Tax relief scams and red flags: how to protect yourself

1. Guaranteed outcomes or settlement percentages before reviewing your finances.
2. "Pennies on the dollar" or "Fresh Start forgiveness" claims. Offers depend on reasonable collection potential, not marketing.
3. Large upfront fees before any investigation of your account.
4. Pressure tactics — "this offer expires today."
5. No named credentialed professional on your case.
6. Advice to stop talking to the IRS or ignore notices.
7. Recommending an Offer in Compromise to everyone. The IRS calls these "OIC mills."
8. Asking you to sign a blank Form 2848 or other forms.
9. Vague refund policies or refusal to put fees in writing.
10. Unsolicited calls or texts claiming to be from the IRS or a "government program."

The IRS usually contacts you first by mail. It doesn't demand immediate payment by gift card, wire transfer or cryptocurrency, threaten arrest, or ask for credit card numbers by phone. To check a notice, log in to your IRS Online Account or get a transcript — and call only numbers listed on IRS.gov. If a letter seems off, see IRS notices explained for what real notices look like.

Three credentials can represent you before the IRS without limits:

• Enrolled agents (EAs) — licensed by the IRS. Search the IRS Directory of Federal Tax Return Preparers.
• CPAs — verify with your state board of accountancy.
• Attorneys — verify with your state bar.

Representation is authorized with Form 2848. Read enrolled agent vs CPA vs tax attorney for which fits your case, and how to choose a tax relief company for questions to ask.

A legitimate firm will usually: pull your IRS transcripts with your permission (Form 8821 or 2848); review income, expenses and assets; explain all realistic options — including ones you can do yourself, like an online payment plan or first-time penalty abatement; quote fees in writing, often in stages; and tell you when an Offer in Compromise is unlikely. The FTC's guidance on tax relief companies is a good checklist.

Paying for help makes most sense with unfiled years, larger balances, revenue officer cases, payroll tax issues, or offers.

• Set up a payment plan online if you owe $50,000 or less.
• Request first-time penalty abatement by phone.
• Request a Collection Due Process hearing with Form 12153 after a final notice.
• Get transcripts from your IRS Online Account.
• Run the official IRS Offer in Compromise Pre-Qualifier.

If you paid a company that didn't deliver, act quickly. First, contact the IRS directly to learn the real status of your account — you may find nothing was filed. Revoke any Form 2848 power of attorney the company holds so it can't act for you. Ask the company in writing for a refund and an itemized list of work performed. If you paid by credit card, dispute the charge with your card issuer. File complaints with the Federal Trade Commission, your state attorney general and the Better Business Bureau. If the company's representative was a CPA, attorney or enrolled agent, you can also complain to their licensing body or the IRS Office of Professional Responsibility. Then get back on track: payment plans, penalty relief and hardship status can all be requested directly, and the Taxpayer Advocate Service or a Low Income Taxpayer Clinic can help for free.

Report impersonation scams to the Treasury Inspector General for Tax Administration (TIGTA) and the FTC. Report problems with a tax preparer to the IRS using Form 14157. If you paid a company that did nothing, check whether your state attorney general handles consumer complaints. Then get your transcripts and make sure no deadlines — especially the 30-day window after a final notice — are being missed.