FTC: American Tax Relief Ripped off 20,000 Clients

American Tax Relief claimed to be able to reduce the income tax bills of their clients. Their television commercials were compelling. To further attract clients, they mailed postcards to solicit the business of those hit with federal tax liens.

An investigation by the Federal Trade Commission concluded that 20,000 consumers paid upfront fees for worthless tax relief services. Fees ranged from $3,200 to $32,000.

Clients made multiple payments, but often received nothing in terms of services. Often the first clue that they had been ripped off was the unreturned phone calls.

Instead of providing legal representation to help negotiate tax bills with the Internal Revenue Service, many clients were left to fend for themselves. There were allegations that when work was done, that it was completed by unlicensed employees rather than attorneys.

There were issues of unauthorized bank drafts and charges made to clients' credit cards without permission. When clients protested, calls were ignored and refunds were rarely provided.

The first clue should have been the outrageous claims made by American Tax Relief. No entity can help you settle your IRS debt for pennies on the dollar. If you believe such claims and fail to check out the company's reputation, then you share some of the blame for your situation. The Federal Trade Commission and states' Attorneys General also share some blame, since scams of this magnitude should be shut down before they grow to such levels. It took the discovery that American Tax Relief failed to pay their own income taxes to finally put them on the radar.

To verify the claims made by American Tax Relief or any other company, always check their rating with the Better Business Bureau. Also, research the company to look for positive and negative comments from their clients. Just a few minutes of researching tax relief scams and reviews of legitimate providers can save you thousands of dollars in fees and some sleepless nights.

For American Tax Relief, this may be the end of the road. Owner Alex Hahn has had his assets frozen, and the same has been done to the company's assets. American Tax Relief bilked customers out of $60 million. It is expected that Hahn's $3.4 million home in Beverly Hills will be seized, along with the two Porsches, a Ferrari, two Mercedes, a Bentley and a Rolls Royce. FTC Consumer Protection director David Vladeck pointed out that the owners of American Tax Relief didn't even buy American.

If you were a client of American Tax Relief, consider telling your story. Make sure you avoid providing any emails or telephone numbers in your comment.