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Tax relief scammers prey on those facing burdensome tax debt

Burdensome debt is something many Americans struggle with. For some, the burden can become so great that the possibility, any possibility, of getting out of debt looks tempting. But, of course, it is important for debtors to exercise caution in considering offers for debt relief services. That is particularly the case now with respect to tax debt relief schemes, which are increasing as the IRS goes after Americans that failed to pay taxes during the economic downturn.

Tax relief schemes come in a variety of forms, one popular form being to take a fee in advance for services, and then fail to perform services. There are, of course, legitimate tax relief companies out there. Finding a legitimate company is easier when one checks out the Better Business Bureau and when one is attentive to the company’s background and public appearance. 

For those facing crippling tax, bankruptcy may be a viable option in some cases, but it is good to consider other options first. For tax debt, individuals may be able to come up with an installment agreement with the IRS, making payments more manageable. Another option for some is to participate in the Partial Payment Installment Agreements program, a debt management program in which one has a long term payment plan to settle with the IRS for a reduced dollar amount. Another IRS program allows certain taxpayers to not have any collections on tax debt for certain amount of time.

Yet another option is a program called Offer in Compromise, in which one settles tax debts for less than what is owned and gets on a payment plan—either lump sum or a short term payment—with the IRS. Each of these programs has its own requirements, so it would be helpful to contact the IRS about any of these approaches to debt relief.

Bankruptcy may be the best option for some folks, given certain circumstances, but discharge of tax debts in Chapter 7 and Chapter 13 bankruptcy is bound by strict rules. It is good to consult with an attorney when seriously considering this option. That way one can get all the possibilities on the table and make the best decision. 

Source: Fox Business, “Don’t Become a Victim of a Tax-Relief Scam,” Donna Fuscaldo, July 30, 2013. 

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