At FTC's request, a federal judge halted a national operation that allegedly bilked consumers out of over $60 million by falsely claiming it can reduce people's tax debts. The company's California state business license was suspended last year for not paying its own taxes, FTC alleges. FTC seeks to make the defendants pay restitution to alleged victims.


According to FTC, in TV, radio and Internet ads, American Tax Relief LLC falsely claimed that it can settle consumers' delinquent federal and state taxes for a fraction of the amount they owe. FTC said that the company also falsely claimed 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 said,

"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."


FTC alleged that the company continued its deceptive practices even after federal agents executed a criminal search warrant on the operation's Beverly Hills business premises in April, 2010. At that time, criminal authorities seized money from bank accounts and a Ferrari from the company's owner, and placed liens on two residences, including a $3.4 million house. At the time, one of the company's owners was leasing six other vehicles, including a Rolls Royce, a Bentley, two Porsches, and two Mercedes-Benzes, according to exhibits FTC filed in court.

American Tax Relief charged 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, FTC's complaint alleges.

In reality, very few of the company's customers qualify for the promised tax relief programs, FTC said. Most people who hire the company would qualify at most for installment payment plans, which still require payment of the full amount owed, and which many taxpayers can easily arrange by themselves, said the Commission.

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FTC's vote to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Northern District of Illinois, Eastern Division.

NOTE: The Commission files a complaint when it has `reason to believe' that the law has been or is being violated, and it appears to the Commission that a proceeding is in the public interest. The complaint is not a finding or ruling that the defendants have actually violated the law.


FTC v. American Tax Relief LLC, et al., United States District Court for the Northern District of Illinois, Eastern Division, Case No. 1:10-cv-06123, FTC File No. 1023083, October 6, 2010.


Volume XXX
Issue 21
November 1, 2010
Page 15-16


Advertising Compliance Service is a REFERENCE COMPENDIUM of JLCom Publishing Co., L.L.C.


NOTICE: This publication is not intended to provide legal advice. Persons who need legal services should contact a duly licensed professional.


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(Editor's Note: This article, "Court Halts Alleged Tax Relief Scam that Collected over $60 Million," appears in the November 1, 2010 issue of Advertising Compliance Service.

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