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Is Tax Relief the Next Debt Relief Scam to Watch Out For? American Tax Relief Under Fire.

In the news again is yet another tax relief company to find itself in hot water. American Tax Relief of Beverly Hills, California made claims that they could settle tax debt for pennies on the dollar. As big and scary as the Internal Revenue Service is, many jumped at the opportunity to make their debt somehow painlessly and magically disappear.

But as the Federal Trade Commission noted yesterday, the owners of the company were leading lavish lifestyles on the backs of financially distressed consumers. Sounds a lot like the perils of debt settlement saga we’ve been living through for the past year or so doesn’t it. And if you don’t think so, here is what the FTC claims has been going on.

According to the FTC, in TV, radio and Internet ads, American Tax Relief LLC falsely claims it can settle consumers’ delinquent federal and state taxes for a fraction of the amount they owe. The company also falsely claims that it can remove tax liens and stop wage garnishments, bank and tax levies, property seizures, and “unbearable monthly payments.” For example, the company’s website states, “The IRS is currently accepting a fraction of back taxes owed to them (sic) for those who qualify. The IRS is allowing the people with delinquent tax liabilities a ONE-TIME opportunity to settle the debt ONCE AND FOR ALL. But at the same time, the IRS does not advertise, promote or even voluntarily suggest this program.”

American Tax Relief charges up-front fees ranging from about $3,200 to $25,000 for the purported tax relief services. The company’s ads include a toll-free number for consumers to call for a “free consultation.” After speaking briefly with commission-based sales people who are supposedly “tax consultants,” virtually all consumers are told that they “qualify” for a tax relief program, and that American Tax Relief can help them significantly reduce their tax debts, the FTC complaint alleges.

Those quotes from the FTC sound exactly like the claims and promises that were made to consumers in the debt settlement world and have now been extended taxes. The business plan appears to be to take anything of fearful consequence and promise to intervene for money. Actually that seems to sum up the entire debt relief industry in one way or another. With consumers afraid of the consequences their creditors will place upon them the fee for debt relief ends up often becoming a bribe to the Gods to spare them instead of a meaningful intervention to alter the course of reality.

The New York Times reported C. Steven Baker, the director of the F.T.C.’s Midwest Regional office as saying, “Everyone has seen these commercials and wondered, ‘Can I really get away with paying the I.R.S. only a fraction of what I owe?,’ The short answer is no.”

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Here is a copy of the American Tax Relief television commercial that aired to attract consumers.

[flashvideo file=/wp-content/uploads/ATRTV.flv /]

Of the 20,000 clients that the F.T.C. says it believes that American Tax Relief signed up, “we have not been able to find a single one” that the company helped to reduce a tax burden, said David Vladek, the chief of the commission’s division of consumer protection.

Mr. Hahn and Ms. Park could not be reached for comment. Charles L. Kreindler, a Los Angeles lawyer who represents the company, said in a statement that it intended to fight the F.T.C. action, which “focused on a small handful of complaints and ignored the thousands of consumers who have been helped.”

In the last five months, Mr. Kreindler said, more than 60 tax abatement offers from American Tax Relief had been accepted by tax authorities, saving clients more than $2 million and reducing their taxes by 90 percent. “During that same time period, American Tax Relief has successfully eliminated debilitating penalties for dozens of other taxpayers and placed them on payment plans that they can live with,” he added.

Mr. Hahn has previously been in trouble with the law for marketing scams. In October 2006, he was sentenced to five years’ probation for a conviction of mail fraud related to a telemarketing scheme at a company he ran in Garden Grove, Calif.

According to an affidavit filed in United States District Court in Santa Ana, Calif., Mr. Hahn started American Tax Relief in 1999 after paying a secretary at the tax-relief firm where he worked to steal a copy of its client list. – NYT

Named in the complaint and request to freeze assets by the Federal Trade Commission in this action against American Tax Relief are Alex Hahn, Alexander Hahn, Alexander Seung Hahn, Joo Hyun Park, Joo Park, Young Soon Park, Young Soon, Young S. Son, and Il Kon Park.

Talk about a real family affair. Seung Hahn, also known as Alex Hahn, is the owner of American Tax Relief (ATR). His wife Joo Park is also an owner and Joo’s mother Young S. Son is nailed in the complaint as well as her father Il Kon Park.

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The complaint states the allegation why many clients never receive help from the ATR service.

“Consumers who have been charged for Defendants’ tax relief services do not receive the promised services or results. instead, Defendants provide only a series of excuses as to why they have not made progress in reducing consumers’ tax liabilities. Defendants often blame consumers for Defendants’ lack of progress. Defendants’ excuses include, but are not limited to, claims that consumers failed to provide, or were dilatory in providing, all of the paperwork or information necessary to settle their tax debs; consumers failed to pay the balance owed to Defendants to complete the work; and consumers “lied” to Defendants about the extent of their tax liabilities or other information during the initial consultations with Defendants’ representatives.” – Source

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The Federal Trade Commission took swift action. As of today the website at AmericanTaxRelief.com now looks like this:


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Here is what the site looked like back when then company was making its tax relief claims.


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This alleged tax relief scheme reminds me of another company that fell into trouble recently with the authorities. In an August, 2010 action by the State of California Roni Deutch and her company also faced similar music. The Attorney General said:

“Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems,” Brown said. “She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”

Deutch manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC’s Today Show, CNN, and CNBC.

Desperate debtors turn to Deutch based on her misleading ads that feature fictional testimonials claiming she secured large reductions in the featured clients’ federal tax debts.

For example, her ad entitled “It’s Your Turn” features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. In fact, those clients still owe the IRS the full amount of their taxes, plus interest and penalties. – Source

It seems that tax relief debt reduction schemes are reaching a significant enough problem that more regulatory action needs to be placed in this area. It has certainly caught my attention.


Damon Day - Pro Debt Coach

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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.
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