5 Worst Tax Relief Companies: Avoid Firms Like These At All Costs

Unfortunately, the shiny nature of many tax relief companies hides their more deceptive tactics.

We’ve compiled a list of the top five worst tax relief companies. These companies’ aggressive marketing campaigns and lofty promises left their honest customers floundering, thousands of dollars in debt, and worse off than before.

Instead of being fueled by the praise of their clientele, the companies thrive off their marketing and sales tactics to grow their brand.

Even though they’re built on a foundation of flimsy words and untruths, they’ve still managed to establish themselves as a notable brand, with a stellar reputation in the tax relief industry.

In this article, we will cut through the noise surrounding tax relief and establish a strong foundation in what to avoid when looking for a tax relief company.

5 Worst Tax Relief Companies

Here’s our list of the top five worst tax relief companies in no particular order. They have a lot in common, including their deceptive marketing and empty promises.

1. JK Harris & Company

Founding a tax representation company in 1997, JK Harris had a bright and promising career ahead of him. His company was growing exponentially, opening 450 sales offices in its first year of operation. The company seemed unstoppable until July of 2007.

In 2007, a judge in South Carolina approved a $6 million settlement of a class action lawsuit, encompassing 18 states. The lawsuit was harsh, making claims that JK Harris & Company was overcharging customers in order to resolve their outstanding debts with no results. It also attacked their advertising and marketing tactics, calling them out for being deceptive.

JK Harris & Company made big claims that, according to the complaint, it couldn’t make.

Many of their shady tactics began to come to light, revealing their problems dated further back than their 2007 lawsuit date. One of our employees at Choice Tax Relief was working for JK Harris & Company at the time and witnessed them getting raided in 2000.

Eventually, the company couldn’t run any longer. After facing multiple lawsuits in multiple states, including Missouri and Texas, the company agreed to settle. Unfortunately, their story doesn’t end there. The company lacked the funds to settle, forcing it to shut down and file for bankruptcy in 2011.

The bankruptcy trustee ended up seeking $4.8 million from Mr. Harris personally, alleging that it was about what he had taken from JK Harris & Company.

2. American Tax Relief LLC

American Tax Relief seemed to be another promising tax relief company, located in the bustling Beverly Hills of California. Unfortunately, that’s all that they were. Having spent hundreds of thousands of dollars on advertising, they’d garnered thousands of clients and seemed to be highly successful and reliable.

However, just like many others on our list, they were, in fact, too good to be true.

Facing almost 500 customer complaints in six years, American Tax Relief LLC found itself in trouble when the Federal Trade Commission (FTC) filed a lawsuit against it. The early stages of the lawsuit halted the sale of their customers’ personal information, including social security numbers and credit card numbers.

American Tax Relief LLC created a false sense of urgency with one-liners like “settle tax debts ONCE AND FOR ALL” and their offer of a “ONE-TIME Opportunity.” When customers jumped to take advantage of the services, they were quoted upfront fees ranging from $3,200 to $25,000. If the client didn’t agree to the payment during the call, they were sometimes pressured for their financial information.

Furthermore, the owner, Alexander Seung Hahn, was already on probation from an earlier case concerning his fraudulent marketing techniques. American Tax Relief LLC lost its case, receiving a permanent ban on telemarketing, marketing debt relief services, and practicing anything related to any goods and services.

Their predatory tactics resulted in a hefty judgment fee of $103.3 million against American Tax Relief, specifically. The owners faced more charges, totaling over $18 million against Alexander Hahn and his wife. Ultimately, they ended up with a $15 million settlement.

With the funds, the FTC was able to assist over 18,500 customers who’d been scammed. Ultimately, they were able to distribute over $16 million to those who’d been promised their tax debts would be reduced. Unfortunately, the money only totaled to about 16% of the total lost assets.

3. TaxMasters Inc.

TaxMasters was founded in 2001 by Patrick Cox to help taxpayers in the Houston area, eventually going national in 2003. Like many tax relief companies, he immediately turned to marketing on TV and radio networks, claiming to be the “most effective IRS tax relief firm in the United States.”

However, TaxMasters hit a wall in 2012 when they were hit with a $195 million charge in civil penalties. The company was found using deceptive advertising practices, the same ones Patrick Cox praised on his LinkedIn profile.

TaxMasters’ lofty claims of debt relief misled customers over 100,000 times, weaponizing client confusion and ignorance to charge more money. Their amazing claims of a 97% success rate drew people in, garnering the attention of the state of Texas.

The Texas court gave a unanimous decision that TaxMasters had violated Texas’s deceptive trade practices regulations, confusing customers with TV ads and sales calls.

Their practices of inviting customers on TV ads to partake in free consultations with tax consultants did not have clients talking to tax professionals. Instead, people found themselves talking to sales representatives who hit them with non-refundable fees after promising tax solutions.

Despite claiming to be a tax resolution firm, the company was found not to be a CPA or law firm, both of which usually operate in tax relief. Despite claiming to work with the IRS and claiming to have former IRS agents on staff, customers were misled since TaxMasters didn’t intend to sell them the services as advertised. Instead, their money went to fund the continuous advertising campaign.

