What Is The TaxRise Lawsuit About And What Should You Keep In Mind?

TaxRise (also styled “Tax Rise”) is a tax-resolution company that markets services to people struggling with IRS or state tax debt — everything from negotiating Offers in Compromise to arranging installment agreements and penalty abatements.

Like many companies in that space, TaxRise advertises success stories and case studies showing major debt reductions, and it says its staff includes credentialed professionals who work on clients’ behalf. 

However, over the past few years, a steady stream of consumer complaints, online reviews, and documented lawsuits has raised questions. These questions are about its sales tactics, fee structure, and the results some clients receive. 

In this article, I will explain the following things:

• What is TaxRise?
• Is there a TaxRise lawsuit going on?
• What are the major allegations in the lawsuit?
• What should consumers/clients keep in mind?

Therefore, if these are some of the things that you want to know, keep on reading this blog till the end…

What Is TaxRise Inc.?

With their mission to achieve “financial freedom” for their clients, TaxRise is primarily a tax relief company. It aims to help its clients with issues related to the IRS. LendEDU calls it a “solid choice” that you can have in case you “have a smaller tax debt, with a $5,000 minimum that’s lower than many competitors.”

According to the official website of the platform, they basically work with their clients to “resolve tax issues with expertise, empathy, and exceptional service.” Additionally, they also mention that ever since they started their work in this industry, they have helped thousands of clients by “protecting them from the IRS.”

With an accreditation of A+ from the Better Business Bureau, TaxRise has been in this industry since 2017. Apart from tax relief, one of their major USPs includes legal representation in matters related to the IRS. “From audits and tax disputes to international tax issues and court representation,” the company provides help to its clients in every way possible.

Is There A TaxRise Lawsuit Going On?

Yes, there is recorded litigation involving TaxRise (and related entities) in U.S. courts. For example, a complaint was filed in the U.S. District Court for the Central District of California (Homayoun Sadr-Arhami v. Tax Rise Inc., et al.).

According to Justia’s docket, the company has been a defendant in civil suits in prior years, as indicated by the complaints that the plaintiff has filed. These filings often concern the following things:

• Business practices.
• Alleged misrepresentations.
• Tax-related disputes.

These generally provide a reminder that legal challenges have occurred in the company’s history. 

However, you should keep in mind that while the existence of prior litigation signals risk and warrants scrutiny, not every complaint or case results in a judgment against the company. For instance, some are dismissed, some are settled, and some remain contested.

Apart from the above TaxRise lawsuit, another case was filed against the company in 2020. According to court documents, the Micah Watckinbs v. Tax Rise Inc. class action lawsuit alleged “illegal actions of Defendant Tax Rise Inc.”

As per the complaint, the company had “negligently, and/or willfully [contacted the] Plaintiff through phone calls and text messages on Plaintiff’s cellular telephone, in violation of the Telephone Consumer Protection Act, 47 U.S.C. §§ 227 et seq., (“TCPA”), thereby invading Plaintiff’s privacy.”

What Does TaxRise Say About Itself?

On their About Us page, the company mentions that they have “built a culture that prioritizes client satisfaction and cultivates change.”

TaxRise publishes case studies and service descriptions. Additionally, they also publish a blog describing their tax attorneys and enrolled agents, along with a money-back guarantee in limited circumstances. These marketing materials are useful for understanding the company’s claims and how it presents itself to consumers.

For instance, according to a case study that TaxRise has spoken about on their website, they helped an elderly pastor to settle a “$206,000 IRS tax liability for $650.” This, the company mentioned, was one of the “largest saves in TaxRise history.”

However, you should always cross-check these marketing claims against contracts and client reviews. While researching the company and its ongoing or past litigations, there are a few allegations that I came across.

What Are The Major Allegations In The TaxRise Lawsuit?

The first time I came across the news of a lawsuit going against the tax relief company was a few months back, when I was scrolling through Reddit. As per my research on litigation against the company, here are the most common allegations or complaints that I found:

• Misleading promises / overpromising results: Some customers say they were led to expect dramatic reductions, only to see little change after paying fees. Forums and complaint sites contain many first-hand accounts of perceived over-promising and under-delivery. A user on their Reddit thread warned other users to stay away from their service, calling TaxRise a “shady and predatory company.”
• Upfront and nonrefundable fees/financing concerns: Multiple reviewers report high upfront charges, limited refunds, or being encouraged to take third-party financing (loans) to pay fees, which can compound financial harm if the tax help doesn’t work out.
• Customer service and follow-through problems: Complaints to the BBB and other sites detail slow responses. It also indicates a perceived lack of work performed and difficulties in obtaining refunds.

While it is true that most companies in this tax-relief sector have similar complaints, it is best to think twice before you subscribe to or use their services. This is primarily because the volume of consumer reports means potential clients should be cautious and informed.

For instance, according to a recent review that a client left on Trustpilot, the company had charged her more than $20,000. The client mentioned that they did not receive any “compensation or a confirmed agreement with the IRS.”

What Should Consumers Keep In Mind When Working With TaxRise?

Are you planning to hire the services of TaxRise or any other tax-relief firm, for that matter? If so, there are a few steps that you should take to protect yourself financially and legally. Here are the steps that you need to know:

• Verify credentials: Ask which licensed professionals (CPAs, EAs, tax attorneys) will handle your case and confirm their credentials independently.
• Read the contract slowly: Look for exact fee amounts, refund/cancellation terms, arbitration clauses, and whether the company uses third-party financing. Beware of nonrefundable “investigation” fees.
• Get everything in writing: Promises made on sales calls mean little unless reflected in the written agreement. If you’re given a timeline or promised outcomes, insist it be written into the contract.
• Check independent reviews & complaints: Look at BBB, Trustpilot, ComplaintsBoard, and consumer forums for patterns of complaints and for how the company responds. One negative review is less telling than a consistent pattern of the same problem.
• Preserve records: Keep emails, contracts, payment records, and any communications with the IRS or state tax authorities. These are crucial if you later dispute services or file a complaint.

Read Also: $50 Million Starbucks Lawsuit: When Delivery Boy Suffered Permanent Disfigurement In California

What Should You Do If You Have Been A Victim In Tax-Relief Fraud?

TaxRise operates in a risky industry where results vary and aggressive sales tactics are not uncommon. 

If you think that you have suffered from tax relief fraud, the best thing to do is to get in touch with the company first. If that fails and you do not receive a satisfactory answer, here are some steps that you can take:

• Report: Submit calls with the BBB, the state Attorney General, and the consumer protection agency in your area. Such calls may result in coercions as well as inspections.
• Speak with a consumer lawyer: In case the loss is significant or the company’s contract is problematic (e.g., a binding arbitration that limits your choices), talk to an attorney who specializes in consumer law or tax-relief disputes.
• Provide Information: Help the FTC to uncover fraud by giving them the necessary information, and if tax fraud or false filings are suspected, simultaneously, report the issue to the IRS (the IRS has the necessary guidance on tax-relief scams).

There have been consumer complaints and one historical civil case that mentions TaxRise, among others, as defendants. That, however, is not the same as evidence of misconduct in every situation.

Irrespective of the issue, consumers should not take risks. Some of the things that clients should keep in mind include:

• Verifying credentials.
• Carefully reading contracts.
• Keeping records of everything that they do.

Additionally, they should also trust the opinion of well-known experts in case the game is worth it.