PHILADELPHIA (CBS) – They claim they can reduce the debt that you owe to the I.R.S. to a fraction of the amount. But are the claims made by tax debt relief companies too good to be true?

3-On Your Side Consumer Reporter Jim Donovan tells us about one company that is said to have scammed it’s clients out of millions. The company claimed it could remove tax liens, stop wage garnishments, and would work with the I.R.S. so that its clients could settle their debts once and for all.

Nick Fiore knew he was in trouble after he paid a tax relief company $5,500 to help settle his tax debt with the I.R.S. It all started when Nick saw a TV commercial from American Tax Relief on TV and called the number immediately.

The commercial said, “We can settle your tax debt for just a fraction of what you owe.”

Nick, who owes more than $60,000 to the I.R.S, says he was desperate for help. “I thought it was legit, but it wasn’t legit in any shape, way or form.”

According to the Federal Trade Commission, American Tax Relief was a giant scam. A federal judge has halted its operations after the company allegedly swindled $60 million dollars from its customers.

Nick adding, “It’s a rip-off. The whole outfit is a rip-off.”

Nick lost his savings, his 401K and still owes the government thousands of dollars. He’s not sure if he’ll ever see his money, but hopes no one else will fall for something like this again.

American Tax Relief has been shutdown, their assets are frozen and they are being sued in federal court.

If you owe back taxes, you need to realize that relief programs are available in very limited circumstances. In most cases you can get an installment payment plan, which still requires payment of the full amount owed and you can do that on your own.

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Reported By Jim Donovan, CBS Philly

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