By: Elowen Gray

In an era of high-pressure advertising, the claim of resolving overwhelming tax debt for a fraction of the cost is an alluring message for millions of Americans. But according to two former high-level IRS officials, a significant gap may exist between the marketing claims of the tax relief industry and the financial reality their clients face.

Former IRS Revenue Officer Michael D. Sullivan and former OIC Supervisor Peter Salinger have released an analysis detailing common myths used in tax debt relief marketing. Their findings suggest that these narratives contribute to a high rate of failure for consumers, who often pay thousands of dollars in fees for a resolution they were never eligible for in the first place. 

This gap between marketing and reality is starkly illustrated by recent data on the IRS Offer in Compromise (OIC) program, which shows a success rate of just 21%. According to the experts, there are three central myths for it, and consumers should be aware of them to help protect themselves.

Myth 1: The “Pennies on the Dollar” Settlement is a Standard Deal

The myth that probably spreads a lot is that tax debt can be “settled for pennies on the dollar.” This term is indeed a strong marketing weapon, but the experts specify that it is a rare, and unlikely scenario, not a usual result. A valid settlement through the IRS Offer in Compromise program is not a negotiation where the taxpayer has a say in what they can pay. 

Rather, it is a matter of a rigid, non-negotiable government formula that determines the amount called “Reasonable Collection Potential” (RCP). This formula assesses how much the taxpayer is able to pay by looking at their assets, income, and necessary living expenses. If a taxpayer is able to pay their debt in installments over time, they will not qualify for a significant reduction, even though a third-party firm may have made all sorts of marketing statements.

Myth 2: The “Fresh Start Program” is a Secret Backdoor

Another common tactic involves promoting the “IRS Fresh Start Program” as if it were a new, limited-time opportunity or a secret plan that may result in a settlement. According to the analysis from the former agents, this is fundamentally misleading. The Fresh Start initiative is a real, long-standing IRS program, but it is simply a brand name for a collection of existing, standard relief options, including installment agreements and the OIC program itself. 

It does not provide any special eligibility criteria or ensure a favorable outcome. Presenting it as a secret or special program creates a false sense of urgency and opportunity, encouraging taxpayers to sign up for services under incorrect assumptions.

Myth 3: Firms Have Unique Access or a Special Relationship with the IRS

There are many companies that suggest they possess unique access or a particular influential connection with the IRS, which provides their clients with a benefit. Sullivan and Salinger totally reject this claim, arguing that the IRS functions on a system of laws, regulations, and uniform procedures. There are no covert meetings or under-the-table transactions that can sway a case decision.

Every tax professional, whether a former IRS agent or not, must follow the same publicly available rules. The experts note that the IRS even provides a free and anonymous online pre-qualifier tool that allows any taxpayer to check their basic eligibility for an Offer in Compromise without paying a fee.

To counter these myths, the authors advise consumers to focus on diligence over statements. They recommend working exclusively with licensed professionals like CPAs, attorneys, or Enrolled Agents, and to insist on a thorough financial review to determine eligibility before paying any fees. In a complex financial environment, they conclude, an informed taxpayer is a protected one.

About the Authors

Michael D. Sullivan and Peter Salinger are former IRS agents and the co-authors of Exposing the Secrets for IRS Settlements. With a combined 75 years of experience, they provide educational resources and professional guidance to help taxpayers navigate complex IRS issues. Mr. Sullivan is a former IRS Revenue Officer and instructor, while Mr. Salinger is a former IRS Appeals Settlement Officer who personally managed over 3,500 Offer in Compromise cases.

Disclaimer: This article is for informational purposes only and is not intended as legal, financial, or tax advice. The content provided should not be treated as a substitute for professional advice tailored to your specific situation. Before making any financial decisions or pursuing tax debt relief options, it is strongly recommended that you consult with a licensed tax professional, such as a Certified Public Accountant (CPA), an attorney, or an Enrolled Agent (EA), to evaluate your individual circumstances.