companies that sell debt relief services on the phone—including promoters of tax relief and settlement services.
Greensboro, NC (Vocus) October 12, 2010
The survival of many tax debt relief firms may hinge on the definition of one word in recent FTC legislation that cracks down on deceptive practices, according to independent Web site easyIRS.com. The rules characterize debt that many settlement firms handle as “unsecured,” including credit card, medical, and tax debt.
In response to the Federal Trade Commission (FTC) actions, a coalition of tax debt relief industry leaders is planning to argue that tax debt is secure—so the law wouldn’t apply to them, according to e-mail evidence obtained by easyIRS.com.
The FTC released a consumer alert Wednesday clarifying its intent to include “companies that sell debt relief services on the phone—including promoters of tax relief and settlement services.” It also reinforced its position Wednesday by shutting down American Tax Relief for alleged deceptive practices and false claims in advertising.
Those actions sent the industry scrambling. According to easyIRS.com, an e-mail announcement Wednesday by the National Policy Group, a lobbying firm that is representing some tax debt relief companies, explained its take on the word “secure.”
“It is our understanding that tax debt is considered ‘secured’ … . We understand that the inclusion of tax debts in the TSR was erroneous,” NPG representative Kallie Guimond explained in the e-mail.
Tax industry insider Jim Buttonow, CPA and 19-year IRS veteran, said he isn’t surprised the FTC took action or that the industry is searching for a way out. “This is a long-shot position that the FTC does not appear to support,” he said.
Buttonow views the FTC ruling as good for consumers. He says customers will more likely work directly with the IRS, without professional representation, or work with local tax practitioners. This is also good news for the emerging Web-based tax software sector, which is providing low-cost, Web-based software to fix IRS problems.
“Dealing with the IRS shouldn’t be a mysterious process,” said Alan Neely, cofounder of easyIRS.com. “Our business model automates the other side of the IRS’s enforcement processes. People don’t need representation to work with the IRS. It’s just a matter of math and forms—not slick negotiating,” he said.
The idea that dealing with the IRS can be cut and dry, rather than nuanced and negotiated, is not the message Americans are used to. Neely said that by providing Web-based problem analysis, math, and paperwork customization, his company’s software helps consumers solve their own IRS problems—intending to do for tax problem solving what Intuit’s TurboTax™ has done for tax filing.
In the end, the same FTC rules that rein in deceptive tax resolution firms may open new doors for consumers to take control of their personal IRS problems.
New River Innovation company profile
New River Innovation, Inc. is a company based in North Carolina and backed by a leading venture capital firm, Intersouth Partners. We are staffed by IRS and tax experts, as well as professionals experienced in high-security applications, Web technology, and intellectual property.
Using the Web, New River Innovation applies years of experience solving tax problems into easy-to-use software applications.