Beware of telemarketers and advertisers on radio and television who make claims that sound too good to be true and who claim that they can settle IRS claims for “pennies on the dollar”.
To avoid getting ripped-off in these scams, be sure to use local tax professionals whenever you have IRS problems. Check the company’s website to verify that actual tax resolution professionals are employed, such as Enrolled Agents, CPAs, or tax attorneys in their firms. Most of the scam firms do not have anyone with these qualifications. Most of the scam firms are simply shell corporations with high-pressure salespeople.
Some of these scam companies have been closed down recently or sued by various State Attorney Generals or by local government agencies, such as, Roni Deutch, known as “the Tax Lady”, American Tax Relief and Taxmasters. The government suits claim that these companies have bilked consumers out of millions of dollars by using deceptive practices and falsely claiming they could reduce the taxpayer’s tax debts.
Roni Deutch, aka The Tax Lady has been closed down and is being sued by the California Attorney General’s office. Deutch claimed in her advertisements of winning 99 percent of her tax battles, when actually she only succeeded in getting a reduction in taxes for her clients in just 10 percent of cases. She had earlier settled in a New York City lawsuit for $300,000 for deceptive advertising. Prior to that the New York Department of Consumer Affairs filed suit (September 2005) in the state Supreme Court for false adverstising.
TaxMasters one of the largest tax resolution companies in the industry, has been charged with unlawful conduct and deceptive trade practices by the Texas Attorney General, citing nearly 1,000 complaints about their conduct and business practices.
TaxMasters’ advertisements encourage taxpayers to call its toll-free number for a “free consultation” with a “tax consultant.” Court documents filed by the state indicate that callers are not connected to an employee qualified to give tax advice, but rather with a TaxMasters salesperson who recommends a “solution” for between $1,500 and $9,000 or more.
According to court documents, many callers were offered an installment plan so that they could pay the defendants’ fee over a specified period of time. However, callers who asked to see written terms and conditions prior to making a payment were informed that a credit card or bank account number was necessary to generate a written TaxMasters service contract and did not disclose that all customer payments submitted to TaxMasters were non-refundable, even if they ultimately decide to cancel before TaxMasters actually did any work on their tax case.
The state’s enforcement action also cites TaxMasters for failing to reveal that it would not begin work on a case until all installment payments had been remitted and the entire fee was paid; and that it also failed to properly provide the “tax resolution” services that were advertised. TaxMasters failed to contact and consult with the IRS on the client’s behalf; failing to appear on the client’s behalf at an IRS audit or hearing; failing to postpone or stop a wage or bank account garnishment; and failing to stop a levy or lien against a client’s property.
When customers who were unhappy with the defendants’ services sought refunds, TaxMasters refused to return the customers’ money. Court documents indicate TaxMasters not only refused to honor refund requests, it also pursued debt collection efforts against clients who cancelled their contracts.
JK Harris and Company Sued—18 State Attorney Generals entered into a lawsuit against JK Harris and Company over deceptive advertising practices and the company’s ability to truly resolve clients’ tax problems. Charleston County Circuit Court Judge Perry M. Buckner III approved a $6 million settlement of a class-action lawsuit involving JK Harris, saying the proposed amount is as much as the business can afford to pay without possibly going bankrupt.
The lawsuit was sparked by consumer complaints about JK Harris’ heavily advertised tax-resolution services, which make use of an IRS program known as “offer in compromise.” Under that program, taxpayers with substantial back tax bills can make an offer to pay less than the amount owed, which the IRS may or may not accept. The plaintiffs had claimed that JK Harris charged them upfront for help resolving their back-tax cases, then failed to deliver the promised help.
Early January 2012, JK Harris suspended all operations. It owes a lot of money to a lot of people, including clients and many employees who have not been paid for quite some time. Thousands of taxpayers are now left completely defenseless, as they pursue bankruptcy, which would liquidate all of its assets.
Are you having problems with the IRS?
Incompass can help resolve your tax problems and put an end to the misery that the IRS can put you through. We pride ourselves on being very efficient, affordable, and of course, extremely discrete. The IRS problems will not just go away by themselves. They just keep getting worse with penalties and interest being added each day.
Incompass can help, we are local and we list our qualified personnel on our website in the Our Team section, or you can call us at 916-974-9393.