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Tax Relief Providers Get Temporary Pass Under FTC TSR Effective Today

Enforcement Deferred for Tax Debt Relief Services, but Most Companies Are Now Prohibited From Collecting Advance Fees

The Federal Trade Commission has issued an enforcement policy statement on a new FTC rule that protects consumers by barring debt relief firms from collecting up-front fees. In its statement, the FTC says that while most companies that sell debt relief services over the telephone are now prohibited from charging fees before settling or reducing a consumer’s credit card or other unsecured debt, it will defer enforcement of the new rule for tax debt relief services.

The ban on advance fees reflects changes that the FTC made to its Telemarketing Sales Rule last July. These change take effect today. During the FTC’s education and outreach efforts earlier this month, some tax debt relief companies expressed uncertainty about whether the Rule applied to them. Specifically, they questioned whether tax debts are “unsecured,” which would make them subject to the Rule. The FTC currently is considering these concerns, and until further notice, will defer enforcing the Rule with respect to “services that represent, directly or by implication, to renegotiate settle, or alter the terms of obligation between a person and a taxing entity (tax debt relief services).”

The enforcement policy states, however, that tax debt relief services must comply with the FTC’s Telemarketing Sales Rule, except for the debt relief amendments, during the enforcement deferral period. It also reminds providers that they must comply with the FTC Act, which prohibits unfair and deceptive practices.

Tax Relief Providers Get Temporary Pass Under FTC TSR Effective Today
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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Michael

    This is huge news for reputable/credible tax resolution firms. I am a big proponent that the industry needs regulation, however at least now we will get to offer our feedback and input to the FTC and mutually introduce a Bill that protects the consumer and but permits the “good” firms to represent and be an advocate for thier clients. IRS Circular 230 (which governs practice before the IRS) states, that we (cpas, attys & eas) vigorously advocate for our clients before the IRS. We would have been prevented from doing so if “tax” was not carved out of the amended TSR.

  • http://www.taxresolution.com Michael

    This is huge news for reputable/credible tax resolution firms. I am a big proponent that the industry needs regulation, however at least now we will get to offer our feedback and input to the FTC and mutually introduce a Bill that protects the consumer and but permits the “good” firms to represent and be an advocate for thier clients. IRS Circular 230 (which governs practice before the IRS) states, that we (cpas, attys & eas) vigorously advocate for our clients before the IRS. We would have been prevented from doing so if “tax” was not carved out of the amended TSR.

  • Joe_debt_jr

    You are right Alex, Freedom Debt Relief, is now more focusing on tax, LHDR is recruiting heavily to do tax, and its funny, i take the time to hear them out and they both have the same philosphosies, collect as much fees upfront. Resolving a tax matter should only be done by licensed professionals that licensed to represent taxpayers before the IRS. I can already see these sales people will do anything for a sale and continue misleading these folks to get them to pay large fees upfront.

  • AlexV

    Let’s not all celebrate for the consumers too early. Reports I am getting is that there is a big movement to the Product Sales type companies and the LHDR or Legal Models.
    Many companies were considering moving on but somehow they believe they can still continue to operate by utilizing the loopholes.
    I truly hope the FTC will take a hard stance on the TSR and sort this out sooner rather than later.
    For now I was hoping to rebrand our industry somehow but it looks like a mess has already started. The No-Fees up front models are the best for the consumers and we should make no bones about it.
    Let’s keep educating the consumers!!!
    Alex Viecco
    New Era Debt Solutions

  • AlexV

    Let’s not all celebrate for the consumers too early. Reports I am getting is that there is a big movement to the Product Sales type companies and the LHDR or Legal Models.
    Many companies were considering moving on but somehow they believe they can still continue to operate by utilizing the loopholes.
    I truly hope the FTC will take a hard stance on the TSR and sort this out sooner rather than later.
    For now I was hoping to rebrand our industry somehow but it looks like a mess has already started. The No-Fees up front models are the best for the consumers and we should make no bones about it.
    Let’s keep educating the consumers!!!
    Alex Viecco
    New Era Debt Solutions

    • Anonymous

      You are right Alex, Freedom Debt Relief, is now more focusing on tax, LHDR is recruiting heavily to do tax, and its funny, i take the time to hear them out and they both have the same philosphosies, collect as much fees upfront. Resolving a tax matter should only be done by licensed professionals that licensed to represent taxpayers before the IRS. I can already see these sales people will do anything for a sale and continue misleading these folks to get them to pay large fees upfront.

  • ComplianceSlave

    That’s actually a relief & too bad at the same time. I expect many companies to get rather exited to find they can continue to rip off consumers w/ tax relief…. Maybe that will keep them out of our bizzzzzzzzzzzz

  • http://www.ftc.gov ComplianceSlave

    That’s actually a relief & too bad at the same time. I expect many companies to get rather exited to find they can continue to rip off consumers w/ tax relief…. Maybe that will keep them out of our bizzzzzzzzzzzz

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