $34 million.

Are all tax relief companies scam? Fortunately no. Nationally, only a small percentage of offers in compromise filed with the IRS are approved. Those that are approved are frequently submitted with the help of trained accountants and lawyers that specialize in tax matters, not TV hucksters advertising they can settle your tax debt for " just $20" or "pennies on the dollar."

Other warning signs are large up front fees and high pressure sales tactics including "discounts" for signing up over the telephone.

Before signing up, ask many questions including the company's success rate. With acceptance rates under 20%, reputable accountants and lawyers have success rates well above 50%. Any representations made to you should be in writing.

Check too on-line and with the Better Business Bureau. The BBB has an easy to use on-line search tool that will give immediate rating information and at no charge. Check carefully, though, as some of these companies operate multiple subsidiaries and sometimes have shell company with a "clean" BBB record for advertising purposes.

by: Brian Mahany

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