You’ve probably seen the late-night TV commercials promising tax settlements for pennies on the dollar. I get asked about these services a lot. “Are they scams? How do they work?”

Unfortunately, most of these services are taking advantage of the uniformed. IRS settlements do happen, but when the commercials show the testimonial of a person owing the government $250,000 and settling for just a few thousand, it wasn’t because someone worked some tax magic and saved their client money.

It was because those few thousand were all the client had left in their bank account. The settlement is basically just the IRS saying “We know this is all we’re going to be able to get.”

Just image if someone owed you $10,000 but offered to settle their bill for $1000. You’re probably not going to agree unless you’re certain that’s all the money you’re going to be able to recover.

The IRS is the same way. And any service that tells you they are going to haggle with the IRS is not going to be able to deliver on their promise.

Instead of using one of these tax settlement services, the appropriate way of dealing with the IRS is cooperation and honesty. Work with you CPA or tax preparer to provide them with everything they ask for and be up-front with all of their questions.

If you’re going through the IRS collections process, the more cooperative and open you are, the better. It makes for a smoother, quicker process and can potentially prevent some penalties.

Assuming you’ve been keeping good financial records you might even be able to clear up mistakes that the IRS has made. Trying to hide behind the veil of a settlement service, though, is not going to do you any good.

On top of the money you owe the IRS, you’ll also be cutting a check to the settlement service for nothing more than dragging out the process and giving both you and the IRS agents assigned to your case more headaches.

So the next time you see the tax settlement commercials, save your questions until the morning and call your CPA or tax-preparer. We’ll be able to help guide you down the right path.

If you’ve watched any of the news reports about identity theft in the last few years you might have taken steps to protect yourself from identity thieves. But what are you doing to protect the rest of your family?

I want to share with you something that’s simple to do that will help protect your loved ones from identity theft.

As more people have become aware of identify theft and are keeping a closer eye out for it, thieves have also adapted. It’s unlikely that someone is monitoring the credit of their child or elderly parent, so criminals have begun targeting these individuals.

These crimes often go uncovered until a teenager starts applying for car for a car or college. It’s probably not a fun surprise to find out that your child’s credit score is already ruined before they’ve even moved out.

So what can you do?

Simple: Freeze their credit reports.

The three credit reporting agencies, Equifax, Experian, and Trans Union, all allow you to put a security freeze on the credit reports of your dependents.

Doing this when your child is born or when an elderly relative becomes a dependent will stop anyone from getting a credit card or loan in their name (Including them!), because it prevents the credit reporting agencies from issuing reports to creditors.

Once your child is ready to apply for a loan or credit card, you can have the freeze lifted.   There are even options for temporary un-freezing.

It often makes sense to keep an existing security freeze in place, or to implement a new one, for a family member who’s recently passed. The credit reporting agencies don’t receive notification of death and will continue responding to credit checks unless a freeze is in place.

Each agency does charge a small fee for putting in a security freeze, but in some states, including Oklahoma, the fees are waved for people 65 years or older and those who have already been the victims of identity theft.

Security freezes don’t prevent all types of identity theft, but they certainly help and are easy to put in place.