by Brian Mahany
JK Harris was ordered to pay $1.2 million dollars after being charged by the Texas Attorney General with violations of the Texas Deceptive Trade Practices – Consumer Protection Act. $800,000 of that money must go to victims – in this case, former customers of JK Harris.
Harris bills itself as the “largest tax representation firm” in the U.S. Some former clients and tax professionals think it is the largest tax scam in the U.S.
The Texas consumer fraud case is not the first time JK Harris has tangled with authorities and lost. In June of 2008 the company settled charges with 18 states and later that year was sued by the Missouri Attorney General (search JK Harris on our blog for more stories.) Apparently the company never learned.
According to the complaint filed by the state in a state district court, JK Harris defrauded customers by charging up front fees and suggesting customers could reduce their tax debts significantly. The state says the firm would calculate a “minimum settlement amount” that was deflated and non-representative of what the IRS would actually accept to compromise their tax debts. Once the taxpayer had signed up and completed the IRS paperwork for an offer in compromise, JK Harris would then tell customers they did not qualify.
At that point, JK Harris frequently tells taxpayers they should enter a payment plan for the full amount of the tax.
Taxpayers that balk and want their money back frequently run into problems. According to the Texas Attorney General, “Typically [JK Harris] refuses to return the money the consumers have paid for the services.]
Nice scam. Find people who are down on their luck because of the economy, lost job or illness and take their last dollar with the idea that they can somehow get out of their back taxes. Once they sign up and pay, send them a letter saying they don’t qualify and keep their money.
The Texas Attorney General calls their policy “unconscionable.” I call it fraud. Whatever it’s called, JK Harris was again caught and once again promised to clean up their act.
Tax resolution is complex and involves detailed negotiation with the IRS. Late night infomercials promising that people can simply pay “pennies on the dollar” are usually frauds. JK Harris isn’t alone in this mess. Prosecutors have previously gone after Roni Deutch, American Tax Relief and TaxMasters.
Not all tax relief programs are scams. Nationally, only a small percentage of offers in compromise filed with the IRS are approved, however. Something the late night TV and radio hucksters fail to mention. Those that are approved are frequently submitted with the help of trained accountants and lawyers that specialize in tax matters.
Mahany & Ertl is a full service boutique law firm concentrating in helping people and businesses with tax problems. IRS liens? Bank levies? Wage garnishments? We can help. Our tax lawyers have helped taxpayers from Maine to Hawaii with tax court litigation, audit defense, collections representation, criminal investigations and of course, offers in compromise.
Mahany & Ertl, LLC – Offices in Milwaukee, Wisconsin; Detroit, Michigan & Portland, Maine, tax services nationwide.