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Pew Law Center Blog
March 27, 2012 Lawrence 'D' Pew

Fat “Tax Resolution Shops” Collapse Under Own Weight

American Tax Relief, “Tax Lady” Roni Lynn Deutch, J.K. Harris & Co., and now Tax Masters, Inc. – lawsuits and bankruptcy for fat “tax resolution shops” are indeed a reversal of fortune.

American Tax Relief Shut Down

In October of 2010, the U.S. District Court for the Northern District of Illinois, Eastern Division, shut down American Tax Relief. This was after the Federal Trade Commission pursued the charlatan tax resolution shop for bilking money out of 20,000 taxpayers. American Tax Relief promised consumers that it would settle their delinquent taxes with the IRS for “pennies on the dollar.” Instead, the tax resolution shop did little more than steal money and worsen tax matters for vulnerable consumers.

The owners in thief were the husband and wife team of Alexander Seung Hahn and Joo Hyun Park. The couple typically charged fees from $3,000 to $25,000 up front, when few of its clients were even eligible for the IRS settlement programs. Hahn and Park amassed over $60 million in their tax resolution scheme. They lived a lavish lifestyle while their clients were strung along and pushed deeper and deeper into tax debt.

Tax Lady’s Fall from Grace

Then we have the infamous “Tax Lady.” Roni Deutch was a California tax attorney known for her Roni Deutch Tax Center franchise (RDTC, Inc.).

Once the know-it-all columnist and infomercial queen of tax resolution, Deutch’s stock in trade was hawking the settlement programs offered by the IRS. Namely, the offer in compromise, installment agreement, and currently not collectible programs for taxpayers with delinquent taxes owed to the IRS.

The Tax Lady was a problem for regulators and a danger to consumers for a very long time. In 2006, Deutch ran into problems with the New York City Department of Consumer Affairs for deceptively advertising her organization’s tax services. In a settlement, Deutch agreed to pay $200,000 in restitution to her victims and another $100,000 in fines to the city. (What did she do? She made false promises including TV commercials telling viewers how she would “settle your back tax problem for only $20” and “resolve your back taxes without paying anything to the IRS.”)

One of the fastest growing franchises in 2009, Roni Deutch Tax Centers were in 23 states with many centers concentrated in Arizona.

In an August 2010 lawsuit against the “predator of profit, preying on the innocent, hard-working people who were simply hoping to settle on their accounts with the IRS,” the California Attorney General went after Deutch for swindling $34 million out of clients in trouble with the IRS. Not long after, Deutch surrendered her license to practice law, closed her operation, and announced her intention to file for bankruptcy.

J.K. Harris Bankrupt

J.K. Harris & Co. was yet another disreputable tax resolution shop, making its fortune preying on consumers and scamming them out of millions. In an all too familiar pattern with these unethical tax resolution shops, the company misled consumers into paying for services that they were ineligible for. J.R. Harris & Co. promised to resolve clients’ tax liability for “pennies on the dollar.”

After a $1.2 million settlement with the Texas Attorney General, followed by a $4 million class action settlement by injured consumers, J.R. Harris & Co. filed for bankruptcy protection in October 2011 in Charleston, South Carolina. Which brings us to our last tax scammer – the “stalking horse” that eyed bankrupt J.R. Harris & Co. for takeover was none other than TaxMasters, Inc.

Final Reversal of Fortune: TaxMasters Files for Bankruptcy

First, we have Texas Attorney General Greg Abbot suing TaxMasters, Inc., for deceptive practices and intentionally misleading consumers to sign their service contracts for tax relief that, among other things, would never be provided or come to fruition.

Second, we have Minnesota Attorney General Lori Swanson settling its lawsuit against TaxMasters last August for $500,000 along with the defendant’s agreement to reform itself and cease its unlawful business practices in that state.

In our very last reversal of fortune, on March 18, 2012, TaxMasters filed for bankruptcy in Houston, Texas. TaxMasters claims assets of a mere $50,000, with liabilities between $1 and $10 million.

With four recognized tax scammers off the streets – American Tax Relief, the Tax Lady, J.K. Harris & Co., and Tax Masters – consumer confidence in reputable tax resolution firms will return.

Trustworthy tax debt relief law firms like the Pew Law Center have always served American consumers honestly, lawfully, and dependably.

Call (480) 745-1770 or fill out our contact form to get help from compassionate professionals. Stop worry and get help today.