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Released: May 24, 2011

Some tax-resolution companies are scams

Source: Sandra Block, USA Today

Investors are often warned that if something sounds too good to be true, it probably is. Or in other words, if that guy on TV really made millions investing in real estate with no money down, why can't he afford a better toupee? You should apply the same skepticism to ads from companies that claim they can make your tax debts disappear. The ads, which also flourish on the radio and the Internet, typically claim that good folks who run these companies will defend you against those big bad bullies at the IRS. While there's no question that the IRS can make your life miserable, some tax-settlement companies could compound your tax woes, according to lawsuits filed by state and federal regulators. Some recent examples: •In September, the Federal Trade Commission charged American Tax Relief of Beverly Hills with misrepresenting its ability to provide tax relief for thousands of customers. The FTC said most customers never got the promised tax relief, even though they paid "exorbitant fees." The FTC alleged that the company cheated consumers out of more than $60 million, which enabled the company's owners to amass an impressive collection of luxury cars.

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