Here's his situation:
Taxpayer owes about $25,000 to IRS for tax years 2003, 2005, 2007 and 2009. He set himself up in payment plan by calling the IRS. He pays about $370 a month.
Just for the record: if you can afford $370 to pay the IRS back -- then you can qualify for an Offer in Compromise of your disposable income multiplied by 48 months or $17,760.00. Not an attractive Offer on a $25,000 debt, but an Offer nonetheless. But still -- this doesn't even factor in what this client's assets were, or whether his actual disposable income might have been even higher than $370. These issues could make the Offer even higher.
Front Street proposed to do an Offer in Compromise for him! And for a juicy fee of $3750.00. Ouch. I didn't get the details of the exact amount of the "Offer" which Front Street proposed, but I am certain that it was far far less than $17,760.00 -- or else how could they justify a $3750.00 fee?
What did I propose to this guy? Based on the fact that he a) filed and paid his 2010 tax return; b) had been in the installment agreement for a while; and c) had some good reasons for falling behind, I recommended that he hire us to submit a penalty abatement to the IRS. My fee? $850.00, including doing the appeal of the case should the original submission fail. I told the taxpayer that the chances for his penalty abatement were good but not excellent due to the fact he owed for multiple years.
Be careful, people. While the FTC and the Attorney Generals around the country are cleaning up the marketplace of tax resolution -- scammers still emerge.