18 state attorneys general settle with tax debt firm

18 state attorneys general settle with tax debt firm

By: The Associated Press

The Messenger 06.16.08

By SUSANNE M. SCHAFER
Associated Press Writer
COLUMBIA, S.C. (AP) — A Charleston firm that claimed to offer people help settling their tax debt has agreed to change its advertising and pay $1.5 million in restitution under a settlement with attorneys general in 18 states, officials announced Thursday.
Attorney General Martha Coakley of Massachusetts and 17 other state attorneys general entered into a consent judgment with JK Harris and Company LLC and its president, John K. Harris, Coakley’s office said.
“This company took advantage of people who paid for tax assistance and, in some instances, profited by taking their money and not giving them any help at all,” Attorney General Coakley said in the statement. “This agreement will ensure that this firm is honest with its clients and provides refunds if they are unable to assist them.”
In a statement, JK Harris denied any wrongdoing and said it entered into the agreement for the betterment of its industry.
“We are pleased that we have been able to reach an agreement with the states,” said Josh Baker, the firm’s director of communications. “We have made every effort to cooperate with them and believe the agreement we have reached will make our company and our industry stronger.”
According to the complaint filed in Massachusetts, JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed.
The complaint filed in Massachusetts alleged that JK Harris regularly advertised it could help people who owed back taxes to the IRS by filing an Offer in Compromise on their behalf and consumers would only have to pay a small percentage of what they owed.
An OIC is a program implemented by the IRS to assist consumers who owed back taxes as a legitimate alternative to declaring a case not collectible.
JK Harris charged money upfront for this service without actually determining if consumers qualified for an OIC or while knowing that consumers in fact didn’t qualify, the complaint alleged.
The complaint said the IRS accepts only a small number of these kinds of cases. In many cases, JK Harris did not even apply to the IRS to assist consumers as promised, and refused to give those consumers their money back.
The statement said that under the terms of the consent judgment, JK Harris must make clearer disclosures to consumers and refund them if the company is not able to work out a compromise with the IRS.
The company must tell consumers under what circumstances they might qualify to reach a compromise with the IRS on back taxes and provide an accurate percentage of how many OIC offers the IRS accepts. The company must also refund consumers money if the IRS does not accept their case.
The statement said the judgment also applies to JK Harris Financial Recovery System LLC and Professional Fee Financing Associates LLC, both owned by John K. Harris.
Participating in the judgment with Massachusetts were Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.

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