California was one of 18 states who sued the tax settlement firm JKHarris for selling services they couldn’t provide. The settlement reached will require fuller disclosure of the odds of reaching the promised results.
Everyone in debt trouble, particularly those in trouble with a heavy hitter like the IRS, wants to believe that a cheaper resolution is available for their problem. The consumer is predisposed to believe that a former insider, like the former IRS agents who supposedly work for JK Harris, can solve their problem on the cheap. Even as I write this, Google brings up the following headline for Harris:
JK Harris Company Will Solve Your IRS Problems Today.I see lots of clients with large tax problems who have signed up with J K Harris to “settle” their taxes before they come to me with their tax problems unaddressed. Often, it is obvious to me that these people are not good candidates for an offer in compromise, which is what tax settlement firms are touting.
The IRS will compromise taxes where the taxpayer (or non-taxpayer) has few assets; little income; the collection statute of limitations is approaching; or other factors that make it unlikely the IRS can collect everything it’s owed.
If the individual doesn’t fit that profile, a successful offer in compromise is unlikely. Yet I see no evidence that Harris explored those factors before taking money from the desperate customer.
One of the myths about bankruptcy is that you can’t discharge taxes. Wrong: income taxes first due more than three years ago, for which a truthful return has been on file for at least two years, and assessed more than 240 days ago are dischargeable in bankruptcy.
My next candidate for the Attorneys General of the various states are the debt settlement companies, whose pitch to consumers is equally as false as JK Harris.
