A federal court has temporarily halted alleged tax debt relief scammers from falsely impersonating government agencies, including the Internal Revenue Service, at the request of the Federal Trade Commission. The FTC filed a complaint against American Tax Service (ATS) and its operators, Terrance Selb and Tyler Bennett, as well as seven affiliated entities, alleging they defrauded consumers of tens of millions of dollars through deceptive tax debt relief services.
The Commission alleges that ATS operators falsely claimed they could settle taxpayers' back taxes for "pennies on the dollar" or for only a "fraction" of what taxpayers owed, often making these claims before evaluating the taxpayer's circumstances. The scheme targeted Americans struggling with tax debt, exploiting their financial vulnerability through fraudulent promises and government impersonation.
"People trying to pay down their tax debt shouldn't have to worry about fraudsters pocketing their hard-earned money," said Christopher Mufarrige, FTC's Bureau of Consumer Protection Director. "The FTC will not hesitate to act to stop companies like ATS that target hard-working Americans with bogus debt relief services."
Since at least 2019, ATS, Selb and Bennett have allegedly misled consumers by mailing deceptive and threatening letters that impersonate the government to solicit inbound telemarketing calls. These communications were designed to appear as official government correspondence, creating fear and urgency among recipients about their tax situations.
The complaint details how ATS operators made false claims about their tax debt relief services and systematically failed to fulfill their promises. The company refused to provide refunds to dissatisfied consumers who requested them, despite taking significant upfront payments for services that were rarely delivered as promised.
According to the FTC's allegations, ATS sales representatives deliberately misled consumers about the severity of their tax debt issues to frighten them into paying for the company's services. Some consumers reported that ATS operators falsely claimed that the IRS was investigating them or that the IRS had "red flagged" their account or marked it as "high risk." These fabricated claims created artificial urgency and fear to pressure consumers into immediate payment.
Once consumers agreed to pay for ATS's services, the operators of the scheme did little, if any, of the promised work and rarely, if ever, obtained the promised results. This pattern of taking money upfront while failing to deliver meaningful services represents the core of the alleged fraud.
The ATS operators contacted consumers through multiple channels, including telemarketing calls and responses to inbound calls generated by direct mail campaigns and online advertisements. This multi-pronged approach allowed them to cast a wide net for potential victims while maintaining the facade of legitimacy through professional-appearing marketing materials.
The FTC alleges the defendants engaged in multiple illegal activities that violated federal consumer protection laws. These include impersonating the government, including local, state, or federal tax authorities, which is a serious federal offense that undermines public trust in legitimate government agencies.
The defendants also allegedly made false promises that they could reduce consumers' tax debt without having the authority or capability to negotiate with tax authorities on consumers' behalf. Additionally, they violated the FTC's Telemarketing Sales Rule requirements by making material misrepresentations during telemarketing calls, including false claims about their services and capabilities.
The case represents part of the FTC's broader crackdown on fraudulent debt relief services that target vulnerable consumers. Tax debt relief scams have become increasingly common, particularly during tax season when consumers are most aware of their tax obligations and potential liabilities.
The temporary restraining order obtained by the FTC effectively freezes the defendants' operations while the case proceeds through federal court. This immediate action protects consumers from further harm while allowing investigators to preserve evidence and assets that may be used for consumer restitution.
Consumers who believe they may have been victimized by ATS or similar tax debt relief scams should be aware that legitimate tax professionals do not guarantee specific outcomes or promise to settle debts for "pennies on the dollar" without first reviewing individual circumstances. The IRS offers its own programs for taxpayers experiencing financial hardship, and consumers should be wary of any company that claims special relationships with tax authorities or guarantees unrealistic results.
The FTC advises consumers to research any debt relief company thoroughly before paying fees and to be suspicious of high-pressure sales tactics, upfront fees, or guarantees of specific outcomes. Legitimate tax professionals will provide clear information about their services and will not use deceptive government impersonation or threatening communications to solicit business.
This enforcement action demonstrates the FTC's commitment to protecting consumers from fraudulent debt relief schemes and holding companies accountable for deceptive practices that harm Americans struggling with financial obligations.