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Roni Deutch Sued by California AG

August 24, 2010 · 27 comments

Roni Deutch, the so-called “Tax Lady” (absolutely no relation, thank you very much) has been slapped with a $34 million law suit by California Attorney General Jerry Brown.

According to the Attorney General’s web site, “Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems. 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.”

Brown’s office says that rather than reducing tax bills, Deutch actually increases taxpayer’s debt by putting them in “in an endless loop of requests.” Brown claims the reason for the requests to boost her bottom line at the expense of the taxpayer.

Further, Brown says that Deutch’s TV ads are “misleading” and feature fictional testimonials promising impressive results, despite the fact that Deutch’s success rate is said to be about 10% in tax cases. The claim states that “most clients never obtain a tax debt resolution” from Deutch.

In the complaint, Brown specifically cites an ad called, “It’s Your Turn” which features three clients whom Deutch claims to have “saved” from having to pay thousands of dollars to the IRS. According to Brown, those clients still owe the IRS the full amount of their taxes, plus interest and penalties.

Deutch’s practices inside her firm are called to the carpet in the complaint, as well. Brown’s office claims that Deutch’s law firm is actually a high pressure “boiler room” where she belittles her employees. “She screams at and berates sales agents who are not performing adequately,” according to the complaint. The complaint alleges that Deutch requires her employees to promise callers results that the potential clients are likely to never see.

Brown’s complaint seeks nearly $34 million in restitution for clients, including funds to refund taxpayer retainers which Brown’s office alleges were improperly retained. The complaint also seeks to prevent Deutch from engaging in unfair business practices and false advertising. You can read the entire complaint here (downloads as a pdf). The State has also asked for a preliminary injunction to force Deutch to cease her “illegal practices” prior to the resolution of the complaint; you can read the request for relief here (downloads as a pdf).

Deutch and her office had to see this coming. In March, Brown posted an alert for California taxpayers warning them to avoid “phony tax-relief companies” that charge exorbitant fees but provide no actual relief. At the time, Brown advised taxpayers, “Every tax season, phony tax-relief companies emerge to exploit cash-strapped Californians who owe back taxes to the IRS. Taxpayers should be on high alert, avoid paying up-front fees to these companies and never ignore notices from the IRS.”

This isn’t Deutch’s first public complaint. In 2006, she agreed to pay $300,000 to settle a lawsuit filed by New York City’s Department of Consumer Affairs for similar complaints about her misleading commercials.

I’ve heard a number of complaints from taxpayers who have worked with so-called tax debt relief companies who promise big results. I’ll just say this… If it sounds too good to be true, it probably is. There’s a reason that you don’t see most tax attorneys on TV promising you “pennies on the dollar.” I can’t stress enough how important it is to work with a trustworthy tax professional – one that returns phone calls and letters, one that keeps you posted about the status of your matter – to resolve your tax obligations.

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{ 20 comments… read them below or add one }

1 David Shulman August 24, 2010 at 9:07 am

One thing I never understood about Roni Deutch is whether she was an attorney practicing law at a firm, or something else. I think she calls herself a law firm, but does she advertise nationwide? I don’t know how that works. I’m surprised she hasn’t gotten in trouble with the Bar(s). Or she just one of those Offer in Compromise mills?

2 Kelly August 24, 2010 at 9:21 am

David, according to her web site, she is barred in California. She does advertise nationwide – I’m not sure how that works. I assume she has some kind of network?
I don’t understand the bar(s) thing either. While I don’t know the rules in other states, Pennsy and NJ both prohibit ads which create unrealistic expectations even if there is truth in what’s being touted. From the PA Rules of Ethics:

An advertisement that truthfully reports a lawyer’s achievements on behalf of clients or former clients may be misleading if presented so as to lead a reasonable person to form an unjustified expectation that the same results could be obtained for other clients in similar matters without reference to
the specific factual and legal circumstances of each client’s case.

3 AK August 24, 2010 at 11:58 am

I was just looking at some information about the CA bar, and from what I can tell, the unrealistic expectations are not directly covered; however, there is a rule about collecting an illegal or unconscionable fee. I would have thought someone would get her on that.

4 br August 24, 2010 at 2:29 pm

Her firm is a C-Corporation and classified as a “professional tax corporation” not as a “law firm”. That structure gives the firm ability to advertise nationally.

