CHARLESTON -- State Attorney General Darrell McGraw has filed contempt proceedings against tax relief company JK Harris and its owner, John Harris, for continuing to violate a court order.
McGraw filed his petition on Thursday in Kanawha Circuit Court, his office said.
The South Carolina-based company advertises that it can negotiate consumers' IRS obligations and save them thousands of dollars.
In his petition, McGraw alleges that JK Harris is in violation of an agreed consent order and injunction it entered into with the state in June 2008.
This consent order permanently enjoined both JK Harris and John Harris from misrepresenting that consumers qualified or were eligible for Offers in Compromise, OICs, unless consumers actually qualified or were eligible.
An OIC is an agreement between the taxpayer and the IRS wherein the IRS agrees to accept far less than the taxpayer actually owes to settle a tax debt.
Since the entry of the consent judgment, the attorney general says he has received complaints from consumers that JK Harris falsely represented to them that they qualified for OICs and charged them a hefty fee to negotiate an OIC on their behalf with the IRS.
McGraw says some of the consumers did not discover they were ineligible for OICs until they received a notice from the IRS that their bank accounts were being garnished.
The attorney general, in a statement Thursday, warned consumers to "be wary of companies running late night advertisements on television guaranteeing they get the IRS to reduce consumers' tax obligations.
"Three out of four times these promises are unfulfilled. IRS statistics show that only 25 percent of compromise applications are granted," he said.
McGraw's petition asks the court to require JK Harris to stop misrepresenting the services it can offer, provide refunds to the consumers who were misled by the company, and enjoin the company from advertising or conducting business in West Virginia until it has done so.