Beware the Bait and Switch: How to Spot a Tax Resolution Scam

When you’re facing tens of thousands of dollars in tax debt, it’s natural to seek assistance in solving your tax problem. After all, the IRS is notoriously difficult to deal with, and missteps can cost you thousands in accruing penalties and interest. But when a tax resolution specialist comes along promising an affordable solution to your troubles, can they really be trusted?

Unfortunately, many tax resolution companies out there use bait-and-switch tactics to take advantage of people in stressful tax situations. Many of these are big names with nationwide advertising campaigns—so how do you know when a company is using misleading tactics? 

Let’s take a look at some of the biggest red flags and how reputable tax resolution services do things differently.

Top Bait & Switch Tactics to Watch for in Tax Resolution 

Tactic #1: Advertising “Free” or “Low-Fee” Services to Get You in the Door

Tax resolution companies will often pour huge amounts of money into TV and radio advertising, claiming that they can solve your tax problem on the cheap. They prey on people in already overwhelming financial situations, promising resolution for “pennies on the dollar,” or quoting impressively low fees for their services. 

That is until they get you on the phone. Then, once they’ve got you hooked, you may start hearing about additional services you supposedly need to solve your problem. And—you guessed it—each of these comes at a higher price. 

What Makes a Legitimate Tax Resolution Company Different

Reputable tax resolution specialists work on fixed rates, and they should offer affordable, regular installment agreements. 

At Lothamer Tax Resolution, each case is approached comprehensively and individually. We will only pursue the course of action that has the highest chance of success for your situation. No gimmicks, no last-minute surprises, just solutions.

Tactic #2: Pressuring You to Pay Large Upfront Fees for Future Rewards

Let’s say you call one of these national companies. After speaking on the phone for a while, the representative will tell you all about the wonderful things they can do—if only you pay them a large upfront fee.

This fee may range anywhere from $3,000 to $10,000. That’s no small change for someone who is already in serious debt to the IRS. But, they may claim, it’ll all be worth it—after all, a few thousand dollars now will make your massive back tax debt disappear! Don’t fall for it!

After an unsuspecting victim pays this fee, the company may claim that the situation is more complex than they originally thought, and now they require more money. This loop could go on endlessly until the victim can no longer pay.

When that happens, they’ll close the case and keep all fees you’ve paid—with no refund in sight.

What Makes a Legitimate Tax Resolution Company Different

At Lothamer Tax Resolution, we never require burdensome fees upfront. Instead, we work with you to determine an interest-free payment plan that you can actually live with. Then, we’ll stay on your case, continually keeping you updated on its progress and status.

Tactic #3: “Guaranteeing” Results Before Fully Reviewing Your Case

One of the most notorious tax scams is Offer-in-Compromise mills. These “mills” aggressively promise they can get you an Offer-in-Compromise (OIC) from the IRS without ever reviewing the details of your tax situation. They have no problem charging you exorbitant fees to prepare and submit an offer that they know isn’t going to be accepted.

While it’s true that the IRS does accept OICs, they’re extremely picky about doing so. But these companies lure in more targets by making big promises than they do by being honest. If a company claims a 100% success rate, that’s a major red flag. 

What Makes a Legitimate Tax Resolution Company Different

OICs are one possible solution to a tax debt problem. But they have strict qualification criteria. True tax professionals need time to analyze your situation and make sure you meet them. 

At Lothamer Tax Resolution, we’ll create a personalized Roadmap to Resolution, which outlines the optimal path to solving your tax problem—whether that involves an OIC or another solution. If an OIC is the ultimate goal, we may also be able to help you reach qualifying status before we proceed.

We’re here to help, but we’re also realistic. Our only promise is that we will fight for the best possible outcome in your situation, and be a true partner in your journey to financial freedom.

Tactic #4: Connecting You with Salespeople, Not Tax Professionals

Most big-name, national tax resolution companies use heavy-handed advertising to claim that they have a team of tax attorneys and CPAs. But you never actually get to talk to these professionals, if they have them—instead, when you call, you speak to salespeople.

These customer service representatives know no more about how to deal with the IRS than any other person. All they do is pressure you to pay the big upfront fee. Then, you may be waiting weeks or even months for further action. 

In the worst scenarios, your case never actually gets assigned to a licensed tax professional. You simply get charged more “monthly maintenance fees” while an unqualified person takes their best guess at next steps. 

What Makes a Legitimate Tax Resolution Company Different

Any honest tax service should pair you with an Enrolled Agent: a professional who is authorized by the IRS to represent clients on their behalf. At Lothamer Tax Resolution, you will speak with an Enrolled Agent on Day 1—we do not hire sales reps or promoters. Every specialist on our team also has prior experience either as a licensed CPA or as a tax attorney.

We’re more than happy to share our qualifications with you, and we’re ready to put our 40+ years of direct IRS negotiation experience to work right away.

Bottom Line: Are Tax Resolution Companies Legitimate?

Being in a complex tax situation is incredibly stressful, and there are companies out there who are willing to take advantage of your fear and uncertainty. But it doesn’t have to be this way. At Lothamer Tax Resolution, we put people first—and we’re ready to take realistic, results-driven action on your case today.

Our biggest measure of success is seeing our clients break free of their tax burdens and achieve their dreams: buying a home, taking that big family vacation, or simply building their savings. We can’t achieve that success with short-sighted and misleading tactics. If you’re ready to take meaningful steps toward your financial goals, get in touch with your local tax resolution specialist today.

Lothamer Tax Resolution: Trusted Throughout the Midwest Region

Lothamer Tax Resolution has offices in cities throughout Michigan, Indiana, Illinois, Wisconsin, Ohio, and Kentucky. We’re here to find your optimal path toward tax relief when and where it matters most. With our advanced client portal and always-available team, you’ll never have to wonder where your case stands. To get started, text or call (877) 955-9020 or contact us online today!