Banking Law

Tax Relief Providers Seek Clarification from New FTC Debt Settlement Regulations

Just weeks after the FTC’s orders to shut down American Tax Relief for cheating taxpayers out of million, the Federal Trade Commission (FTC) is slated to enact the “debt relief service” amendments to the Telemarketing Sales Rule (TSR) that the FTC now says applies to the tax relief industry as well to reign in the deceptive practices of debt settlement, debt resolution and credit counseling agencies.

“There is no doubt that many providers of tax resolution services make unreasonable claims and are guilty of consumer abuse,” said Lawrence Lawler, National Director of the American Society of Tax Problem Solvers (ASTPS). “However, IRS and other agencies have the power under existing regulations to eliminate the ‘bad apples’ without damaging good practitioners in the process.”

The FTC TSR amendment references tax debt as “unsecured.” This contradicts federal tax law, which states that there are simply no “unsecured” federal tax debts. All federal tax debt is secured as are most state tax debts.

“Since all tax debts owed the government are secured from the moment the tax is assessed, tax relief providers by definition should be exempt from the TSR,” said Michael Rozbruch, CEO of Tax Resolution Services, Co., an Inc. 5000 company. “We are grateful that the FTC has been active in bringing enforcement actions to stamp out unethical tax debt relief firms. However we need clarification from the FTC about the application of the TSR to tax debt relief companies so we can continue to serve taxpayers concerned about IRS audits and their collection tactics.”

Rozbruch adds that resolving tax debt can be a complicated and highly technical process, especially if taxpayers are under audit and/or owe ,000 or more to the IRS. Consumers should be weary of easy IRS solutions or software substitutes offered on the Internet, in lieu of professional representation from a practicing ASTPS member or practitioner with the Certified Tax Resolution Specialist credential who is experienced in negotiating with the IRS.

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