CHARLESTON - A South Carolina firm that promised to settle consumer tax debts has agreed to pay $1.5 million in restitution and change its advertising, under an agreement with 18 state attorneys general.
The attorneys general entered into a consent judgment with JK Harris and Company LLC and its president, John K. Harris, officials said Monday. State Attorney General Darrell McGraw is one of them.
"For an exorbitant fee, JK Harris promised to help consumers with their tax problems. Instead of getting tax help, consumers only got deeper in debt," McGraw said.
The attorneys general said the company took consumers' money and offered them little help in return.
JK Harris has denied any wrongdoing. The firm said the agreement comes at the betterment of the tax debt consulting industry.
"We are pleased that we have been able to reach an agreement with the states," said Josh Baker, JK Harris' director of communications. "We have made every effort to cooperate with them and believe the agreement we have reached will make our company and our industry stronger."
In addition to not helping consumers, the company is accused of refusing to issue refunds when consumers complained that they did not receive promised services.
The company claimed it could help struggling taxpayers who owed back taxes to the federal government by filing an Offer in Compromise on their behalf. The firm said that as a result consumers would have to pay the IRS only a fraction of what they owed.
JK Harris allegedly charged consumers upfront for the service without determining if they qualified for an OIC, the complaint said.
States participating in the judgment in addition to West Virginia were Arkansas, Arizona, California, Connecticut, Florida, Illinois, Maine, Michigan, Minnesota, New York, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee and Vermont.
The states will share in a $300,000 pool to help cover the costs of the investigation.