(Request from Rick and Erin in Harrisburg, Pennsylvania) I’m trying to get help with 3 years of back taxes, I called community tax relief llc, and got some info and prices. $499 for the first step and somewhere around $900-$1200 for the next part depending on what all was involved with my case, if a lot then closer to the $1200. I went and had them do phase 1 @$499. Now going forward into the next step in this, they are now telling me it will be $4850, way more then we were told in the beginning. Is there any help, information, anything you can tell me about this company and my situation I’m now in. Please Help, don’t know what to do, already out $499. Is Community Tax Relief llc a scam or ripping me off completely…I just don’t know.
Dear Rick and Erin,
Tax problems can be scary, and I realize that it is even scarier to try and manage negotiations with the Internal Revenue Service or the Pennsylvania Department of Revenue on your own. While it is entirely possible to conduct the correspondence on your own, sometimes it gives tax filers a warm fuzzy feeling to know that an attorney is handling this on their behalf.
Industry overview
Tax relief firms make up one of the most abusive industry categories. Misrepresentations and consumer deception is quite widespread.
There are two major misrepresentations that most firms make.
- MYTH: “Your problems will be handled by lawyers.” Tax relief firms are a business first, not a law firm. Most such firms hire lawyers on staff, but their jobs largely consist of setting up stock correspondence documents (templates) and protecting the company from legal action. Most exchanges between those firms and the IRS are done via form letters that simply have the customer’s name, address and social security numbers along with other details that are printed within a standardized template.
- MYTH: “We will negotiate an Offer in Compromise (OIC).” These settlements do happen in some cases, but most taxpayers will not qualify. The vast majority of regulatory actions taken against tax relief firms is based on false promises of being able to obtain an OIC. Firms admit clients and charge high fees even though the clients may not fit the eligibility requirements for an OIC. According to legal authority NOLO, “You don’t have to hire a law firm or other tax professional to make an OIC. To begin the OIC process, you must file IRS Form 656, Offer in Compromise and pay a $150 nonrefundable application fee. For full details on the OIC program, see the IRS Form 656 Booklet.”
Now to get to the essential task of examining your situation. I am concerned that the fee amount is far more than what you originally believed you would have to pay. I must ask the question. Do you have a contract that specifies the exact fees that will be charged for your situation? If you have a document that shows a smaller amount, then the firm must abide by the terms of that agreement.
There have been tax relief scams in the past that have been broken up by regulators. Roni Deutch was a television sensation many years back. Only 10% of their customers received a reduction in their tax bill despite claims by sales agents of a 99% success rate. While that was the worst case, there are other tax relief scams that have robbed tax filers of money that should have gone to their tax bill.
Review of Community Tax Relief LLC
Community Tax Relief LLC also uses the name Community Tax LLC. The firm was chartered in 2010, making it a very young firm. That is a bit of a warning sign, as it lacks the longevity that legitimate firms can boast of.
Another warning sign is the number of complaints that I see registered at the Better Business Bureau of Chicago and Northern Illinois. The BBB has closed 42 complaints against the firm, of which 32 were related to a problem with the product/service and another 7 related to advertising and sales issues.
The BBB did receive 36 customer reviews, of which all 36 were positive. None were neutral or negative. While it is entirely possible that the firm received 100% positive reviews, it reminds me of Saddam Hussein receiving 100% of the Iraqi vote. It is actually a very high number of positive reviews considering the volume of complaints.
The firm likely has done an exceptional job at fostering positive reviews with the BBB. The firm has a “C” rating with the BBB. A score of “C” is not great, but it is actually on the high end of the much maligned tax relief industry.
Next steps
I guarantee that the $4,850 that they are now requesting, plus the initial $499 could make a dent in your tax debt. Depending on how much you owe, a successful OIC could be worth the expense. Just keep in mind that even if you win a reduction in your tax bill, you still have to pay the firm their fees.
I cannot provide actual tax advice or legal advice. I am not qualified to do so. Plus, if you have retained that firm as your legal counsel, it is their job to provide that advice for you.
One step I would recommend is to check with the Bureau of Consumer Protection through the Pennsylvania Attorney General. Find out if there are any actions that have been taken against that firm. An advocate with the Bureau can review your documentation to determine if the escalation in fees is warranted and legal. Fortunately, they do have a regional office in Harrisburg. You may call the state hotline at 800-441-2555. Alternatively you may call the Harrisburg office at 717-787-9707.
I would certainly recommend getting a second look at the case by the authorities. They can help you avoid certain mistakes and scams. It is always best to be sure before you send money, as refunds from scams are few and far between.
I hope this provides some information that helps you evaluate the situation better. Please leave a comment if you have feedback from the office of the attorney general that you would like to share.
Long is a graduate of the University of North Carolina at Chapel Hill with a B.A. in Industrial Relations. He subsequently received his Certificate in Nonprofit Management from Duke University. His Certificate in Financial Planning was issued by Florida State University.
Long has achieved the Accredited Credit Counselor and Accredited Financial Counselor certifications through the Association for Financial Counseling, Planning and Education. Long originally achieved the Certified Credit Counselor designation through the National Institute for Financial Education.
In addition to years of nonprofit leadership, Long has been an innovator in the field of volunteer tax return preparation programs. He assists volunteer associations and nonprofit organizations who seek to integrate credit counseling and asset-building programs with free personal income tax preparation. His approach to using free credit reports as both an incentive and a screening tool for placement into asset-building programs has been shared with members of the National Community Tax Coalition, the EITC-Carolinas Initiative of MDC, Inc. and nonprofit groups across the Carolinas.
Long assists members of our armed forces in the Carolinas, Iowa, Rhode Island, Georgia and Germany with financial readiness. Please support our Soldiers, Marines, Airmen and Sailors!
Favorite quote:
"The democracy will cease to exist when you take away from those who are willing to work and give to those who would not."
Thomas Jefferson
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