Ultimately, TaxMasters filed for bankruptcy in 2012, having less than $50,000 in assets and millions more in liabilities.

4. Roni Deutch Tax Center

In 1991, Roni Deutch founded her tax center, named Roni Deutch Tax Center. Being called the “Tax Lady” and working at her own law firm, she promised great things to many clients. Her clientele quickly grew to reach many states, establishing locations in nearly half the US states. Deutch’s claims to help those in trouble with the IRS were glamorized by her TV commercials. Unfortunately, like many of the tax relief companies that overpromise and underdeliver, her schemes quickly came to light.

In 2010, Roni Deutch Tax Center found itself facing the Attorney General of California and a $34 million lawsuit. The lawsuit called her a fraud, claiming her company extorted customers without providing services. The suit claimed that only 10% of her clients got their tax debts resolved and dealt with, ultimately leaving the company when work wasn’t performed. Ultimately, Deutch was floundering, even going so far as to lose her law license due to a lack of payment.

The official complaint for the state’s lawsuit highlighted every grievance customers had with Deutch, showcasing how predatory and egregious her tactics truly were.

The complaint noted how her tax center failed to provide help or representation with anything tax or IRS-related to the majority of the clients, uprooting the foundation she’d built her empire on. It went on to note the large legal fees, going anywhere from $1,600 to $4,700, and the direct targeting of senior citizens and disabled individuals. Furthermore, there was an ultimate lack of results from the company, despite the $12 million the company had spent on advertising in four years.

The biggest lie was the company’s claim of a 99% success rate. Realistically, their success accounted for 10% of their clientele. 75% of clients ultimately terminated their contracts, showing how bad the company was at client retention.

In 2015, the lawsuit was dismissed after a fine of $2.5 million and 350 hours of community service.

5. National Tax Experts Inc.

National Tax Experts Inc. seemed to be another innocent tax relief firm, but found itself in trouble in Maryland. The California-based tax firm received complaints for impersonating government agencies through mail.

Maryland residents were mailed documents alleging “imminent bank account seizures” as part of a marketing tactic. In the letter, customers were sold the tax relief services to relieve their debts.

However, the threatened didn’t even receive the services from the company, which failed to respond to their requests for information.

National Tax Experts Inc.’s operations in Maryland resulted in at least 1,933 victims of their malicious mail campaign. Clients had no knowledge of any bank account seizures, nor did National Tax Experts have the authority to allege any of their claims. Furthermore, the complaint alleged they had no jurisdiction in Maryland at all.

As a result of their actions, National Tax Relief received a cease and desist notice for their actions. Additionally, they were required to refund all their victims’ money on top of a $100,000 civil penalty.

The company ultimately shut down at the departure of the owner.

Red Flags to Avoid When Choosing a Tax Relief Company

While the five tax relief companies listed above are the absolute worst, there are still dozens of shady tax relief companies – some of whom never make news headlines – actively running today to scam their customers out of their hard-earned money.

Here are five red flags to keep in mind as you choose a tax relief company.

1. Do they make amazing claims before hearing about your financial status?

Often, any company making dramatic claims before hearing about your finances is bound to be a scam. Every situation is different, and there’s no one-size-fits-all for tax relief. Underhanded companies often make promises they can’t keep, snagging the customer’s attention right away.

2. Are there a concerning number of complaints about them online?

While this may appear obvious in our current digital age, reviews are crucial when looking to find a tax relief company. Often, a quick Google search can pull back the curtain and sound some alarms. While no company can be perfect, if the overwhelming response appears to be negative, that’s a significant red flag.

3. Do they have a lack of transparency regarding their total prices and fees?

A solid tax relief company will be upfront about how much money it’ll cost to work with you. If they’re oddly secretive about it, it’s probably a sign to get out. They may be hiding fees, waiting to slap you with a massive bill in the future.

4. Do they hide who’s working with your finances?

While some companies favor anonymity, it’s always a good idea to get an idea of who you’re working with. Do you know the service provider? Is the owner of the company present and active? Do you even know who the owner is? Ideally, the owner of the company will be a licensed and credentialed CPA, tax attorney, or IRS enrolled agent.

5. Do they have monthly maintenance fees without an end date?

While sometimes monthly fees are necessary for the process, a lack of an end date should raise concerns. If the fees are indefinite, there’s a chance the company is hoping you’ll forget about them and keep automatically paying when they send you a bill.

Final Thoughts

Keep in mind the dangers of the predatory nature of tax relief companies. However, when done correctly, they are incredibly powerful tools to help individuals with their tax needs. With our checklist and examples, we hope you’ll be more informed and avoid the worst tax relief companies.

Author:

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Logan Allec, CPA, Founder and Owner

Logan Allec has been serving taxpayers as a CPA for over 14 years. After leaving his role at a "Big 4" firm, he started Choice Tax Relief to help everyday Americans who have found themselves behind on their taxes. He also educates thousands of people daily about tax relief on his YouTube channel. In addition to his CPA license, Logan also has a Master's Degree in Taxation from the University of Southern California (USC). He lives with his wife and children in the Los Angeles area. Learn more about Logan here.

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