Chris Rizo Jun. 13, 2008, 2:10pm
SPRINGFIELD, Ill. (Legal Newsline)-A South Carolina firm that promised to settle consumer tax debts has agreed to pay $1.5 million in restitution and change its advertising, under an agreement with 18 state attorneys general.
The attorneys general entered into a consent judgment with JK Harris and Company LLC and its president, John K. Harris, officials said.
Illinois Attorney General Lisa Madigan said the company took consumers' money and offered them little help in return.
"Consumers should be on the lookout for tax resolution offers that seem too good to be true," Madigan said.
JK Harris has denied any wrongdoing. The firm said the agreement comes at the betterment of the tax debt consulting industry.
"We are pleased that we have been able to reach an agreement with the states," said Josh Baker, JK Harris' 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."
In addition to not helping consumers, the company is accused of refusing to issue refunds when consumers complained that they did not receive promised services.
The company claimed it could help struggling taxpayers who owed back taxes to the federal government by filing an Offer in Compromise on their behalf. The firm said that as a result consumers would have to pay the IRS only a fraction of what they owed.
JK Harris allegedly charged consumers upfront for the service without determining if they qualified for an OIC, the complaint said.
"This agreement will help ensure that before signing up for these services, consumers are provided with accurate information concerning the limited nature of what these companies can offer due to the limited nature of the IRS OIC program," said Madigan, a Democrat.
States participating in the judgment in addition to Illinois were Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Vermont, and West Virginia.
The states will share in a $300,000 pool to help cover the costs of the investigation.
From Legal Newsline: Reach reporter Chris Rizo by e-mail at firstname.lastname@example.org.