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Short answer: tax debt relief companies that promise to erase what you owe for “pennies on the dollar,” guarantee a result or demand their whole fee upfront are a warning sign. The FTC says only the IRS, or your state’s comptroller or revenue department, can decide what you qualify for. For federal problems you can’t resolve yourself, the agency points to the IRS Taxpayer Advocate Service. The advice is in its Aug. 13 consumer alert.
How tax debt relief scams work
Dishonest companies, the FTC says, promise to get rid of your debt before “even looking into your tax situation.” They’ll often charge service fees without doing anything for you, and leave you “further in the hole” with tax authorities.
The alert points to the FTC’s nearly $10 million settlement with the owners of American Tax Service. According to the FTC, the company mailed letters impersonating the government, demanding that people call by a specific date or risk property seizure. It also ran ads on TV, radio and online, including on podcasts. Those led to sales calls the FTC says were filled with false promises of tax debt resolution.
Red flags for tax debt relief offers
| Red flag | What it looks like |
|---|---|
| Promise to erase debt for “pennies on the dollar” | The offer comes before anyone reviews your tax situation |
| “You qualify” claims | The company says you can settle for a fraction of what you owe |
| Full fee upfront | The FTC says to walk away |
| Guaranteed results | Every taxpayer’s situation is unique, so a guarantee is a red flag |
| Government-looking letters | Demands to call by a set date or threats of property seizure |
Source: FTC consumer alert, Aug. 13, 2026.
Where to get real help with tax debt relief
Ignore businesses that say you “qualify” for a tax relief program, the FTC says. If a company wants its whole fee upfront, “walk away.” For federal tax problems, visit the IRS Taxpayer Advocate Service. For state taxes, contact your state comptroller. The FTC’s page on tax relief companies has more detail.
The alert doesn’t say whether those offices are free, so confirm any costs directly. Before paying anyone, ask for the company’s fees in writing.
If a letter or call looks official
Don’t call a number printed on a threatening letter or given by a caller. Look up the agency’s number on its own website. Government impersonation overlaps with tax debt relief scams, and our guide to government impersonation scams explains the pattern. Already paid a company that did nothing? See what to do if you were scammed, and report it at ReportFraud.ftc.gov.
Editor’s take
Tax debt feels urgent, and that’s what tax debt relief sellers count on. Call the agency you owe first, not an ad. Planning season is a good time to sort out a balance through official channels, and our 2027 brackets report covers what’s ahead.
