The IRS has once again warned taxpayers to watch out for nefarious promoters that claim their services are needed to resolve unpaid taxes owed to the IRS while charging outrageous fees usually without results.

In a release, the IRS characterized these scammers as unscrupulous “mills” that use aggressive marketing tactics to advance false claims of guaranteed settlements for “pennies-on-the-dollar” or that state that there’s a limited time period to resolve tax debts through the agency’s Offer in Compromise (OIC) program—a legitimate IRS program occurring directly between the taxpayer and the IRS. The program permits qualifying taxpayers to work together with the agency to settle tax debts for less than the full amount owed. 

The program is a potential alternative for those whom the IRS deems eligible—usually taxpayers who cannot pay their full tax liability or for whom paying it would create a financial hardship.

"Taxpayers should be cautious of aggressive marketing that can mislead them,” said IRS Commissioner Danny Werfel. “Many OIC mills charge steep fees, give false assurances and can take advantage of taxpayers with empty promises that their tax debt will disappear. The result is often good money paid for bad results.”

The IRS warned  of companies that offer empty promises and steep costs. Although some companies offer legitimate services to assist taxpayers in filing a request, the IRS acknowledges that some do not. Some firms with “OIC” mill operations will extensively advertise their questionable and heavily discounted assurances to settle taxpayer debt. They typically charge excessive fees for service taxpayers could have gotten directly from the IRS.

The IRS adds that OIC mills make a “perennial appearance” on the agency’s annual Dirty Dozen list of scams and schemes, placing taxpayers and the tax professional community at risk of losing money, personal information, and data, among other dangers.

The IRS encouraged taxpayers to familiarize themselves with the OIC program through its website, where they can learn more about the program and whether they qualify. While not all taxpayers will meet the technical requirements for an OIC, the IRS encourages individuals to learn about the program's requirements through the IRS's Offer in Compromise Pre-Qualifier tool. Individual taxpayers may also check their OIC eligibility via their Individual Online Account.

The IRS has a new playlist video series on the OIC program, another resource for scam awareness. 

Although some people will not qualify for an OIC, most taxpayers can avail themselves of an IRS payment plan and can use the online payment agreement to set it up to pay off a balance over time. Taxpayers applying online are notified right away if the IRS has approved their payment plan.

Individual taxpayer payment plan options online include the following:

• Short-term payment plans. For taxpayers who have a total balance of less than $100,000 in combined tax, penalties and interest. This plan gives them an extra 180 days to pay the balance in full.

• Long-term payment plan. For taxpayers who have a total balance of less than $50,000 in combined tax, penalties and interest. They can make monthly payments for up to 72 months.

More details on payment options and methods of payment can be found on Tax topic no. 202, Tax payment options.

The IRS also reminds taxpayers of the first-time penalty abatement policy, under which they can seek administrative relief from a penalty that would otherwise be added to their tax debt.

Information about avoiding scams or tax preparation schemes and fraud is available at Abusive tax schemes and abusive tax return preparers.

To report an abusive tax scheme or a tax return preparer, individuals should use the online Form 14242, Report Suspected Abusive Tax Promotions or Preparers. 

Taxpayers could also mail or fax a completed paper Form 14242, Report Suspected Abusive Tax Promotions or Preparers together with any supporting material to the IRS Lead Development Center in the Office of Promoter Investigations. The address is:

Internal Revenue Service
Lead Development Center MS7900
1973 N Rulon White Blvd
Ogden, UT 84404
Fax: 877-477-9135