5 Jbruce41 August 24, 2010 at 3:26 pm

It’s about time! I see herads and those of other such outfits all the time, making it seem like you can dispose of your tax arrears in no time at all. I can’t believe the IRS would forgive 90%+ of your tax debt just to get you off their books.
And how about the “we can drastically reduce or even eliminate your credit card debt!” ads? That has to be just as bad. Sure, you can negotiate down your credit card debt with many issuers (without the “assistance” these “firms” provide), but they aren’t going to give away the store just to get rid of you. And that card will go on your credit report as “settled”. Not good. But the blaring ads never tell you that their alleged “satisfied customers” also have ruined credit ratings from all this “settlement”.

6 Elizabeth R., EA August 24, 2010 at 8:16 pm

The best I can tell if she does anything for the clients it is an offer in compromise. Every year I have one client who asks me if they should use her services (and I’m in Indiana, not sure how that would work). Every year I tell them that if they have the money to pay her, they have the money to send to the IRS. Plus I know enough about their situation I know that the IRS will never accept an offer in compromise for them so paying her will be wasted money.

I’m glad to see California is stepping up to the plate on this. So, think the IRS can put a lien on any potential settlement the clients will receive? :)

7 Mary Kay Foss August 24, 2010 at 8:45 pm

I saw one of her ads on TV last night. My husband commented that she must have seen someone or done something to herself because she looks much better than she has before. There’s an old picture of her in the Sacramento Bee article about the lawsuit – that’s the Roni I remember. Now we have a slender, elegant Roni in the ads.

Everytime I see one of the ads for her and others of her ilk I shout at the TV “I pay my taxes!”

8 Sacramento August 25, 2010 at 5:41 pm

I used to work there. Not sure if you remember but she was on a talk show hosted by Dick Clark back in early 2000′s and presented herself on the show as a guest to discuss the IRS. She actually paid the show to be a guest. It was another one of her advertising strategies. She is now looking for celebrity staus and now appearing on many news shows as THE TAX LADY. I don’t know if she paid for the spots or not but would love to know.

9 Joe Mastriano, CPA August 25, 2010 at 6:46 pm

Actually, some firms do properly advertise and represent their clients reasonably well before the IRS. And yes, the IRS really does settle for 10% or less of the liability. The catch is, that very few people actually qualify!
IRS representation should be done by a professionally licensed law or CPA firm that has the experience and proper training. When people decide to let their sales people handle client relationships, the professional work etc., it’s a recipe for consumer complaints. Anyone who wants valuable free info on dealing with the IRS, or who wants experienced help they can trust, please visit our site at http://www.taxproblem.org

10 Joe Mastriano, CPA August 25, 2010 at 6:53 pm

It is possible to get quality professional help when you have IRS problems. And yes you could really settle for pennies on the dollar. The catch is, that very few people qualify, so ads can get misleading fast The PA rules as quoted:
“An advertisement that truthfully reports a lawyer’s achievements on behalf of clients or former clients may be misleading if presented so as to lead a reasonable person to form an unjustified expectation that the same results could be obtained for other clients in similar matters without reference to
the specific factual and legal circumstances of each client’s case.”
…pretty much sums up the Texas state board of CPA’s view as well. As fiduciaries, we can’t mislead people, let alone cheat them!
Anyway, those of you wanting valuable free advise on dealing with your IRS problem, without the HYPE, fluff and other tricks of the trade, please visit our site. http://www.taxproblem.org

11 KD August 26, 2010 at 3:53 pm

I was amazed that when I decided to discontinue their services, they didn’t ask for their last two payments. If that’s the case, they could have ceased payments when I was told that the IRS wouldn’t accept my application for a reduced settlement. Roni Deutch’s office kept telling me that they were corresponding with the IRS and not to act on my own behalf. Once I found out that they almost got my IRS payment agreement cancelled because of no contact, I wrote them a letter stating that I wanted all paperwork filed and received on my behalf. And because I won’t even have my interest and liability reduced by one penny, I think I deserve all of my money back considering the IRS won’t give me a reduction based on the exact information that I gave the “tax corporation” on my initial consultation call.

I would like to know if any civil suits have been against Roni Deutch? I would like to get in on it if so.

12 Greg Z August 28, 2010 at 3:45 pm

It’s not surprising that CA has finally gone after RLD. What’s surprising is that more states haven’t aggressively stepped up to the plate on these kinds of suits.

