Tax Debt Compromise Program Scam

Dena Standley | October 19, 2022

Legal Expert, Paralegal
Dena Standley, BA

Dena Standley is a seasoned paralegal with more than 20 years of experience in legal research and writing, having received a certification as a Legal Assistant/Paralegal from Southern Technical College.

Edited by Hannah Locklear

Editor at SoloSuit
Hannah Locklear, BA

Hannah Locklear is SoloSuit’s Marketing and Impact Manager. With an educational background in Linguistics, Spanish, and International Development from Brigham Young University, Hannah has also worked as a legal support specialist for several years.

Watch out for IRS scams

Summary: There are a lot of IRS scammers out there. Here is SoloSuit's guide on how to spot Tax Debt Compromise Program scams and other fraudsters pretending to be with the IRS.

Last year, 59.49 million Americans (23%) lost money to phone scams. According to Truecaller, the average reported loss in the previous 12 months was $502, up from $351 in 2020. What's staggering is that robo-callers deceived 60 percent of the victims called.

Over that time, fraudsters posing as IRS agents defrauded these victims over $29 billion through the IRS's offer of a compromise debt relief program. It's one thing to get annoying, endless calls from telemarketers and robo-callers. Phony tax debt relief phone calls are even worse.

What is the debt-relief compromise offer?

An offer in compromise lets you pay less than your total tax bill. If you cannot pay your entire tax debt or if doing so would put you in financial hardship, it may be a viable choice. Tax-relief organizations help distressed taxpayers, but many individuals find the qualification standards challenging. But the IRS considers the following facts and circumstances:

Financial capability
Income expenses
Equity in assets

Before making a compromise offer, look into all available payment choices. When the amount you propose is the most they can hopefully collect in a reasonable time, the IRS approves your offer in compromise. Check the qualifications of any tax professional you employ to assist you in filing a request.

You may be eligible to apply for an Offer in Compromise

You may qualify for an Offer in Compromise if you:

Filed all necessary tax returns and made all required projected payments.
Are not involved in an ongoing bankruptcy case.
Have a valid extension for a current year's return (if applying for the current year) and have made tax deposits for the current and previous two quarters before applying.

If the IRS cannot process your Offer in Compromise, they will:

Apply any offer payment you had to your outstanding debt.
Return your application and include an application fee.

Know what to look for and how to prevent a tax-relief scam

A clever scammer wants you to believe you are dealing with a government body associated with the IRS. Threats like these are standard strategies used by con artists to entice victims to invest in their schemes. If the caller fits the description below, then it's probably a scam:

They send unsolicited letters or emails stating that you are eligible for a government program to assist you in paying off your tax burden.
They never inquire why you owe taxes.
They promise to wipe out your tax debt.
They say they'll settle your IRS tax for “pennies on the dollar."
They prey on your concerns about the IRS.
They promise to waive interest or penalties on your behalf.
They fail to examine your financial background from the outset.
They demand a significant upfront payment—often equal to the amount of cash shown on an asset inventory.
They use delay tactics like repeatedly asking for the same papers before telling you missed the eligibility mark for relief, and the IRS has rejected your offer.
They threaten to summon local police, immigration agents, or law enforcement to arrest you for failing to pay.
They threaten to cancel your driver's license, business license, or immigration status.

How to avoid being tricked by IRS scammers

The IRS never calls you demanding immediate payment with a specific payment method, whether it's prepaid debit card, gift card, or wire transfer. Any taxpayer who owes taxes will first get a bill in the mail from the IRS. Here is what to do:

Use the IRS Directory of Federal Tax Preparers with Credentials and Select Qualifications to discover an enrolled agent who can represent you in negotiations with the IRS.
If you owe less than $10,000, file an Installment Agreement Request (Form 9465) with the IRS.
Before signing any deal, inquire about and review the company's refund policy.
Only work with established local businesses that the Better Business Bureau has approved. Look into complaints filed against the company with the Attorney General's Consumer Protection Division and BBB.
Find out how many attorneys, accountants, and CPAs the organization employs and how many salespeople.
Request references, success stories, reviews, and client testimonials from the organization.

The IRS directs you to direct payments to the "United States Treasury” if you owe taxes. Check out the instructions on how to pay here.

Know who to call

Contact the Treasury Inspector General for the Tax Administration to report phone fraud. Use their web page for "IRS Impersonation Scam Reporting." You can also reach them at 800-366-4484. Inform the Federal Trade Commission about phone fraud and use the FTC Complaint Assistant. Be sure to include the phrase, "IRS Telephone Scam," in the notes.

Report an unsolicited email purporting to be from the IRS or a component of the IRS, such as the Electronic Federal Tax Payment System, to the IRS. Finally, visit Tax Scams/Consumer Alert for a comprehensive list of current and consumer alarms.

If debt is keeping you from paying your taxes, and if debt collectors are calling you off the hook or suing you, SoloSuit can help you get them off your back and find debt relief you need.

What is SoloSuit?

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You can use SoloSuit to respond to a debt lawsuit, to send letters to collectors, and even to settle a debt.

SoloSuit's Answer service is a step-by-step web-app that asks you all the necessary questions to complete your Answer. Upon completion, we'll have an attorney review your document and we'll file it for you.

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