Associated Tax Relief

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1. Feb 25, 2009

Ivan Seeking

Staff Emeritus
So what is the deal with this?
http://www.associatedtaxrelief.com/

On their commercials they show people who claim they had drastic reductions in their tax debt. One says that he owed over $130,000 and had his tax liability reduced by over$90,000. What's with that?!?!?! Can I just neglect to pay my taxes and then go running to Associated Tax Relief to have my tax burden reduced? And why would people get such drastic reductions?

2. Feb 25, 2009

mgb_phys

If you are rich enough yes.
Your team of lawyers goes to the tax man and says - we can tie you up for years in court while you try and find the details of all of the offshore accounts. Or we can offer to pay X, in cash right now.

Of course if you aren't rich then the boot is rather on the other foot.

3. Feb 25, 2009

Staff: Mentor

This has nothing to do with being rich, it's the same as amy other debt collection plan, from credit cards to phone bills: creditors will settle for an amount equal to their calculated odds of getting paid.

4. Feb 25, 2009

mgb_phys

Logical intelligent creditors would - does this apply to the IRS?

5. Feb 25, 2009

Staff: Mentor

Apparently so...

6. Feb 25, 2009

Ivan Seeking

Staff Emeritus
I thought that even bankruptcy couldn't relieve a person of tax liability. Why would the IRS negotiate anything except a payment schedule?

7. Feb 26, 2009

Proton Soup

because sometimes businesses fail and people fall behind and can't catch up. if you keep punishing them, they will never recover and become a productive taxpayer again.

i hate the commercials for that company, tho. they look very scammy indeed.

8. Feb 26, 2009

Ivan Seeking

Staff Emeritus
Is that a requirement for tax relief - bankruptcy?

9. Feb 26, 2009

Proton Soup

maybe? i don't know. maybe their receipts are just way down. what if the choice is either paying the full amount of the tax owed, or going bankrupt? what is in the best interest of the government long-term?

10. Feb 26, 2009

dilletante

As I understand it, the government will give deep discounts in rare cases but not if you have tangible assets that could cover your debt. You can't keep your vacation home and get a deal from the IRS at the same time. It also costs you \$150 just to apply for a compromise. Here is a more detailed discussion:

http://moneycentral.msn.com/content/Taxes/P69849.asp

11. Feb 26, 2009

Proton Soup

that's why you keep money in UBS

12. Feb 26, 2009

Staff: Mentor

Note, we had a thread on this subject two years ago when a similar issue made some news, the "outsourcing" of small collections: https://www.physicsforums.com/showthread.php?t=129293&highlight=tax+collections+agency

A relevant post of mine:
Why don't they just sieze assets, Ivan? I don't know, but it would appear they don't.

13. Feb 26, 2009

Ivan Seeking

Staff Emeritus
When I was just starting out in life, I got involved in a tax revolt and didn't pay taxes for a year. Not long after that I realized that I should just clear this up and pay the piper. So I went to the IRS, told them that I owed them money, and arranged a payment schedule. Note that I didn't get caught or audited; I just went to the IRS office and admitted that I hadn't paid taxes. Everything was now above board and I had a mangeable payment plan. The next week, without any notice or warning, they cleaned out my checking account. They did it again a month later.

14. Dec 15, 2010

FlexGunship

Yes! Except that in this case, someone is relieved of their public duty. I can't believe these people (tax debt reducers, in general) advertise on television. It's like a slap in the face to every tax payer.

15. Dec 15, 2010

AlephZero

The position in the UK is quite clear, following a court case about 100 years ago: tax avoidance is legal, and a everybody has the right to organize their finances to minimize their tax liability. On the other hand, tax evasion is illegal.

There is no sense in HMRC (=IRS) attempting to recover unrecoverable debts, and they are not in the business of organizing garage sales of people's personal assets, which don't raise much cash in any case.

There is a procedure called IVA (Individual Voluntary Agreement) in the UK as an alternative to bankruptcy. You could think of it as being like a personal version of the US "Chapter 11" laws. The basic idea is that you get all your creditors to agree to one legally binding schedule for repayment, that is feasible in practice. The money distribution is administered through a third party, with the threat of an automatic legal process if you don't comply with the agreed terms.

IVAs can produce a better deal for the creditors than bankruptcy, because they can be getting "legally guaranteed" repayments from your future earnings for several years, whereas bankruptcy simply draws a line under the current situation - if you have no assets on the day you are declared bankrupt, the creditors get nothing and can't take any further action against you at a later time.

Of course the downside of that is that IVAs can produce a worse financial deal for the debtor than bankruptcy, though they are heavily marketed on the basis of "avoiding bankruptcy" which is in the public domain, unlike an IVA which only becomes a public knowledge if you break its terms and conditions.

16. Dec 15, 2010

Staff: Mentor

Note, this thread is almost two years old and is just up top again because of a spammer...

17. Dec 15, 2010

Ivan Seeking

Staff Emeritus