Beware of Tax Debt Scams: How to Avoid "Offer in Compromise" Mills
The IRS warns taxpayers about shady businesses known as "Offer in Compromise" (OIC) mills. These companies make false promises to settle your IRS tax debt for "pennies on the dollar" while charging high fees for little to no results. Being aware of these scams is essential so you don’t waste your money.
What is an Offer in Compromise (OIC)?
An OIC is an actual IRS program that allows certain taxpayers to settle their tax debts for less than they owe if paying the total amount would cause financial hardship. When deciding eligibility, the IRS considers each taxpayer's unique situation, including their income and assets. The good news? You can apply for this program directly with the IRS without paying a third party.
You can apply for the Offer in Compromise program
directly with the IRS without paying a third party.
The Risks of OIC Mills
Some companies exploit the OIC program by charging excessive fees and promising results they can't deliver. These "mills" often target taxpayers with aggressive marketing, claiming they can make tax debts disappear. Unfortunately, many of these promises are empty, and taxpayers end up paying for services they didn’t need or could have handled on their own.
The IRS regularly lists these scams on their "Dirty Dozen" list of common tax fraud schemes. If a company is pressuring you into a service with unrealistic guarantees, take a step back and research your options.
How to Avoid Scams
You can check your own eligibility for an OIC directly through the IRS website using the Offer in Compromise Pre-Qualifier tool. Additionally, the IRS offers various payment plans for those who may not qualify for an OIC but still need help paying their tax debt.
Payment options include:
Short-term payment plans for debts under $100,000, giving you 180 days to pay.
Long-term payment plans for debts under $50,000, allowing up to 72 months of monthly payments.
Protect Yourself from Scams
If you think a tax scam has targeted you or you want to report a fraudulent company, the IRS makes it easy to do so online or by mail. Mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers, and any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations.
Mail:
Internal Revenue Service
Lead Development Center MS7900
1973 N Rulon White Blvd
Ogden, UT 84404
Fax: 877-477-9135
Be cautious of any company that guarantees you unrealistic results when it comes to your tax debt. For more information on payment options and how to avoid tax scams, visit IRS.gov.
Don’t let dishonest companies take advantage of you. Always research your options, and remember you can work directly with the IRS to resolve your tax debt. If you have questions, please give me a call.