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Davis Brown Tax Law Blog

If it's too good to be true... - February 21, 2012

Joe Kristan, of the venerable Roth & Company P.C. Tax Update Blog, raises an important issue that all taxpayers should keep in mind. Joe reminds us to beware of promises of fast, dramatic tax relief. Whenever a notice of federal tax lien is filed with a county reporter, it becomes a public record. Companies such JK Harris, Integrated Debt, and First Class Tax Relief promise to reduce the tax debt that you owe. Many times these companies send official looking documents which contain threatening language unless you act immediately - by calling them, of course.


These companies promise pennies on the dollar savings for a small fee. These trade practices can be deceptive and many states are now cracking down. Joe points out two such companies that have been targets of state attorneys general. What they are promising is relief through a process known as an offer in compromise. The IRS may agree to settle your tax debt for less than the amount due if certain conditions are met. First and foremost is that your total net worth (including future earning capacity) is less than the amount owed. Thus, the vast majority of all offer in compromise claims are rejected. Even if you qualify under the net worth determinations, there are a plethora of other requirements that you will have to go through before an offer in compromise is approved. There are certain circumstances where an offer in compromise is warranted, but taxpayers should be cautioned against paying any money to an "offer in compromise mill" to handle their case.