Posted: 6/22/2018

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Imagine owing the Internal Revenue Service (IRS) a considerable amount of money. Drowning in tax debt and desperate to find a way out of the debt, you turn to a tax relief service for help. After paying for services and waiting on a resolution, the company finally tells you the IRS is unwilling to negotiate and you owe more money due to penalties and fees. And they refuse to give you a refund although they did not do what they said they would do. Talk about a nightmare, right?

money stress

Imagine owing the Internal Revenue Service (IRS) a considerable amount of money. Drowning in tax debt and desperate to find a way out of the debt, you turn to a tax relief service for help. After paying for services and waiting on a resolution, the company finally tells you the IRS is unwilling to negotiate and you owe more money due to penalties and fees. And they refuse to give you a refund although they did not do what they said they would do. Talk about a nightmare, right?

This is the situation a Texas taxpayer, who wishes only to be identified as M.D., fell into when hiring Baypoint Associates LLC (Baypoint) to help with their tax issues. M.D. was facing a $22,000 debt with the IRS when an ad from Baypoint claiming they can cut that debt by half enticed M.D. to hire them. Initially Baypoint agreed to negotiate with the IRS for $500. Months later, they asked for an additional $1,300. M.D. explains “After I paid them the $500, thinking that was the only payment, they told me I was misinformed by an employee who is no longer there and the $500 was only to get my transcript. The counsel who supposedly was going to negotiate with the IRS on my behalf will need the $1,300 payment to process my request and begin the negotiation with the IRS.”

M.D. paid the $1,300 and waited for some resolution. Here is what M.D. said occurred, “After they collected my payment, weeks had passed, months went by and I did not hear from them. Every time I called, I had to leave messages. When I emailed, I’d get a response after 3 to 4 days, telling me they are still negotiating with the IRS.”

Then Baypoint dropped a bombshell on M.D. Here’s how the story continues, “The due date for this case to be closed was supposed to be March 1st. They called to tell me that the IRS refused to negotiate and I have to pay the full amount due plus penalty and late charges totaling $3,000. Therefore, in addition to the $1,800 I paid them for nothing, I incurred an additional $3,000 by the IRS. My debt went from $22,000 to $25,000.”

M.D. called the IRS and found out that there had not been any negotiation attempts by anyone on their behalf. M.D. continues. “In fact, I called three different times and talked to three different IRS agents and all three told me that no one had contacted them to negotiate for me. That's when I realized I was scammed. I was not able to get a manager or supervisor to complain to, although I sent email after email with no response.”

Distressed and eager to recover the $1,800 paid to Baypoint, M.D. reached out to Business Consumer Alliance who promptly contacted Baypoint for a response. Our BCA representative was able to leave a message and we are waiting for a reply to the allegations of defrauding this taxpayer.

Sadly, M.D.’s story is not uncommon. Our experience has been that many of these tax debt relief companies exaggerate, misrepresent, or flat-out lie about their ability and expertise in effecting settlements and often promise much more than they can deliver. They generally attribute their inability to obtain settlements on the fact that the customer provided inaccurate or incomplete information.

If you find yourself in debt with the IRS, we suggest you first seek the advice of an IRS enrolled agent, CPA, or a tax attorney. You may also consult with the IRS to determine if you would qualify to file for an offer in compromise, or some other type of payment arrangement. For more information, check out our blog, “Dealing with Tax Debt.”

What would you do if you found yourself in a similar predicament? Would you use the services of a tax relief company? We’d like to hear about your story, so leave a comment below.

About Business Consumer Alliance

Business Consumer Alliance (BCA) is a non-profit company that started in 1928. The broad purpose of BCA is to promote business self-regulation. BCA's mission is achieved by assisting consumers in resolving complaints with businesses and using that complaint information, along with other relevant information such as customer reviews, to forecast business reliability. With community support, BCA can identify trustworthy and ethical businesses and warn the public to avoid unscrupulous businesses whose purpose is to defraud the marketplace. BCA also helps businesses promote themselves by providing services and tools to protect their business and reach out to their customers. BCA obtains its funding from member businesses who support the mission and purpose of the organization and who agree to abide by high standards of ethical business practices.

Tags: IRS tax assistance, scam, tax debt

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