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.