Beware of tax debt settlement claims for pennies on the dollar – Red Bluff Daily News
The Internal Revenue Service warns taxpayers with pending tax bills to contact the IRS directly and not to approach unscrupulous tax companies that use local advertising and falsely claim they can resolve unpaid taxes. for pennies on the dollar.
“No one can get a better deal for taxpayers than they can usually get for themselves by working directly with the IRS to solve their tax problems,” said IRS Commissioner Chuck Rettig. “Taxpayers can search online for their best deal, as well as call a dedicated collection line where they can get prompt service using voice and chat bots or choosing to speak with a live phone assistant.”
Offer-in-Compromise factories usually make outlandish claims in local advertising about how they can settle someone’s tax debt for pennies on the dollar. The reality is usually that taxpayers pay a factory fee to get the same deal they could have gotten on their own by working directly with the IRS.
The IRS has compiled the annual Dirty Dozen list for over 20 years to alert taxpayers and the professional tax community to scams and schemes. The list is not a legal document or a literal list of agency law enforcement priorities. It is designed to educate a variety of audiences who may not always be aware of developments involving tax administration.
Mills are a year-round problem, but tend to be more noticeable just after tax season ends and taxpayers attempt to resolve their tax issues, perhaps after receiving a balance owing notice. by mail.
For those who feel they need help, there are many reputable tax professionals and important tools that can help people find the right tax professional for their needs. IRS.gov is a good place to start figuring out what to do.
These mills twist the IRS program into something it is not – tricking people with no chance of meeting the requirements while charging excessive fees, often thousands of dollars.
An offer is an agreement between a taxpayer and the IRS that resolves the taxpayer’s tax debt. The IRS has the authority to settle or impair federal tax obligations by accepting less than full payment in certain circumstances. However, some promoters mistakenly advise indebted taxpayers to file a claim with the IRS, even though the promoters know the person will not qualify. It costs honest taxpayers money and time.
Before taxpayers start investing time in completing the paperwork necessary to submit an offer, they will want to review the IRS’ Offer in Compromise Pre-Qualification Tool to ensure that they are eligible to submit one. Although both individuals and businesses can submit a bid, the tool is only available to individuals.
The IRS has also created a video playlist that walks taxpayers through a series of steps and forms to help them calculate an appropriate offer based on their assets, income, expenses, and future earning potential. Find these helpful and easy-to-browse videos at irsvideos.gov/oic.
The IRS reminds taxpayers that under the First Penalty Reduction Policy, taxpayers may apply directly to the IRS for administrative relief from a penalty that would otherwise be added to their tax liability.
Factories are an example of unscrupulous tax preparers. Taxpayers should beware of unscrupulous “ghost” preparers and aggressive promises to produce a larger refund.
Although most tax preparers are ethical and trustworthy, taxpayers should beware of preparers who do not sign the tax returns they prepare, often referred to as ghost preparers. For electronically filed returns, the ghost will prepare the return, but refuse to digitally sign as a paid preparer.
By law, anyone paid to prepare or help prepare federal income tax returns must have a valid Preparer Tax Identification Number (PTIN). Paid preparers must sign and include their PTIN on the return.
Not signing a return is a red flag that the paid preparer may be looking to make a quick profit by promising a big refund or charging a fee based on the size of the refund.
Unscrupulous tax preparers may also: require payment in cash only and will not provide a receipt, fabricate income to qualify their clients for tax credits, claim false deductions to increase the refund amount or direct refunds to their bank account, not that of the taxpayer. Account.
The Choosing a Tax Practitioner page on IRS.gov has information about tax preparer credentials and qualifications. The IRS Directory of Federal Tax Return Preparers with Credentials and Certain Qualifications can help identify many preparers by type of title or qualification.
Taxpayers are legally responsible for the content of their tax return, even if it is prepared by someone else.