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Aug 12, 2024
In the past month, I have been made aware of two instances from the tax debt resolution world that I find profoundly troubling. The details of these situations were so shocking that I couldn't help but think, “No, this CAN’T be right… nobody would do this… would they???” The behavior described to me was not just unacceptable but deeply unethical. Unfortunately, it seems to be more common than we would all hope. Here’s the first that made me pause and really reflect on what is happening….
As a part of a vast network of tax professionals nationwide, I have established myself as a reliable resource for all matters related to tax debts. In early July, a fellow EA from Colorado contacted me, seeking to refer a new client. This client had engaged a company in California to resolve a tax debt issue, only to find himself in a situation of gross mistreatment. After speaking with the client, he shared with me copies of the text messages he had recently received from the firm when they asked him to pay more money to continue representing him. Here are copies of some of the text messages:
Let me provide a little back story here. This client hired this firm to file four years of missing returns, and he already had $11,000 owed for two prior years he had already filed. This firm schemes to “loan” the client the money at 18% interest to pay the debt and then submit a resolution to reduce what ultimately has to be paid back. The initial charge to the client was $4,500 to handle everything and set up the loan. The first lie caught in these exchanges when I reviewed them: his debt was assigned to the general collections department, not to someone in the field.
Now, as a tax professional, I agree that getting four years of tax returns done for a self-employed individual for $4,5000 is fair if they had to get involved with reconciling bank statements and some bookkeeping work. Keeping the debt out of collections with only $11,000 owed and several missing returns would have resulted in a few phone calls delaying collections until known balances for the missing returns could be determined. The fee makes sense. However, where I started really having a problem with this was the way this tax firm’s representative was speaking/texting to the client. It was rude and unprofessional at this point.
Here’s where things really get squirrelly! “An offer and compromise”… you mean an Offer in Compromise? If someone is trying to solicit clients and they don’t know the correct name of the resolution programs, that’s a HUGE red flag! I’m assuming this salesperson was using a form of chat text, which isn’t always accurate. However, this level of unprofessionalism is sickening when you think about the sensitive nature of the work they are supposed to be trusted to handle for the client. And regarding the “offer and compromise” plan? I will address that a little later… it’s ridiculous!
After paying the initial $4,500 to handle the tax return filings and keeping the client protected from collections on the known $11,000 balance, the tax firm issued a contract for another $10,900 charge to continue their pursuit of a resolution to address the increased total tax debt. Again, this is another highly unprofessional response from this tax firm.
Just as a recap to this point: This salesperson is mad that this client won’t agree to another $10,900 fee for continued representation and he is talking to others to see if he should continue on the current path. He has already paid $4,500 for the work up to this point; the tax firm is committing to pay the entire balance owed to the IRS at an 18% interest rate, with plans to submit an “offer and compromise” (again, more on this point below!) to settle what ultimately has to be paid back. In summary, this tax firm is financially raping someone who has come to them in need. Then, their salesperson communicates in this manner. Absolutely nauseating!
This is what happened when the client did not respond for a day. The company had a representative call him to push the issue, and when he said he was still trying to wrap his head around what they were trying to pressure him to enter into, a rant ensued.
The entire question was, “Do you have a supervisor I can talk to?” I’m sorry this got cut on his copy sent to us!
I’m sure you all let out a big “WHAT????” just like I did.
And here’s the final kicker: this client DOES NOT qualify for the IRS’ Offer in Compromise program. He has over $200,000 equity in his home, is of employable age, makes a decent living as a tradesman, and even after his monthly estimated tax payment is calculated, has sufficient net discretionary income left over to pay towards his tax debt. Had he continued representation through this firm, he would have paid them $15,400, the “offer and compromise” would have been rejected, and he would have been locked into an 18% interest rate for the $51,000 tax debt.
I wanted to share this with all of you because you NEED to know this is really happening to people! This is how some firms use pressure and demeaning communications to emotionally prey on people with tax debt problems. It is imperative that if you or one of your clients has a tax debt situation, please seek help from a credible firm that will not employ predatory schemes like this to manipulate someone into ridiculous contracts.
Golden Lion Tax Solutions never employs tactics like this with our clients. We are open and honest about the tax debt situation, the options available to the client, and our process for going about it. Check out the testimonials on our website to hear not just from clients, but from their trusted tax professionals we have worked with while seeking a resolution for a mutual client. You will be hard-pressed to find another firm with the moral guidance, transparency, and relentless commitment to clients that we employ!
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