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PENNIES ON THE DOLLAR!

November 08, 2006

If you read the sports pages you'll see, among the pitches for tire dealers and "gentlemen's clubs," ads for outfits promising to settle your tax debts for "pennies on the dollar." I've worked with clients who came into our office after trying these "tax resolution" companies, and I wasn't impressed by their work.

Nor is tax attorney Kreig Mitchell:

I myself have called a few of these firms to see what services they offer, etc. In one conversation I asked the representative who "had handled thousands of cases," how many tax related court cases he had read recently and whether he could cite any tax code section by number. The answers from this guy were: "tax case, what are you talking about. I don't read tax cases" and "code section, we don't do code sections here." The conversations usually go down hill from there. If you ever get the time and you want a laugh, you should try calling these firms....

He says clients can end up paying more to the IRS as a result of working with these outfits:

For example, after reviewing cases from these firms I often find that: (1)the IRS did not properly assess the underlying tax therefore no tax was due, (2) the statute of limitations for collecting the tax had long since expired so no tax was collectible, (3) that the IRS had recorded the incorrect tax information, when corrected showed no tax due, and (4)the tax liability was fully dischargeable in bankruptcy which puts the taxpayer in the superior negotiating position with the IRS, which was never mentioned in the negotiation process.

Pennies on the dollar, then? You may get more for your money at the gentlemen's club, and certainly at the tire sale.

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