According to the FTC, if you help settle "tax debts owed to the government – you’re covered by the new Rule."
Washington, DC (PRWEB) September 29, 2010
The FTC recently published its final rule amending TSR. The TSR is very broad in its coverage and, according to the FTC, now applies to tax resolution services. Under the amended TSR, starting on October 27, 2010, it will be “…illegal to charge upfront fees. You can’t collect any fees from a customer before you have settled or other¬wise resolved the consumer’s debts.”
Other amendments to the TSR took effect on September 27, 2010. Anyone who violates the TSR is subject to civil penalties of up to $16,000 per violation. In addition, violators may be subject to nationwide injunctions that prohibit certain conduct, and may be required to pay redress to injured consumers.
The TSR now defines a “debt relief service” as a program that claims directly, or implies, that it can renegotiate, settle or in some way change the terms of a person’s debt to an unsecured creditor or debt collector – including tax debts. According to the FTC, if you help settle "tax debts owed to the government – you’re covered by the new Rule."
The expanded definition includes reducing the balance, interest rate, penalties or fees a person owes. The TSR defines “telemarketing” as a “plan, program, or campaign…to induce the purchase of goods or services” involving more than one interstate telephone call. The TSR encompasses all forms of advertising, including Internet, web pages, television, radio, and direct mail.
The TSR contains specific requirements for debt relief service providers related to the charging of fees before providing any services. It specifies that fees may not be collected until:
- the debt relief service successfully renegotiates, settles, reduces, or otherwise changes the terms of at least one of the consumer’s debts;
- there is a written settlement agreement, debt management plan, or other agreement between the consumer and the creditor, and the consumer has agreed to it; and
- the consumer has made at least one payment to the creditor as a result of the agreement negotiated by the debt relief provider.
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