As reported in the Washington Post, American Tax Relief is closing down, as the Federal Trade Commission (FTC) zeroed in on the fact that they were taking advantage of consumers looking for relief from their tax debts. The government agency is returning $16 million worth of refunds to over 18,000 American Tax Relief customers.
According to the FTC, the company made over $100 million by charging people upfront fees ranging from roughly $3,200 to $25,000.
American Tax Relief advertised very heavily on the Internet, TV, and radio, promising taxpayers overwhelmed with IRS debts that it could significantly reduce their financial burden.
The FTC filed a complaint stating that the company made claims that it could remove tax liens, as well as stop bank and tax levies, property seizures, wage garnishments, and difficult monthly payments. At one point, the American Tax Relief’s website even said:
“The IRS is currently accepting a fraction of back taxes owed…for those who qualify. The IRS is allowing the people with delinquent tax liabilities a ONE-TIME opportunity to settle the debt ONCE AND FOR ALL. But at the same time, the IRS does not advertise, promote or even voluntarily suggest this program.”
Numerous people complained about the company on www.consumeraffairs.com, stating that they paid the company thousands of dollars to seek tax-debt relief, yet the company did nothing for them.
At the request of the FTC, a federal judge closed down the national operation. Without denying any of the allegations or admitting guilt, the American Tax Relief agreed to the settlement terms.
Under their settlement with the FTC, the company and its owners agreed to turn over millions of dollars worth of assets, including jewelry, bank accounts, and a Ferrari. The parents of the defendants, who were not charged in the scheme but received money from it, also turned over jewelry, money in their bank accounts, a Los Angeles condominium, and a Beverly Hills residence.
The Federal Trade Commission, however, warns the company’s former customers that they will not be getting back a full refund. Instead, they will receive an average of 16 percent of the amount of money lost. Although authorities are able to take action against a company, there generally isn’t enough to refund victims completely, as much of the money is already long gone. Those who receive a check must cash it within 60 days of the mailing date.
What companies such as American Tax Relief fail to disclose in their ads is that claims of debt relief is dependent on approval for the IRS’s OIC or Offer in Compromise program. To qualify for an OIC, the IRS will thoroughly examine your income and assets to determine your inability to pay your full tax liability because it will cause severe financial hardship.
If you need IRS tax relief call the Winspear Law, PLLC at (716) 803-8770 or (585) 301-4025 for a free consultation.