A Los Angeles-based firm who advertised that tax delinquents could settle with the Internal Revenue Service for "pennies on the dollar," is facing two lawsuits.

New York City's Department of Consumer Affairs filed a lawsuit accusing the company, American Tax Relief, of sending junk mail with exaggerated promises -- and then collecting large fees but not clearing its clients' tax debts.

Separately, a Brooklyn woman filed a lawsuit claiming that she paid $5,000 to the firm to help resolve what was a $50,000 tax debt. The woman eventually learned she didn't qualify for the IRS settlement program the company was selling and had to settle with the IRS for about $80,000.

An attorney for American Tax Relief said the company has done nothing wrong, and that it doesn't promise it can help all of its clients.

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