By: Elowen Gray

Two former high-level IRS agents are issuing a stark warning to taxpayers in New York and across the country about what they describe as widespread deceptive promises in the tax relief industry. The alert comes as a new analysis of government data shows the success rate for the IRS Offer in Compromise (OIC) program, a key debt settlement tool, has fallen to a historic low of just 21%.

This steep decline from a historical average of 30-40% is not due to a change in government policy, according to former IRS Revenue Officer Michael D. Sullivan and former OIC Supervisor Peter Salinger. Instead, they suggest it could be a contributing factor due to an influx of unqualified applications, often driven by aggressive and potentially misleading marketing tactics from third-party firms. Last year alone, of the more than 33,000 OIC applications submitted, over 26,000 were rejected by the IRS.

“We felt it was our duty to issue this alert after seeing a consistent pattern of taxpayers paying thousands of dollars in fees for a service that was never going to succeed,” said Sullivan.  “Consumers, often under immense financial pressure, are being sold false hope based on deceptive advertising. It’s a business model that prioritizes a large upfront fee over a successful outcome, and it’s leaving them in a worse financial position, with their original tax debt still unresolved.”

The experts’ analysis breaks down the common marketing myths that taxpayers should be wary of, urging consumers to understand the reality behind the sales pitches.

The Myth of the “Pennies on the Dollar” Settlement

The most prevalent claim is the idea of settling tax liabilities for “pennies on the dollar.” While a powerful and appealing slogan, the experts clarify that this is a rare, best-case scenario, not a standard outcome. A successful settlement is determined by a strict, non-negotiable government formula called Reasonable Collection Potential (RCP). This is not a negotiation; it is a clinical financial calculation.

The RCP formula assesses a taxpayer’s ability to pay by analyzing the equity in their assets (such as homes, vehicles, and other property), the balances in their bank and investment accounts, and their projected future disposable income after a set of standardized, allowable living expenses are subtracted. If this formula shows a taxpayer has the financial means to pay their debt in full over the remaining life of the collection statute (typically 10 years), their offer will be rejected. The experts stress that no amount of negotiating skill can change this mathematical reality. 

The Myth of the “Fresh Start Program” as a Secret Deal

Many firms heavily promote the “Fresh Start Program” as if it were a new, special solution for settlement. Sullivan and Salinger explain that this is a branding tactic. The Fresh Start initiative is a long-standing umbrella term for existing IRS relief options, including Installment Agreements and the OIC program itself. It does not provide any special eligibility criteria, secret advantages, or a higher chance of success. Its use in advertising often creates a false sense of urgency that can push consumers into making hasty decisions.

The Myth of “Insider Access” and Special Relationships

One of the unstated consequences often associated with marketing is that a company may sometimes have “insider access” or a close relationship with the IRS, allowing its customers to gain a benefit. The former agents dispute this claim. The IRS is a vast bureaucracy that operates within a system of rules and standardized processes, ensuring fairness for all representatives and applying them equally.

“The process is designed to be impartial,” Salinger, who personally managed over 3,500 OIC cases, noted. “An IRS employee evaluates a case based on the financial information provided, not on who submitted it. There are no backroom deals.” They also point out that the IRS provides a free, anonymous OIC pre-qualification tool on its website, which allows anyone to check their basic eligibility.

The High Cost of Misinformation

The consequences for taxpayers who fall for these claims can be severe. Not only are they out the thousands of dollars paid in fees, but during the months their ineligible offer is being processed, penalties and interest on their original tax debt continue to accrue, digging them into a deeper financial hole.

To avoid these pitfalls, the former agents advise consumers to focus on diligence. Their primary recommendation is to work exclusively with licensed professionals, a CPA, an Attorney, or an Enrolled Agent, who are held to strict ethical standards by both their licensing bodies and the IRS’s Office of Professional Responsibility. 

They urge taxpayers to verify these credentials personally and to insist on a direct conversation with the expert who will handle their case, not just a salesperson. Most importantly, a thorough financial review should be demanded to determine eligibility before any fees are paid.

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 to help taxpayers handle complex IRS issues. Mr. Sullivan is a former IRS Revenue Officer, while Mr. Salinger is a retired IRS Appeals Settlement Officer.

Disclaimer: The information provided in this article is intended for educational purposes only and should not be construed as legal, financial, or tax advice. The views expressed by Michael D. Sullivan and Peter Salinger are their personal opinions and reflect their professional experiences as former IRS agents. The IRS Offer in Compromise (OIC) program has specific eligibility requirements, and acceptance is not guaranteed. Taxpayers should consult with licensed professionals, such as Certified Public Accountants (CPAs), Attorneys, or Enrolled Agents, to discuss their individual circumstances. The information presented here is based on publicly available IRS data and expert commentary, and readers are encouraged to verify all details before making any decisions regarding tax relief services.