Trouble for TV tax lady

[LDE]

I never heard of Roni Deutch, but apparently she's big in California. Now she's being sued by AG (and gubernatorial candidate) Jerry Brown because she "exaggerates her abilities to top the IRS in tax messes."

http://newsfeed.time.com/2010/08/24/tv- ... -troubles/

[LPC]

Here's the press release from the AG himself:

News Release
August 23, 2010
For Immediate Release
Contact: (510) 622-4500

Brown Seeks $34 Million From TV's Tax Lady Roni Deutch For Victimizing Thousands Who Sought Her Aid in Dealing With the IRS

SACRAMENTO - Attorney General Edmund G. Brown Jr. today filed a $34 million lawsuit against television's "Tax Lady Roni Deutch" for orchestrating a "heartless scheme" that swindled thousands of people facing serious and expensive tax collection problems with the IRS.

"Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems," Brown said. "She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills."

Deutch manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC's Today Show, CNN, and CNBC.

Desperate debtors turn to Deutch based on her misleading ads that feature fictional testimonials claiming she secured large reductions in the featured clients' federal tax debts.

For example, her ad entitled "It's Your Turn" features three clients whom Deutch claims to have "saved" from having to pay thousands of dollars to the IRS. In fact, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.

When potential clients call Deutch's boiler room, sales agents employ high-pressure sales tactics plus a series of misrepresentations and false promises to persuade them to retain her firm. The sales agents claim Deutch's success rate in dealing with the IRS is as high as 99 percent. But the percentage of clients whose tax bills Deutch actually reduces is a mere 10 percent.

Rather than cut clients' debts, Deutch often escalates them. She places clients in an endless loop of requests for duplicate documents that increases her fees and, due to further delays in payments to the IRS, increases clients' IRS fines and penalties.

One woman from Pico Rivera, who owed the IRS $13,000, turned to Deutch after seeing a TV ad. She paid Deutch a $1,900 retainer, but by the time the Deutch firm ended its representation, she owed the IRS hundreds of dollars more in interest and penalties, and the IRS had placed a levy against her Social Security benefits. Despite failing to take any effective action on her behalf, Deutch refused to refund the woman's retainer by falsely billing her for time the firm did not spend on her case. Deutch regularly uses false billing statements to deny her clients' refund requests.

Hundreds of clients have filed complaints with the Attorney General and other government agencies, describing Deutch's failure to reduce their IRS debts as she advertised and her refusal to refund retainers of as much as $4,700.

Brown's lawsuit says thousands of consumers in California and around the country have fallen victim to Deutch's unlawful scam, losing millions of dollars that could have been used to pay their IRS tax liabilities. The lawsuit charges that Deutch operates a deceptive tax resolution scheme that employs "a bevy of false promises and misrepresentations."

Brown's action seeks to permanently prevent Deutch from engaging in such unfair business practices and false advertising, and force her to pay victims restitution of at least $33.9 million plus civil penalties.

Brown's lawsuit follows the consumer alert he issued on March 30, 2010, warning consumers to be wary about tax debt scams. It is also one of a series of actions he has taken to protect consumers who suffered during the financial crisis and resulting economic downturn, including his 2008 lawsuit against Countrywide Home Loans that resulted in an $8.68 billion settlement, as well as recent enforcement actions against scams in the foreclosure consultant, loan modification, and property tax reassessment industries.

# # #

[LPC]

The AG website also has copies of the complaint and the memorandum in support of the request for a preliminary injunction.

[Imalawman]

The AG website also has copies of the complaint and the memorandum in support of the request for a preliminary injunction.

I've always been suspicious of her and definitely not a fan. If these alleged facts are true, I hope they take her down.

