Tax season has arrived and many people face this time of year with sweaty palms. USA Today reported that, "...[A]n estimated 10 million face tax penalties each year, the IRS found." What can the average person do about that?

You may have seen or heard commercials for a variety of tax relief companies. The commercials all follow the same format: they tell you that the IRS can clear out you bank account and put a lien on your home, they tell you that you can't do this on your own, and they tell you that they can help you pay back your debt for a fraction of the cost. What's behind all of the smoke and mirrors?

People spend thousands of dollars on these companies in fear of the IRS. What if I told you that you don't need these companies? According the the Federal Trade Commission, "The truth is that most taxpayers don't qualify for the programs these fraudsters hawk, their companies don't settle the tax debt, and in many cases don't even send the necessary paperwork to the IRS requesting participation in the programs that were mentioned."

People spend thousands of dollars in upfront fees with no results. The FTC also says that most of these companies do not refund the money spent even if they do not provide the service promised.

Many people have filed complaints with the FTC stating that their money was stolen by these companies. The FTC reports, "...[T]he companies took even more of their money by making unauthorized charges to their credit cards or withdrawals from their bank accounts"

So are Americans helpless? The FTC says absolutely not. They say, "If you are having trouble paying bills, it's often better to try to work out a payment plan with the creditor yourself than to pay someone else to negotiate a plan for you. The same is true when you owe money to the IRS or your state comptroller."

What are the steps can you take?

If you are unable to pay back your taxes in full, fill out Form 9465 also known as an Installment Agreement Request. If you owe less than $10,000, according to the FTC, in some circumstances the IRS cannot deny your request.

...[Y]ou should still pay as much as you can with the return. You will be charged interest and possibly a late payment penalty on any tax not paid by its due date, even if your request for an installment agreement is approved. You can avoid IRS collection notices and actions, like a Notice of Federal Tax Lien or an IRS levy, by establishing an installment agreement upfront and making your installment payments.

The IRS also offers an Offer in Compromise to settle owed taxes without paying back the full amount. "In very limited circumstances, the IRS may offer penalty abatement to people who haven't paid their taxes because of a special hardship. If the taxpayer meets very narrow criteria, the IRS may agree to forgive the penalties."

There are options out there that won't cost you thousands of dollars and won't scam you. Get more details from the FTC.

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