March 28, 2024

The Internal Revenue Service posted a series of videos to explain how taxpayers can steer clear of scammers who claim to be able to help them with their tax debts while charging exorbitant fees and making outrageous claims.

The videos show how taxpayers can apply for Offers in Compromise directly with the IRS instead of going through a tax debt business that may or may not help them. An Offer in Compromise can help a taxpayer to settle their tax debts for less than the full amount they owe, but only if they qualify.

Even with the OIC program, many taxpayers who owe back taxes still face hardship in paying the negotiated amount, and the IRS isn’t always open to compromise or it may keep part of the tax refund to which taxpayers would otherwise be entitled. Earlier this week, National Taxpayer Advocate Erin Collins announced the IRS would relax some of its restrictions and allow taxpayers who have received an OIC to receive Offset Bypass Refunds to enable them to pay for necessities, but only under certain conditions (see story).

Still, an OIC can be a legitimate option if a taxpayer can’t pay their full tax liability or doing so would lead to financial hardship. The IRS said it considers a taxpayer’s unique set of facts and circumstances when making its determination. However, some tax debt settlement companies take advantage of the program by overpromising what they can deliver.

The IRS headquarters in Washington.

Andrew Harrer/Bloomberg

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