WASHINGTON, D.C. — In a recent alert, the Internal Revenue Service (IRS) has reminded taxpayers to remain vigilant against fraudulent “mills” that exploit individuals with unpaid tax obligations. These deceptive entities often promise unrealistically low settlements for tax debts in exchange for exorbitant fees, leaving taxpayers with little to no resolution.
These operations aggressively market their dubious services, claiming they can negotiate tax settlements for “pennies-on-the-dollar” or falsely suggest urgency in using the IRS Offer in Compromise (OIC) program. IRS Commissioner Danny Werfel warns, “Taxpayers should be cautious of aggressive marketing that can mislead them.” He notes that many of these mills charge high fees, provide false guarantees, and ultimately fail to deliver the promised results, leading taxpayers to spend money without resolving their debts.
The Offer in Compromise is a legitimate IRS initiative aimed at aiding taxpayers unable to meet their full tax liabilities due to financial hardship. The program assesses eligibility based on an individual’s unique circumstances, income, and asset equity. Importantly, the OIC agreement is conducted directly between the taxpayer and the IRS, without the need for third-party intervention.
Despite the genuine benefits of the OIC program, fraudulent companies often exploit it, making it a recurrent feature on the IRS’s “Dirty Dozen” list of notorious tax scams. These scams not only jeopardize taxpayers’ finances but also risk their personal information and data security.
To combat these fraudulent practices, the IRS encourages taxpayers to independently pursue the OIC program. Resources such as IRS.gov provide comprehensive guidance, including the Offer in Compromise Pre-Qualifier tool, which helps determine eligibility. The IRS also offers a video series to educate taxpayers on scam awareness and the legitimate use of the OIC program.
For those not qualifying for an OIC, the IRS provides alternative payment plans. Short-term payment plans allow taxpayers with balances under $100,000 to pay within 180 days, while long-term plans are available for balances under $50,000, permitting monthly payments for up to 72 months. Taxpayers can set these plans up through the online payment agreement portal, receiving immediate feedback on their application status.
Additionally, the IRS highlights the first-time penalty abatement policy, offering administrative relief from penalties directly through the agency. This initiative represents another avenue for taxpayers seeking to manage their tax obligations without resorting to potentially fraudulent services.
The IRS continues to advocate for taxpayer awareness and self-education, emphasizing the importance of utilizing legitimate resources and programs directly offered by the agency. By understanding the available options and recognizing the signs of scams, taxpayers can effectively navigate their tax responsibilities and avoid becoming victims of predatory practices.
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