[Number Six]

I would assume the worst with her business. She has branches in many states, and perhaps other AGs will take notice. JK Harris has been around a long time in this business, presumably they are an ethical company. The scare tactics probably lead customers to call in and explain their tax situation. If the customer has substantial tax liability and has not yet been contacted by the IRS or state DRS, I would not be surprized if the customer's confidentiality is not honored, but that someone with her company could try to collect the 15% whistleblower's reward from the IRS. If I had tax problems, I would go to the IRS office and ask for help. This is not a risky strategy unless the taxpayer is hiding huge sums of money or if volunteering information to the IRS agent would be the basis for greater jeopardy. It helps to have a good CPA as an interface with the IRS, confidentiality should prevail. Ask for referrals from people for help. If the matter is criminal, or if large sums are at stake, the taxpayer will need a tax attorney too.

[Imalawman]

I would assume the worst with her business. She has branches in many states, and perhaps other AGs will take notice. JK Harris has been around a long time in this business, presumably they are an ethical company. The scare tactics probably lead customers to call in and explain their tax situation. If the customer has substantial tax liability and has not yet been contacted by the IRS or state DRS, I would not be surprized if the customer's confidentiality is not honored, but that someone with her company could try to collect the 15% whistleblower's reward from the IRS. If I had tax problems, I would go to the IRS office and ask for help. This is not a risky strategy unless the taxpayer is hiding huge sums of money or if volunteering information to the IRS agent would be the basis for greater jeopardy. It helps to have a good CPA as an interface with the IRS, confidentiality should prevail. Ask for referrals from people for help. If the matter is criminal, or if large sums are at stake, the taxpayer will need a tax attorney too.

Universally, these IRS settlement firms are bogus. Its really a mathematical process to see which of the IRS debt reduction plans you qualify for. There isn't a lot of room for creativity. Certainly, there have been times when I've been able to obtain better results than if the client went at it alone, but mainly, I know the system and I know the forms that have to be filed. There's no reason to use these shady IRS mills, they usually don't have the expertise or the time it takes to work out an OIC or PPIA. Sometimes, they'll push people towards an OIC when a PPIA would be a better option. Moreover, unless you have over $50,000 in tax debt, there's no reason to hire me or anyone else - the taxpayer is better off going it alone, the IRS typically is very patient with self-represented taxpayers. Better yet, contact the local legal aid clinic for free help with IRS collection issues.

[Number Six]

My understanding of offers in compromise is that the taxpayer has to declare all assets, and must make a good faith effort to pay tax debts before tax amnesty is offered. No hiding assets. Most OICs are rejected, over 80%, and they only get accepted if all conditions are met. They are not intended to let the taxpayers keep most of their money while being forgiven taxes, interest and penalties. If there is an active investigation on the taxpayer that has already cost the government big bucks, they are not going to call off the dogs unless the taxpayer has satisfied their demands. Most of those who got involved in tax fraud and evasion and proved their willful intent to defraud the IRS with signed documents are going to owe money and possibly face jail time. Tax protestors and their leaders are in a special category and are potentially subject to criminal penalties. Good lawyers in this case come with a hefty retainer, "earned when paid", no refunds folks.

[Pantherphil]

This makes my day.

I provide volunteer tax assistance for the local low income tax assistance program and take a lot of referrals involving long term failures to file and enforced collection actvities. Our program handles offers in compromise, installment payments, and (most of the time) uncollectible status issues for no or reduced fees for low income taxpayers who qualify.

I am so tired of these "pennies on the dollar" tax settlement scammers-- Roni Deutch, J.K. Harris, Tax Masters, etc.-- looking for substantial up front fees and yielding no results. J.K. Harris took back a $3,000 Note from one of my referral clients, never even submitted an Offer in Compromise or Installment Payment Request, and then sued on the Note in small claims court. Roni Deutch took a $2500 fee from a client and delivered nothing.

Ms. Deutch was, I believe, previously shut down by the State of New York and enjoined from advertising in that State. J.K. Harris is being sued in Texas for fraudulent misrepresentation. Google any of these companies and you will see literally hundreds of complaints from dissatisfied customers.

I can't believe that they are permitted to advertise on TV.

