American Tax Relief and Omni Consumer Tax, Inc.

In the current economic climate, many individuals and businesses are experiencing financial stress. This includes a large number of persons or companies that owe tax monies to the federal or state government but are unable to pay this tax obligation. This has lead to a dramatic increase in people seeking the services of so called “tax relief” companies that advertise their ability to negotiate with the Internal Revenue Service to dramatically reduce your tax obligation or in some cases, to eliminate it. These tax relief companies engage in extensive advertising campaigns in which they represent to consumers that a consumer’s tax debt can be settled for “pennies on the dollar.” These companies represent they have special expertise or knowledge that enables them to obtain this type of relief for a consumer. Frequently, this “expertise” is represented to be in the form of the employment of tax professionals such as attorneys and ex-IRS officers. A large up-front fee (between $3,000 and $12,000) is required before the entity will begin the process of negotiating the consumer’s tax debt.

Unfortunately, in many cases, not only do these companies fail to provide consumers with a tax settlement of “pennies on the dollar,” but they provide little to no tax relief at all. The type of tax settlement wherein the IRS agrees to a dramatic reduction in the amount of an alleged tax debt is known as an “Offer in Compromise” (OIC). However, the IRS has very stringent qualifying criteria to be considered for an OIC and the overwhelming majority of debtors do not meet these stringent criteria. The IRS will consider an OIC only in three circumstances: (1) Doubt as to Collectability - doubt exists as to whether the taxpayer could ever pay the full amount of the tax liability within the remaining statutory collection period; (2) Doubt as to Liability – a legitimate doubt exists as to whether the assessed tax is correct; and/or (3) Effective Tax Administration – these is no dispute that the assessed tax liability is correct and the consumer has the ability to pay the full amount, but some exceptional circumstance exists warranting consideration of an OIC. An example of this would be that the taxpayer has a dependent with serious long-term medical issues that will likely exhaust the taxpayer’s assets.

We are investing complaints that certain tax relief companies, such as American Tax Relief and Omni Consumer Tax d/b/a El Dorado Financial, have represented to consumers they could obtain an OIC for the consumer and have taken large cash payments to negotiate an OIC without inquiring as to whether the consumer even meets the minimum requirements for consideration by the IRS. Other commonly heard complaints are that these companies, (1) fail to disclose to consumers the odds that the IRS would accept an OIC or disclosing the stringent criteria to qualify for an OIC; (2) have taken large cash payments from the consumer, but failed to perform any work on the consumer’s behalf and in some cases failed to apply for an OIC on their behalf or even contact the IRS about the consumer’s tax debt; and (3) that any work that is being performed is being performed by clerical staff with little or no specialized tax training instead of the “tax professionals” such as attorneys or ex-IRS investigators that are advertised to consumers.

In many cases, the consumers fail to receive tax relief of any kind and instead find that the delay or inactivity by these entities has actually increased their tax liability to the IRS. The aforementioned problems with purported “tax relief” companies are widespread. The IRS even published a consumer alert cautioning consumers not to be lured by promises that companies can settle tax obligations for “pennies on the dollar” through OIC’s. Many state Attorney General offices have issued similar warnings and in some cases have filed suit against certain tax relief companies for deceptive advertising.

If you retained American Tax Relief or Omni Consumer Tax, Inc. d/b/a El Dorado Financial, to help resolve your tax liability and experienced any of the above issues, or otherwise failed to receive the services you expected, feel free to contact us toll free at 1-888-933-1514 or email at info@beltlawfirm.com to discuss your legal options.