Beware of Ambulance Chasing Telemarketers Calling You Regarding a Government Tax Lien; Direct Violation of IRS Circular 230!
"Yes this is Ms. X".
"Ms. X, we are calling you regarding a federal tax lien that was filed are you aware of that?"
"Yes, I am."
"Well Ms. X (in pleasant "soft" voice, usually female) I am with Muddy Waters Financial and we specialize in helping people resolve their back taxes. How much are they claiming you owe?"
"Around X amount."
"OK, hold on for me, we can definitely help."
{Transfers you to the "closer" for a hard sell}
"Hello Ms. X, my name is Seth Gideon, I am a senior consultant here at Muddy Waters Financial. We have been in business since Aramaic was still a spoken language....hire us and all the penalty and interest will stop immediately. If you don't the IRS will levy your bank account!"
Sound familiar? If you have had the misfortune of the IRS or your State Taxing Authority place a tax lien against you and/or your property chances are very high you have already received a call from one, if not several, of these ambulance chasers from all across the country. The movie Boiler Room hits on how the system works (although they sell stock the underlining principles remain the same) with tax help telemarketing scams.
Take away securities, replace with tax representation rhetoric and take away the suits and replace with t-shirts and jeans and you have a typical tax resolution salesroom floor.
If you are unsure what a boiler room refers to it is this: an unflattering term used to describe a place of business where high-pressure telemarketing tactics are used to solicit sales. A boiler room is most often associated with stock brokerage firms (in this case tax resolution companies). A boiler room may rely on aggressive cold calling to sell risky stocks (false or overreaching claims to resolve a taxpayer's debt) to willing investors (taxpayers). A boiler room may use sales methods that violate National Association of Securities Dealers (NASD) (in this case Circular 230 IRS regulation that bars unlicensed sales people, i.e. attorneys, enrolled agents and certified public accountants from soliciting taxpayers) rules requiring brokers to recommend investments that are appropriate to an investor's portfolio (in this case offer in compromise or penalty abatement promises). For example, an unlicensed salesperson (they call them operners and closers) working in a boiler room might try to sell very speculative tax resolution services to a taxpayer who has equity in his home, makes over $100,000 and has not filed his tax returns in 5 years which would tell any competent tax professional that an Offer in Compromise is highly unlikely and based on the circumstances (no reasonable cause for falling behind on his taxes other than he just didn't do it) do not qualify for what they are selling. Boiler room tax resolution salespeople may also try to create taxpayer interest in non-existent IRS programs to heighten their sales pitch (always easier to sell a lie than it is the truth).
The good news is I have spoken to several IRS Revenue Officer's who have said that the Service is trying to convince Congress to crack down on these snake oil salesmen. The bad news is the government is being lobbied as usual by special interests and now with the House and Senate being split good luck on seeing any meaningful legislation being passed, so unfortunately the harassment of hundreds of thousands of taxpayers will continue for the unforeseeable future.
Although Circular 230, which prescribes the rules governing practice before the U.S. Internal Revenue Service (IRS), rules that require attorneys, Certified Public Accountants (CPAs), Enrolled Agents, and others preparing tax returns and giving tax advice to do certain things, and prohibit certain things and penalties may be applied for noncompliance such as solicitation and advertising by an un-enrolled preparer (i.e. unlicensed telemarketers), directly or indirectly, an uninvited solicitation of employment. Solicitation includes, but is not limited to, in-person contacts, telephone communications, and personal mailings directed to the specific circumstances unique to the recipient. The rules are clear so how is it that these unlicensed salespeople are so prevalent in the tax help industry?
The truth is that Congress should not allow any company that provides tax services to be owned by a non-licensed tax professional (any Joe-schmo is not legally allowed to open a law firm so why should anyone be allowed to hide behind a tax resolution firm offering professional tax services that require licensed people to perform the work???). Could you imagine if law firms were publicly traded companies? Talk about the over billing that would go on so they can issue their shareholders dividends, that is what is happening with a lot of these larger companies such as Tax Masters.
Another problem is that some in Congress (and some within the IRS) take the position that these snake oil companies are a positive for the Service because it eventually scares people enough to get them to pay the IRS and creates less work for their Revenue Officers and their collection department (ACS). Too many officials in the federal government view taxpayers who are being ripped off by these tax schemers as collateral damage- taking the moral high ground if they would have paid their taxes in the first place they would not be in the position to get ripped off by these companies. This is why so many of these companies are allowed to stay in business.
In my opinion it takes a even higher precedence to pass legislation that should bar non-licensed people from soliciting professional tax representation. It makes absolutely no sense and in the end all that ends up happening is people getting ripped off not only by the IRS with the insane amount of penalties and interest they charge, but these parasite financial/consulting companies. These sales floors, let me tell you from first hand experience who work at these companies, are primarily made up of drug addicts, felons and flat out psychopathic con artists-strong language but the truth needs someone to shed light on these vampires and I am happy to oblige.
