by Jay Freeborne , Enrolled Agent
July 23, 2013

The oldest form of marketing to people with tax problems is to:

A. Send people and/or businesses with tax liens a mailer after acquiring a list from Lexis-Nexis or some other lien database or
B. Calling individuals or businesses after acquiring a list of tax liens

We know tax lien marketing better than anyone else - as from 1989 to 2011 -- our company - Washington Tax - mailed out hundreds of thousands of tax lien mailers. AS I have written about exclusively on the Tax Problem Resolution Blog - tax lien calling and mailing are problematic in their own right -- see Cold Calling Tax Liens But the one overlooked area of abuse with tax lien marketing these days - is that many people with tax liens already have their cases resolved with the IRS and don't need any further help. So this puts tax lien marketers in a desperate position: they can only motivate people to hire them by lying and making things up.

This new desperation in tax lien marketers is best illustrated by looking at the background of changes in IRS resolution over the last 5 years. Since the onset of the Great Recession in 2008 - many people than ever qualify for "Currently Not Collectible" or an Offer in Compromise - two very common ways of conveying financial hardship to the IRS to resolve a tax debt. While the IRS has generously accepted these resolutions in higher quantities, at the same time -- they have been more diligent at filing liens during these processes.

For example, Currently Not Collectible is an effective resolution of a tax debt as the taxpayer isn't required to pay anything at all. The case is closed and the collection process is stopped. However - a tax lien is recorded against the individual. The taxpayer then waits for the debt/tax lien to expire or have his/her case reviewed in the future. Tax lien marketers can exploit this situation by saying that the taxpayer should file an Offer in Compromise (even though that option might not be available) to get the lien removed. And granted - there are exceptions where they do qualify and the tax lien marketer could be correct. But the customer must be interviewed thoroughly before making this leap.

Another example of abuse is during the Offer in Compromise process. The IRS now places liens at the beginning of the Offer in Compromise process whereas in the past liens were almost always filed by the time an individual filed for an Offer in Compromise. So in this situation, a tax lien marketer - could try to get involved in their already deepening Offer in Compromise process that has already been initiated by the taxpayer. I can't see a real benefit in getting involved once the Offer process starts UNLESS the client clearly doesn't qualify for an Offer and needs alternative solutions OR the taxpayer has a good Offer that was rejected and needs professional help by doing an APPEAL of the Offer.

Nonetheless - with the different timing of the filing of tax liens these days - tax lien marketers are NOT finding people at the right time of their tax problem cycle as they once did in the old days when liens were filed much earlier in the process. I see big problems actually for companies that continue to market themselves in this way. Could the glory days be over for them?

For 30 years, WATAX has been solving every kind of tax problem. Call us at 1-888-282-4697 or email us a description of your tax issue and we'll contact you.

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