American Tax Relief, a company who purported to reduce consumer’s tax debt, has been ordered to pay more than $15 million to the FTC for deceiving consumers. As their name implies, American Tax Relief sold tax debt relief services to consumers. The FTC filed charges against the company for making false claims about significant reductions in previous customers’ tax debts and also for falsely telling consumers they qualified for programs that would lower their tax debt.

Consumers, believing the company could help with their tax problems, were scammed out of more than $100 million! The company and its owners are banned from selling debt relief services and are banned from telemarketing. While the court imposed a $103.3 million judgment against the company and its owners, the FTC will consider the fine satisfied after $15 million has been paid as long as the owners haven’t lied about their financial situation. It’s unfortunate that the scammers aren’t required to fork over everything they stole from consumers or that their offense isn’t one that warrants jail time.

You may have seen tax relief advertisements on the television or internet, or even through email ads. If you owe back taxes, you might be tempted to get help from one of these companies. Beware, many of these companies will provide the same results as American Tax Relief – none at all.

No company can determine that you’re eligible for tax relief, especially before they’ve thoroughly reviewed your tax situation. Even then, only the IRS can decide whether you qualify for their tax programs. The thousands of dollars you pay to a tax debt relief company could be used to pay down your debt. Unfortunately, after you’ve been scammed, you still owe the IRS and you may have even incurred additional interest and fees.

If you’re considering a company to help with your taxes, check with the Better Business Bureau first. Don’t do business with a company that as a low rating or one that has no rating at all. You can also search the internet for consumer reviews on the company. Consider positive reviews with a healthy dose of skepticism; companies have been known to post fake testimonials and reviews even on sites other than their own.

Contact the IRS if you owe back taxes. You’ve likely received letters from them letting you know what you owe and how the IRS plans to collect. Don’t ignore these notices. Owing taxes is scary, but it’s better to work with the IRS than to completely ignore them.

You may be able to enter an installment agreement or settle your debt via an offer in compromise. Both of these options are available directly to consumers. You don’t need a third-party to help you apply.

Unfortunately, the likelihood of being approved for an offer in compromise is low. Most people who apply for an offer in compromise won’t be approved. In 2011, the IRS received 59,000 applications and only approved 20,000 of them. That’s 33%, but a great improvement over previous years. In 2010, the IRS only approved 25% of applications and 21% in 2009. With such low approval rates, it’s highly unlikely that a debt relief company would have some type of “in” with the IRS to get you approved. An installment agreement may help you, if you can afford the monthly payments.

Bankruptcy may also be an option if you’re overwhelmed with back taxes and you can’t afford to pay. Seek the advice of a bankruptcy attorney to talk about your bankruptcy options.

If you’ve been a victim of a scam, contact the Federal Trade Commission. With enough complaints, they can stop the company from operating, sue the scammers, and maybe even get a judgment large enough to refund some of what you’ve been scammed out of.