Here are some things to watch out for when you talk to one of these "Financial/Consulting" companies that are calling you:
Some common lies that are used to manipulate people into buying the snake oil:
- Penalties and Interest stop as soon as you hire us.
- We have "special" relationships with the IRS that allows us to solve your case quick.
- We will file an appeal to get the case out of the Revenue Officer's hands so we can settle faster.
- You don't have to pay your current taxes (federal tax deposits, estimated tax payments, withholding, etc.), we will include those in the agreement.
- We have a flat fee.
- We have been in business for 25 years.
100% of these firms will pull the bait and switch on you. The salesperson will tell you what you want to hear then hand your case off to a "team" to work your case where they will "down sell" what you were initially told. Funny story about a client who recently left one of these companies to sign on with me: She said that she was told by her Representative to "forget about what the sales guy told you, this is how it is..."
Can they really be that bad? They have some complaints with the BBB but have a decent rating.
Because of the high level of competition in the tax help/resolution industry there are several telemarketing companies slick enough to realize that it is smarter to refund a client in full then to get another BBB complaint. On average, I am able to assist my clients by drafting a demand of refund letter after they realize they had been hoodwinked (i.e. the sales guy tells them one thing, the person assigned to their case tells them another and asks them several more thousands of dollars in the process).
Another trick they use to mislead consumers is to change the business name by using a dba name such as Berkshire Financial Consulting who bought a company called Quantum Financial in 2008.
Quantum Financial had a horrible BBB record due to the amount of complaints and also had several lawsuits pending. All of a sudden an out of state company came in and took over the same clients, same employees, same building, same phone number (i.e. an alter ego of Quantum). They registered with the BBB and overnight had an A+ rating. It is undetermined if Berkshire was a shell company (i.e. if it was even doing business and/or if it provided the same services they do now - it is extremely unlikely that they did). Of course it was inevitable being that they were hit with BBB complaints and when they were they quickly changed their operating name from Berkshire Financial Partners to Berkshire Capital Partners.
The BBB clearly did not do its due diligence even though several competitors reported this to them. When you take into account that the BBB gave the middle east terror group Hamas an A- after a group of jokers registered it in 2010 you start to see the bigger picture (ABC NEWS BBB HAMAS)
2. Ask them if they will allow you talk to an attorney or the person who will be assigned to your case if you choose to hire them. They won't. And when you do hire them your case will more than likely be worked by a low level assistant with an attorney signing off on their work. They are just there to put up a front so they can collect a check. Most companies who telemarket may have one licensed person for every 5-6 of their representatives, so chances are you will not get any one licensed assigned directly to your case.
3. If you do hire them the only time you will hear from an attorney who works at their firm (and the fact is-no self-respecting attorney would work at a firm that ambulance chases-at best maybe one who just got out of law school and is waiting to get on with a real law firm and can't wait to leave) is when you initially hire them and when they are asking you for more of your money.
4. The fact is there are no self-respecting lawyers, CPA's or Enrolled Agents who would work for a firm that employs ambulance chasing "salespeople". These salesroom floors are flooded with all varieties of drugs (Oxycontin I hear is now the favorite on tax resolution floors, but coming in at a close second is heroin). These are the people who you initially talk to before you send them your money. They can be very persuasive with their rhetoric, which is not all that hard to do when you can make up any lie and fabrication and get away with it. Psychopath's run rampant in these salesroom floors so be EXTREMELY careful and use your better judgement.
As I stated earlier I represent many taxpayers who were once using one of these financial/consulting firms and I hear all the time about how nothing ever got resolved and how they had to keep throwing good money after bad. These companies tell prospects that they will have a "team" of "professionals" that will help them resolve their taxes-which really means two-three inexperienced, unlicensed paper pushers who send out all the boilerplate letters, faxes and have a licensed tax professional rubber stamp their work ( I worked for a firm years ago that told me they wanted to get an actual stamp of my signature!). These "assistants/para's" charge clients up to $150 an hour for simple faxes, boilerplate letters, etc. (which adds up nicely if they have you on a retainer agreement).
After the well polished sales person (the Closer) gets you to sign on they then quickly dump your case to a "team" of tax professional (i.e. unlicensed assistants making $12.00 an hour but billing $125-$175 an hour). These "teams" are required to milk their book of clients for as much as $30,000 - $40,0000 + each month. When it is your turn to pay and you balk for any reason they will simply revoke the power of attorney and stop doing work on your case until you do. People who work at these firms and decide to say something about their practices are quickly shown the door (I would like to see the statistics of these firms rate of resolving cases vs. their turnover ratio). I ran across an interesting blog which details what it is like working for one of these large tax resolution companies (For legal purposes I have to state that I am not confirming or denying what this blogger has to say about this particular tax company):
http://blog.jonathanharrington.com/2004/08/what-you-need-to-know-about-omni.html
http://blog.jonathanharrington.com/2004/04/farewell-omni-financial-i-did-indeed.html
These "consulting/financial" firms can be very pushy. If you want them to stop calling simply tell them to take you off their list and that you have the situation handled and then hang up.
