Beware of Tax Relief Scams and Fake Tax Lawyers
The tax relief industry is known for firms ripping people off in droves. Many “tax relief” firms (aka fake tax lawyers) over the years have been sued, fined, and ultimately shut down for false and deceptive sales tactics that leave their victims out thousands of dollars, and worse off than they started. Every time a scammer gets put out of business, two more seem to pop up. The reason people keep falling for these scams is because these fake tax lawyers are allowed to act as if they are real tax lawyers, and nobody seems to care enough to stop them from doing that. Let me explain how all this works.
Tax Relief Scams 101
Everyone is afraid of the IRS. From the lowly minimum wage employees all the way up to the top 1%. The IRS is to adults what monsters are to children. Doesn’t matter how big and powerful you are, the IRS is terrifying. And these tax resolution companies know that. They feed off that fear, even prey on it. When they set up shop, they often do so by making a lot of noise, equipped with a lot of heavy advertising. The gist of these ad campaigns is always the same “we can solve all your IRS issues” or better yet “we can make the IRS leave you alone” etc. They also mention the wonders their “team of tax lawyers” can do. Desperate to get the IRS off your back, you call the number provided. You speak to a high-pressure, fast-talking commissioned salesperson who makes outlandish promises that seem too good to be true but you decide to trust him anyway. It’s not like he would lie about this stuff, would he? There have to be laws against that, right? You fork over thousands of dollars and you rest easy thinking that your problem will be taken care of. Meanwhile, you continue getting notices from the IRS. For months now, your debt has been accumulating and now they are going to garnish your wages. But wait? Didn’t you pay a bunch of money to have that taken care of? What ever happened with that? You call the company that you entrusted to handle your IRS issue and the salesperson you spoke with doesn’t remember you (why would he/she?). Your file has gotten lost in the shuffle. You don’t even know who your assigned “tax attorney” is. Nothing has gotten done. Nothing he said was true. How did this happen? How did you get here? I’ll tell you how.
The attorney you were promised is a FAKE TAX LAWYER.
What it means to be a Fake Tax Lawyer
The relationship a person has with an attorney is special under the law. People trust their attorneys and believe what they say. Unfortunately, if an attorney has ill-will, he or she would easily be able to take advantage of his or her clients. That is why attorneys are highly regulated by the State Bar. The Rules of Professional Conduct are designed to prevent attorneys from taking advantage of their clients. If an attorney breaks those rules, he or she could easily lose their license to practice. Most attorneys do not take advantage of their clients because they have too much to lose. It takes almost a decade of college and post-graduate education and hundreds of thousands of dollars of tuition to become an attorney, so lawyers will usually think twice before breaking the rules.
Because the Rules of Professional Conduct only apply to lawyers and law firms, only licensed attorneys are allowed to call themselves a lawyer. Also, only a law firm can be in the business of providing lawyers to the public (MCL 450.681). The problem with these “tax relief” firms is that they are not law firms, so the Rules of Professional Conduct don’t apply to them. These are the rules that were written to prevent people from getting ripped off.
They are allowed to do things that lawyers would lose their license for. For example, a lawyer cannot share legal fees with a non-lawyer. Because of this rule, law firms are not allowed to employ commissioned sales people. Salespeople don’t have a law license on the line. They’re more likely to say whatever it takes to get you to pay up. They don’t have anything to lose. Since the Rules of Professional Conduct don’t apply to “tax relief” firms, they are allowed to use commissioned salespeople.
This is why only a law firm can be in the business of providing attorneys. There is a law in place that says companies that are not law firms cannot use the title of attorney in their advertising. They cannot offer you an attorney, even if attorneys actually work there.
How to Spot a Fake Tax Lawyer
If someone is promising you an attorney, and the firm does not have “law” in the title, chances are they are fake tax lawyers. If you call a company up and ask the person on the phone, SPECIFICALLY IF THE COMPANY IS A LAW FIRM, in those EXACT WORDS, and they say ANYTHING BUT YES, they are fake tax lawyers.
Make Sure You’re Talking to a Real Tax Lawyer
IRS issues are nothing to be taken lightly. More importantly, they shouldn’t be left in the hands of someone who will make empty promises just to get your business before handing your case off to some faceless, nameless person. You should be able to look the person (lawyer) in the eye who is personally going to handle your tax issue and ask them questions. You need to be assured that whomever is handling your case is bound by state law to abide by ethical rules and guidelines or risk losing their license. Otherwise, you are just throwing money at a problem that will never be resolved and digging yourself in deeper with the IRS which can lead to levies, wage garnishments, liens, etc. Make the smart choice and ask the right question, “Are you a tax law firm?”