Tax Relief--or Tax Scam?

            You have probably heard about companies that offer help to reduce your debt to the IRS. Maybe you’ve seen ads for the “Tax Lady” Roni Deutch on late-night television or online ads for American Tax Relief.  You may have wondered whether these were legitimate offers. As it turns out California attorney general, Edmund G. Brown, Jr. has recently filed a 34 million dollar lawsuit against “Tax Lady” Roni Deutch charging that she orchestrated a “heartless scheme” that swindled thousands of people facing serious and expensive tax collection problems with the IRS.  According to Brown, Roni Deutch promises to significantly reduce customers’ IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills. Brown says that rather than cutting clients’ debts, Deutch often escalates them. She places clients in an endless loop of requests for duplicate documents that increases her fees and, due to further delays in payments to the IRS, increases clients’ IRS fines and penalties. Brown alleges that Roni Deutch’s success rate is less than 10 percent, rather than the 99 percent she claims. He also accuses her of featuring fictional testimonials in her ads.

            Roni Deutch is not the only one in hot water for defrauding the public through illegitimate offers of tax relief. American Tax Relief has recently been sued by the Federal Trade Commission  for a variety of offenses related to tax debt relief. According to an article in the October 7, 2010 Los Angeles Times, the Federal Trade Commission alleges that  American Tax Relief used TV, radio and Internet advertising to lure consumers by falsely claiming that it could settle their delinquent federal and state taxes for far less than they owed. The article goes on to say that American Tax Relief charged people fees to remove tax liens and stop wage garnishments, bank and tax levies, and property seizures– all things that, for the most part, they were completely unable to do.

            So what is the lesson here? Desperate people make poor decisions. Carefully research any company before sending them any of your money. If it sounds too good to be true it probably is.

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