NEW FTC rules may affect representation

[lenboush]

The FTC has recently come out with new rules for "Debt Relief Services". Here is their NEW their definition of a "Debt Relief Service".

"The definition of "debt relief service" covers all types of unsecured debt. If the debts you settle are unsecured - for example, medical debts or tax debts owed to the government - you're covered by the new Rule." Note the inclusion of "TAX DEBT"!

It seems that if you do anything to assist a taxpayer in settling their debt with the IRS, you come under these new rules and the new rules are very stringent. For example, you cannot collect any fees upfront is one of the new rules.

Read an article about it here, http://www.accountingweb.com/blogs/t...r-get-paid-huh

I wondered if anyone had heard any feedback on this?

[solomon]

Per the FTC brochure, attorneys that do not use interstate commerce or meet face to face first with a potential client would be exempt. Would this not apply to other tax practitioners as well?

Surely most have seen the advertisement on TV for tax representation (can't recall his name) that does interstate commerce but states up front that he meets with potential client face to face right up front.

[Nashville]

Tax Resolution Firms

All the tax resolution firms, such as Roni Deutsch, J K Harris, TaxMasters, etc. that have become household names due to heavy advertising do collect fees up front.

Complaints are everywhere that after collecting fees up front, they don't really do anything once they get your money.

This may be true, but if I were trying to help them reduce their tax debt, I would not even attempt to do any work before charging them money up front. Although I'm sure there are a few exceptions, 99% are people who DID make income, and blew the money quickly before dealing with the tax consequences and now view the IRS dealing heavy with them after they are broke. These are mostly people who DO NOT believe in the concept of "paying as you go." I would NOT be in that business without collecting up front. If they consider you to be a vehicle to avoid paying their taxes, then how serious are they going to be in paying YOU if you work for them and bill them later?

Having said that, if it is true that Deutsch, Harris, Patrick Cox, etc.cannot collect fees up front, then they won't be representing many people. Regardless of how sleazy you think these firms are, I wouldn't either.

[taxmom34]

totally agree

with nashville, it turns my stomach when i see the ads that say " i owed the IRS $40.,000 and only had to pay $1500" .