Tax Relief Scams: $77.7M Taken, Only $8M Ever Recovered

A Las Vegas operation called American Tax Service took $77.7 million from people who owed back taxes, over four years.

When the Federal Trade Commission and the State of Nevada settled the case, the amount recovered for victims was about $8 million.

Roughly ten cents on the dollar. That gap is the most important thing on this page, because it tells you where the effort belongs. Not in getting money back afterwards, but in never sending it.

What the FTC alleged

The FTC and Nevada Attorney General Aaron Ford announced the settlement in June 2026, after a federal court halted the operation in October 2025.

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The allegations against operators Terrance Selb and Tyler Bennett:

• Promising settlements before looking at anything. Consumers were told they could settle back taxes for "pennies on the dollar", often before anyone had reviewed their finances or checked whether they qualified for any IRS programme at all.
• Mail designed to look governmental. Marketing materials appeared to come from government agencies, including the IRS, to generate sales leads.
• Manufactured alarm. Consumers were told their tax situations had been flagged as high risk or were under investigation.
• Targeting older people. The FTC and Nevada alleged the scheme aimed at older consumers and pressured them into costly add-on services, sometimes charging tens of thousands of dollars for services that either did not exist or provided little value.

Selb and Bennett are now banned from debt relief services, tax preparation, telemarketing, and impersonating individuals, governments or businesses. The order carries a $77.7 million judgment, mostly suspended because they said they could not pay. It becomes due in full if they misrepresented their finances.

The three sentences that identify this scam

Whatever company name is on the letter, the pitch is the same.

"Pennies on the dollar." Nobody can know what you qualify for without your actual figures. A settlement amount quoted before your financial details are reviewed is a sales line, not an assessment.

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"Your account has been flagged." The IRS communicates about your account by mail, to you, using letters that reference a specific notice number. A third party calling to say your account is flagged does not have that information.

"You need to act today." Tax debt does not work on same-day deadlines. Urgency is there to stop you checking, which is exactly what this article is asking you to do.

What they were selling is free or cheap

This is the part that stings. The IRS programmes these operations charge thousands for are applications you can make yourself, at no cost.

Offer in Compromise

This is the real version of "settle for less than you owe". It exists, and it is genuinely used, but qualifying depends on your income, expenses, assets and ability to pay.

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The IRS publishes a free Offer in Compromise Pre-Qualifier tool. It takes a few minutes and tells you whether you are likely to be eligible before you spend anything on anyone.

Run it first. If the tool says you are unlikely to qualify, no company can change that, whatever they promise.

Payment plans

Most people who owe do not need a settlement. They need time. The IRS offers short term plans and longer instalment agreements, and you can apply online in minutes.

Currently Not Collectible

If paying anything would leave you unable to cover basic living costs, the IRS can place your account in this status and pause collection. Interest continues, but the pressure stops.

Penalty relief

If you have a clean compliance history, first-time penalty abatement can remove penalties on a single tax period. It is often a phone call.

Where to get real help, free

• The Taxpayer Advocate Service. An independent organisation inside the IRS that helps when normal channels have not worked. Free, with an office in every state.
• Low Income Taxpayer Clinics. Free or low cost representation in disputes with the IRS, for people under certain income limits.
• The IRS directly, on 1-800-829-1040. Wait times can be long, and it is still free.
• A credentialed professional you found yourself. An enrolled agent, CPA, or tax attorney, verified through the IRS directory of preparers. Paying a professional is reasonable. Paying a telemarketer is not.

How to check any company before paying

1. Look them up in the IRS preparer directory linked above. Credentials are verifiable in a minute.
2. Ask what your fee buys, in writing, before paying anything. Vague answers about a review or an evaluation are the answer.
3. Ask whether they have run your figures. If they quoted a settlement before seeing your finances, walk away.
4. Search the company name with "FTC" and "lawsuit". Enforcement actions are public.
5. Never pay a large fee up front. Under the Telemarketing Sales Rule, a debt relief company selling by phone cannot charge you before it has actually delivered a result. Our guide to credit card rate reduction calls covers that rule in full.

The letter test

Because this operation used mail that looked official, one check is worth having.

A genuine IRS notice arrives by post, references a notice or letter number in the top right corner, and relates to a specific tax year. You can look that number up on the IRS website and read what it means.

Marketing mail that mimics a government agency will not survive that check, because there is no notice number to look up.

Two more things the IRS does not do: it does not begin contact with a phone call demanding immediate payment, and it does not ask for payment in gift cards, wire transfers or cryptocurrency.

If you already paid one of these companies

1. Dispute the charge with your card issuer. Under the Fair Credit Billing Act you have 60 days from the statement showing the charge to send a written notice.
2. Cancel any recurring payments, in writing, and keep the confirmation.
3. Report to the FTC at reportfraud.ftc.gov. Refunds in cases like this one only reach people who are on the record.
4. Report to your state attorney general. Nevada's action here began at state level, and states move on these cases.
5. Deal with the tax debt directly. Contact the IRS or the Taxpayer Advocate Service. The debt did not go away while a company held your money, and penalties may have continued.
6. Check what they did with your information. These operations collect income, assets and account details. If a Social Security number was shared, start a plan at IdentityTheft.gov.

Our guide to the first 48 hours covers the dispute deadlines in detail.

Expect the second approach

When a settlement is announced, callers appear offering to help victims claim their share for a fee.

No government agency charges a fee to return money to a consumer. The FTC contacts eligible people using its own records and never asks for payment or bank details by phone.

The number to remember

$77.7 million taken. $8 million recovered.

Enforcement works, and it arrives years later and returns a fraction. So the useful move is the free one you can make today: run the IRS Pre-Qualifier tool, or call the Taxpayer Advocate Service, before you pay anybody anything.

Check a company before you call them back

Look up a phone number or website here, free and in about ten seconds.

Sources

• FTC, Nevada Will Require Tax-Relief Scammers to Pay Cash and Turn Over Assets Worth Nearly $10 Million, June 2026
• FTC Legal Library, FTC and Nevada v. American Tax Service LLC et al.
• Nevada Attorney General, Settlement requiring tax-relief scammers to surrender assets
• IRS, Offer in Compromise
• Taxpayer Advocate Service