They should all be shut down.

[grixit]

From the title of this topic i guessed it would be about Roni Deutch. Thing is, if there is substance to the allegations, then it should be up to the regulators to sue her. The AG should be prosecuting her for fraud.

[Arthur Rubin]

From the title of this topic i guessed it would be about Roni Deutch. Thing is, if there is substance to the allegations, then it should be up to the regulators to sue her. The AG should be prosecuting her for fraud.

What "regulators"? Tax preparation and representation isn't "regulated".

[ashlynne39]

There are a ton of complaints about her on ripoffreports, which I have to admit has become a new guilty pleasure for me. . . reading all the complaints about things and feeling pretty good about myself.

[Famspear]

From the title of this topic i guessed it would be about Roni Deutch. Thing is, if there is substance to the allegations, then it should be up to the regulators to sue her. The AG should be prosecuting her for fraud.

What "regulators"? Tax preparation and representation isn't "regulated".

But the Internal Revenue Service is about to get into registering all paid federal tax return preparers, and will require that most such preparers (other than CPAs, attorneys, and enrolled agents) pass a national IRS exam:

viewtopic.php?f=12&t=6193

As far as representing taxpayers, the IRS does some regulation of that (sort of) with the rules in Circular 230.

[Tax Man]

From the title of this topic i guessed it would be about Roni Deutch. Thing is, if there is substance to the allegations, then it should be up to the regulators to sue her. The AG should be prosecuting her for fraud.

What "regulators"? Tax preparation and representation isn't "regulated".

But unfair or deceptive trade practices are regulated.

[Joey Smith]

Sounds like she just took the "credit repair" scam and duplicated it to tax controversy, i.e., pay us a big fee to do nothing but maybe send in a form letter for no benefit.

[fortinbras]

I am sort of disappointed, since I thought she was attractive.

When I was much younger I was good friends with a real tax lawyer (that was long ago, in the days before lawyer advertising) who pretty much had to accomplish something for her clients because her fee was a percentage of the amount she saved her clients (the difference between what the IRS originally demanded and what they finally had to pay).

[LPC]

I am sort of disappointed, since I thought she was attractive.

Which is pretty much the plot of most romantic novels (and the lives of most men), not to mention the siege of Troy and the Illiad of Homer.

[wserra]

There are a ton of complaints about her on ripoffreports, which I have to admit has become a new guilty pleasure for me. . .

So long as you're also aware of Magedson's version of greenmail.

[Imalawman]

My understanding of offers in compromise is that the taxpayer has to declare all assets, and must make a good faith effort to pay tax debts before tax amnesty is offered. No hiding assets. Most OICs are rejected, over 80%, and they only get accepted if all conditions are met. They are not intended to let the taxpayers keep most of their money while being forgiven taxes, interest and penalties. If there is an active investigation on the taxpayer that has already cost the government big bucks, they are not going to call off the dogs unless the taxpayer has satisfied their demands. Most of those who got involved in tax fraud and evasion and proved their willful intent to defraud the IRS with signed documents are going to owe money and possibly face jail time. Tax protestors and their leaders are in a special category and are potentially subject to criminal penalties. Good lawyers in this case come with a hefty retainer, "earned when paid", no refunds folks.

That's generally correct, though there's about 5 varieties of OICs which have differing standards. Generally speaking you have to be broke as a joke - but some of the clients I deal with owe hundreds of thousands, maybe millions, and even though they have considerable income they can still qualify for an OIC. Basically, the IRS is looking at it as we can go through the tremendous expense of taking their assets or spreading the money over several years or we can take a nice lump sum now. But yes, OICs are very hard to get through and it takes a lot of attention to detail.

[Arthur Rubin]

...fee was a percentage of the amount she saved her clients (the difference between what the IRS originally demanded and what they finally had to pay).

I thought that was a violation of Circular 230.

[fortinbras]

I am utterly unaware of Circular 230 and have no idea what it says.