The National Association of Tax Resolution Companies (NATRC) inaugural conference in Washington D.C., May 20-21 had several important agenda items. Perhaps the most important was the discussion on how to best regulate companies using deceptive and misleading advertising practices to lure in vulnerable consumers looking to resolve their IRS tax issues.
These companies, called lead aggregators/generators, hook unwitting consumers by promising IRS debt relief for “pennies on the dollar” then hand them off to an affiliate company and often disappear with the consumer’s money. These companies and their horrible practices have tarnished the reputation of the entire industry. Here are some lead aggregator practices the NATRC is looking to stop:
- An aggregator’s main purpose is to sell the private and personal information of the consumer (without their consent) to other companies who negotiate a settlement or resolution. The reason: aggregators do not do the actual case work, so they hand off cases to an affiliate company but don’t let the consumers know about the transfer when they take their money.
- The consumer’s relationship with the aggregator typically ends once they hand over their personal information.
- Sadly those consumers who bought services from these companies, were often left with no resolution, sometimes more IRS tax debt than before and the company they entrusted to provide tax help nowhere to be found.
The Federal Trade Commission (FTC) amended the Telemarketing Sales Rule in August 2010, due to a flood of complaints regarding consumer credit card companies, making many of their questionable business practices illegal. While the new regulations put many of these “bad” companies out of business, hundreds of the same disreputable consumer credit firms changed gears and began marketing their “expertise” in tax debt resolution believing it would be the same.
Those of us who run credible firms, outlined on the National Association of Tax Resolution Companies (NATRC) conference agenda, the institution of the following rules and regulations:
- Establish federal and state legislation that makes it illegal for tax debt resolution firms to do business with a lead aggregator.
- Prohibit lead aggregators to market themselves to tax resolution practitioners and consumers at large.
- Any firm offering tax resolution services must have on staff a qualified tax resolution expert who has the legal authority to place their own name(s) on IRS Form 2848, Power of Attorney. Typically, only a CPA, attorney, or Enrolled Agent who can sign and is authorized to act as the taxpayer’s representative.
- Companies that cannot make this claim, should be prohibited from generating or aggregating leads that would subsequently be passed along or sold to others.
Important to note: Credible resolution firms typically employ the three types of individuals who are allowed to represent clients before the IRS: a CPA, an attorney or tax attorney or an Enrolled Agent.
Regulating lead aggregators the same way CPAs, attorneys, or Enrolled Agents will prohibit companies from using false outrageous claims that prey on consumers who often don’t qualify for tax relief in the first place. It will help the industry self-regulate and also go a long way to restoring the reputation of the tax debt resolution industry that up to now thanks to unscrupulous interests, has been damaged.
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