More importantly, as I mention in my blog post (http://www.gaztaxlaw.com/brown-v-deutsch-can-you-eliminate-tax-debt-by-watching-tv/) not one of these TV hucksters talks about solving your state tax problems – which, if you have IRS issues, you probably have.

It’s also interesting to note that
1. NONE of the attorneys on RLD’s site has been practicing for more than 7 years;
2. Her managing attorney is only 9 years out of undergrad, and 5 years out of law school; and
3. Most of her attorneys have 3 years or less experience.

All of which supports Brown’s ‘sweatshop’ arguments.

Sadly, these types of people prey on those who need the help the most. As you mentioned, Kelly, there’s no substitute for working with a trustworthy professional – and they don’t advertise on TV.

13 Dianna October 30, 2010 at 9:18 am

I would love to join forces to file a law suit against them. They stole 2600.00 from my daughter and son in law and I am working on trying to get that back.

14 Jo January 4, 2011 at 5:16 pm

Has anyone been sucessful in getting a refund from Roni Deutch? She has done nothing to help us and we are in a bad financial way, ready to lose our home. She charged us $3700.00 dollars and we have paid all but $660.00 of it. We just now stopped paying becasue she is just making our fines and penalties go up and up with no results!! Please let me know if you can help. Thank you

15 Jack Trey January 25, 2011 at 9:15 pm

Someone like herself is no better than a thug, preying on someone misfortune. all she needs is one disgruntle man that she conned out of their money and that’s a recipe for disaster. i myslef who read all these negativity wish she’d suffer from some malignany ailment and live long enough to reflect of her wrong doing. I’d like to tell her to go to hell but i think she’s already heading that way.

16 Joe Mastriano, CPA April 23, 2011 at 6:27 pm

If anyone promises you tax reduction find out what basis in law or tax code allows it. If it came from a sales person, in general don’t believe it. If people take out the time to verify what is being said to them and if it’s a licensed professional firm, then the odds of fraud are drastically reduced. Our CPA firm provides you valuable free information on resolving your situation.

17 barbara scott June 14, 2011 at 9:34 pm

Well, this explains why no one from her office is returning my phonecalls. I was a client – just received a letter from the IRS saying they received notice on 4/26 from an attorney in her office that they were no longer representing me (revoked form 2848). My case with them was closed last year – made my final payment last June 2010. Hope her situation doesn’t effect my current status. Thank you for the info.

18 Janice Lyons December 7, 2011 at 10:06 am

I am in NC. I have a client (I am not a lawyer) who just got 5 letters from the IRS last week about an issue she was told by her “attorney” Roni Deutch (her ‘office’, I guess) was settled in her favor back in 2006. Needless to saty the penalties and interest has been accruing. (Why hadn’t she heard from them in the last 5 years is one of my wuestions.)

She had gone on to disability at the time and was unable to pay what she owed from her job previous to that. She continues on disability (~12,000 year) and has no resources beyond a little tiny cottage she lives in.

Not asking anyone here to solve the problem here, but I am looking for information on what resources she can pursue for help in solving this problem which is pretty huge.

If she is just one example of what this Deutch person has been doing, Deutch needs to go to prison big time. What was the outcome of the California suit?

19 Jo December 13, 2011 at 7:12 pm

I don’t know if you have the same situation in your state but in WA there is a department of our University ( Tax Law) THAT TAKE CASES FOR PEOPLE IN TROUBLE WITH THE IRS because OF LOSS OF WORK ETC..You MAY WANT TO CALL YOUR LOCAL UNIVERSITY AND SEE IF THEY CAN HELP YOU.

20 Greg December 13, 2011 at 7:44 pm

Many law schools have low-income taxpayer clinics; some universities do as well, and there are generally local resources (such as VITA) which focus on assisting low-income taxpayers with problems.

For someone on a fixed income, these may be good alternatives. North Carolina is home to Duke and UNC, so I would start there. However, other readers should keep in mind that being low-income does not automatically mean ‘free’; frequently, a sliding scale exists whereby taxpayers over a certain income level are charged a nominal amount, with the fee increasing as income does.

As for the RLD suit, I’m not sure if it’s completely finished, though I know she voluntarily surrendered her bar license (in May, 2011 with charges pending), and is prohibited from practicing law in California. According to the state bar website, the matter is ‘pending.’

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