Tax Defense Network: Scam Companies & How They Operate

In August, the IRS published their Dirty Dozen Tax Scams for 2012, warning American taxpayers of the top ways scammers cheat taxpayers out of money. The Federal Trade Commission (FTC) also published advice on identity theft, phishing and fraudulent tax businesses to help taxpayers steer clear of the scam. Tax Defense Network, being a part of the tax resolution industry, shares the inside story on how fraudulent tax companies operate.

Tax Defense Network: Scam Report

All scam tax companies hide under a mask so convincing that few doubt its authenticity. Scam tax companies create this mask through false advertising. They use the right words, and the right medium to persuade unsuspecting taxpayers that the solutions they are providing are accurate and attainable. Roni Deutch did it, Patrick Cox of TaxMasters did it, and J.K. Harris did it. These are real companies who scammed thousands of American taxpayers out of millions. Sadly, there are still hundreds more Patrick Cox’s out there.

Tax Defense Network: Scam Tax Companies Busted

Tax Defense Network compiled a scam report of the top busted scam tax companies so that taxpayers are aware of the tactics these kinds of companies use:

American Tax Relief – This company cheated taxpayers through false advertising, incorrect billing, and deceptive business practices. After a large number of consumer complaints, it was busted and shut down by the FTC.

TaxMasters – This tax resolution company faced multiple lawsuits after hundreds of consumer complaints were filed against them. A Texas court ruled that the company was guilty of 110,000 violations of the Deceptive Trade Practices Act. TaxMasters filed for bankruptcy and now owes $5 million to the cable news channel CNN, and others where it aggressively advertised its services to mislead taxpayers.

Roni Deutch – She was a well-known face on television for years, selling tax relief to taxpayers nationwide. Deutch was accused of deceptive advertising, destroying valid documents during court proceedings, and other business malpractices. After her scam was discovered, she closed down her company, and surrendered her license to practice law.

J.K. Harris – This is the most recent tax resolution company to be sued by various U.S. Attorneys General after many consumer complaints claiming deceptive advertising, false billing and fraudulent business practices. A South Carolina judge directed the company to pay $6 million to taxpayers in a settlement. After more lawsuits were brought, the CEO shut down the company, abandoning current clients.

Tax Defense Network: Reporting a Scam

To assist law enforcement agencies, taxpayers must report any irregularities or misconduct by tax relief companies. To prevent and stop a scam, Tax Defense Network advises taxpayers to file a complaint with the Better Business Bureau, Federal Trade Commission, or the IRS. When filing a complaint with the IRS, taxpayers can use Form 211, Application for Award for Original Information.

The complaint should include the following information:

  • The name of the company and people involved in the scam
  • The scam practices witnessed
  • Date and time period of the alleged scam
  • The amount of money involved, if any
  • Any other details that will help the investigation

Reporting, avoiding, and busting scam tax companies will curb the menace in the country. To stop a scam, Tax Defense Network spreads awareness about tax scams and frauds that have helped many taxpayers avoid falling prey to these types of practices.

From the Author: Tax Resolution Legal Team

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