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J. K. Harris Settles Deceptive Ad Charges

Company took consumers' money, did nothing, states charged

June 16, 2008

In a settlement J.K. Harris has agreed to stop misleading consumers about its services and to pay $1.5 million in restitution.

"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," said Massachusetts Attorney General Martha Coakley. "This agreement will ensure that this firm is honest with its clients and provides refunds if they are unable to assist them."

The 18 state attorneys general entered into a consent judgment with JK Harris and Company, L.L.C of Charleston, South Carolina, and its president, John K. Harris. According to the complaint, 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 alleges that JK Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an Offer in Compromise (OIC) 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 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, but still refused to give those consumers their money back, the complaint alleged.

The complaint detailed other issues; it said JK Harris regularly advertised that it had more than 450 offices nationwide. Typically, however, the person handling a consumer's OIC was actually located at the JK Harris home office in Charleston, South Carolina. If a consumer wanted to meet with a JK Harris representative about their file they had to physically travel to Charleston.

The other offices were reportedly staffed by sales representatives who could not assist consumers with their tax problems.

JK Harris also claimed that consumers' files would be handled by "tax experts" or "ex-IRS agents" when in fact, the states charged, the individuals handling the cases did not fit those descriptions and did not have tax expertise. JK Harris case managers changed frequently, and consumers complained that they often had to provide the same information to the company several times.

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.

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