For all you ambulance chasers out there reading my blog (I have a lot of them that do and a lot of them that leave messages late at night on my business phone and spam my other website after I beat them out on a deal) I would like to say, get a real job. And all of you licensed representatives who are stuck working at one of these ambulance chaser firms I would like to say:
When leads are not flowing you way, the first thing you should do is check your two-pronged marketing plan and ask, "Am I implementing it properly and fully?" If yes, then consider doing a full evaluation of how your firm operates. But whatever you do, do NOT take a loving look at the telephone and consider calling prospects. It is an easy temptation, especially when you know their names.
But you are an education resource, an accessible expert, with years of experience, skills, and successes. You are a professional. People come to you. You do not go after them, other than indirectly through providing education and creating relationships with your marketing. It is salespeople who call you at home or work and try to pressure you into giving them your money ASAP or lose out on the deal of the century.
The moment you place a cold-call, you are no longer you. You are no longer a high-value, high-priced professional provider of quality services that only people like you can provide. Put another way, calling is like begging. It demolishes your credibility. You look desperate. If you are supposed to be so good, why would you be chasing after clients?
Are these companies trying to scare you? Here is something to scare them:
Why I am, by far, the better value:
• No Bait and Switch. I am licensed to perform the work and will be the only person you talk to, no para legals, no assistants, no low level clerks. I am the only one working your case from start to finish. The majority, most likely all, of these companies that have contacted you has done so with a unlicensed salesperson. If their fear tactics don't work they will tell you anything to get you in the door then flip your case over to someone else to work who has to downplay the expectations that you were fed. I under sell and over deliver- and have the references to prove it.
• No Outrageous Retainer Fees. Most of these companies, if you read the fine print, will charge on an hourly basis(even though you may have been told it is a flat fee). They will bill you anywhere from $50-$1,000 for a boiler plate letter. They do this so they can “re-write” you for additional fees. Click here to read the post and to see the actual retainer statement of a current client of mine received from one of these companies prior to hiring me. All companies who perform the “bait and switch” have a “production” or “services” department who also earn their paycheck on commission. The person assigned to your case is expected to generate a monthly quota by re-writing existing clients (even though they will most likely tell you otherwise). Why throw good money on bad?
• Licensed to Perform the Work. Many companies use unlicensed salesmen who never worked, yet alone resolved a case in their lives (although many will lie and say they have), to talk to you about the case and outsource the work with to someone else who is licensed. You may, or may not even get an opportunity to speak to the person who actually talks the Internal Revenue Service. And if you do, the only time you will hear from them is at the start of the case and when they ask for more money-the rest of the time you will be contacted by one of their assistants (they call them paras).
• Full Disclosure. If you have a business that has fallen behind on its quarterlies (941s) and now has a payroll tax liability the IRS will be looking to assess you personally for the Trust Fund portion of the taxes. This is the amount withheld directly from the employee’s pay (not including FICA and medicare, or penalties and interest). That is why my Service Agreement includes both your business as well as you personally.
Nicholas Hartney, E.A. not only has very reasonable fees but more importantly provides a value of service that is unprecedented in the field of tax representation. Feel free to email Nick at nick@genesistaxconsultants.com or directly at (720) 453-2795 ext. 777.
I would like to say that I have been in this industry long enough to see many of my once colleagues go on and either create their own business or become a manager at one of these firms. They all started out with good intentions but after they got a taste of the money they quickly sell out and their ethics go down the drain. Of course they will tell you that they are not boiler rooms but the fact is they are. They have their managers knock on the doors of their tax professionals offices daily, every hour asking them how much money they have coming in. When I was at Omni-Financial from 2002-2004 I remember the meetings of their management staff every morning in front of the whole company (I would say approximately 100 people at that time)going around the room and asking each Associate (tax professional) how much money they had coming in on that day and throughout the week. They were so much of a boiler room that they would make you pick up your clients checks using Federal Express and you would have to write on the "Money Board" where everyone could see who you "rewrote" (i.e. ask for additional money above the initial sales contract) and throughout the day made you confirm three times by marking x 1, x 2, x 3. They were blood thirsty vampires, and their employees and clients were nothing more than a means to the owners end. If you continued to miss your quota you were fired, the turnover rate was remarkable. It was ALL about money, don't let them fool you. Look up boiler room in a dictionary and you will find Omni-Financial.
Clear Creek Financial was started by a team of an unlicensed Associate and his paralegal (they had to talk to the IRS by using a relatives CPA license until they could afford to hire licensed people). The company was started with all the right intentions (at least that's what they say) but they became a carbon copy of Omni-in fact some have said even worse.
Berkshire Capital Partners/ Berkshire Financial Partners/ Berkshire Tax, etc. The company is an alter ego of Quantum Financial, LLC another Omni-Financial spin-off. I talked about them previously in this post. They lie about their length in business (11-12 years-but in reality 1-2) and their affiliation with Quantum Financial and have already changed their name again to avoid marks on their BBB (from Berkshire Financial Partners to Berkshire Capital Partners).