What the FTC Has Done About Tax Relief Companies, and What It Teaches Buyers

Every industry has bad actors. What makes the tax relief industry different is how desperate its customers are when they buy. Fear makes people sign things. Federal regulators have noticed.

This chapter summarizes two Federal Trade Commission matters against tax relief operations, using only what the FTC and the Nevada Attorney General have published. Complaints contain allegations, not findings, and settlements are often entered without any admission. I note where that matters. The point is not to gossip about companies. It is to learn what the government says these schemes look like, so you can recognize the pattern.

American Tax Relief LLC (2010 to 2014)

In October 2010, the FTC announced that a federal judge in Chicago had issued a temporary restraining order, at the FTC's request, against American Tax Relief LLC and two individuals, Alexander Seung Hahn and Joo Hyun Park. The order barred deceptive claims, froze assets, and appointed a receiver. The FTC described it as its first action against a tax relief company.

The FTC's announcement described the alleged scheme this way:

• Television, radio, and internet ads claimed the company could settle delinquent federal and state taxes for "a fraction of the amount they owe," remove tax liens, and stop garnishments, levies, and seizures.
• The company's website allegedly implied the IRS offered a one-time opportunity to settle tax debts, when the FTC alleged most customers would at most qualify for installment plans that require full repayment.
• Customers were often told they qualified for an offer in compromise or penalty abatement, and the FTC alleged the company did not gather enough information to determine eligibility.
• Up-front fees ranged from about $3,200 to $25,000.
• Ads offered a free consultation, and commission-based salespeople, described as "tax consultants," allegedly told nearly all callers they qualified.

In February 2013, the FTC announced a settlement. A $103.3 million judgment was entered against the company and the two individuals, suspended once they surrendered assets worth more than $15 million. The company and Hahn were banned from telemarketing, and Hahn and Park were permanently banned from selling debt relief services. The FTC noted the settlement was for settlement purposes only and not an admission of the complaint's allegations.

In August 2014, the FTC announced it was mailing refund checks totaling more than $16 million to 18,571 consumers, who received on average 16 percent of what they lost.

American Tax Service (2025 to present)

In October 2025, the Nevada Attorney General and the FTC announced a lawsuit in federal court in Nevada against American Tax Service, its operators Terrance Selb and Tyler Bennett, and affiliated entities. The court issued a temporary restraining order barring impersonation of government agencies, deceptive debt relief promises, and threats about debts.

According to the Nevada Attorney General's announcement, the allegations included:

• Sending deceptive, threatening letters, since at least 2021, that impersonated the government to generate calls.
• Posing as local, state, or federal tax authorities, including the IRS, with some consumers reporting they were told the IRS was investigating them or had "red flagged" their accounts.
• Promising to settle back taxes for "pennies on the dollar," often before reviewing the taxpayer's situation.
• Charging for services that were barely performed and rarely, if ever, produced the promised results, and refusing refunds to customers who asked.

The announcement said the FTC alleged violations of the FTC Act, the Gramm-Leach-Bliley Act, the Telemarketing Sales Rule, and the Impersonation Rule, and that Nevada alleged violations of state law.

On June 2, 2026, the FTC announced a proposed stipulated order with Selb and Bennett. According to the FTC, it would ban them from debt relief services, tax preparation services, nearly all outbound telemarketing, and impersonation, require them to surrender cash and other assets, and impose a $77.7 million judgment, with the remainder suspended based on inability to pay. The FTC's announcement also alleged the operators targeted older consumers and upsold fictitious add-on services. Litigation against the corporate defendants was continuing at the time of that announcement; check the FTC's case page for current status.

The pattern across both cases

Alleged tactics, as described by the government, and what to do instead

What the FTC tells consumers

The FTC's consumer advice on tax relief companies boils down to a handful of points. Many tax relief companies promise to reduce or eliminate tax debt for an upfront fee, sometimes thousands of dollars. Most people will not qualify for the hardship programs these companies advertise. Some companies never send paperwork to the IRS. No company can promise a particular result.

Its recommended first steps are to read your notices, contact the IRS or your state about collection alternatives, ignore claims that you qualify for a program because only the IRS or your state can decide that, and try to set up a payment plan directly. It also points to Low Income Taxpayer Clinics and the Taxpayer Advocate Service as free help. See low income taxpayer clinics.

What these cases do not mean

They do not mean every national firm is a scam. They do not mean every tax relief advertisement is false. Plenty of firms, large and small, do honest work. Painting the whole industry with one brush would be as unhelpful as ignoring the cases.

What they mean is that the tactics are documented. When you hear them, you are not being paranoid. You are recognizing a pattern the government has described in court filings. The broader comparison is in tax attorney versus national tax relief firms.

How to check a company yourself

1. Search the FTC's website for the company's name and any names of its owners.
2. Search your state attorney general's press releases.
3. Ask for the name and license of the professional who will represent you, and verify it. See verifying credentials.
4. Search the IRS's records of disciplined practitioners for that name.
5. Read the contract's fee and refund terms before paying anything.

If you find nothing, that is not a clean bill of health. Enforcement is slow and selective. The checks in this guide are what protect you in the meantime.

Reading enforcement news without overreacting

When you see a headline about a tax relief company being sued, read the government's own announcement, not a summary of a summary. Look for the words the government uses: alleged, complaint, temporary restraining order, stipulated order, settlement. Each means something different. A complaint is the government's side of the story. A settlement may include no admission of wrongdoing.

And keep the time frame in mind. The American Tax Relief case ran from 2010 to 2014. The American Tax Service matter began in 2025 and was still being litigated against some defendants in 2026. Enforcement is a lagging indicator. By the time a case is announced, people have already paid.

If you think you were taken

Report it. The FTC takes reports at ReportFraud.ftc.gov. Your state attorney general's consumer protection office takes complaints too. If a licensed practitioner was involved, the IRS Office of Professional Responsibility and the practitioner's licensing body are also options. The reporting chapter lists each one.

Then fix the tax problem, because it did not go away while you were paying. Check your IRS online account, get your records back, and start with a real diagnosis.