The Fouts Law Firm and tax attorney Jeffrey I. Fouts are NOT in any way affiliated with or connected with JK Harris, J.K. Harris, JK Harris & Company, or JK Harris and Company.
Over the years we’ve received many questions from the public about the tax representation firm of JK Harris. While they appear to be one of the largest in the U.S., they don’t appear to be a law firm.
Presented below is a variety of information and articles about JK Harris which appear to be truthful and correct although neither Jeff Fouts nor the Fouts Law Firm can vouch for their truthfulness. This information comes from a variety of third party sources in the public domain usually considered by prudent persons to be trustworthy. These sources include:
- press releases from different state Attorneys Generals,
- articles from reputable newspapers about JK Harris,
- a Better Business Bureau (BBB) web page about the firm, and
- court documents of a law suit filed against JK Harris in California.
Better Business Bureau Info on JK Harris
The Better Business Bureau (BBB) office for the central South Carolina and Charleston area has a web site with a page of information about JK Harris & Company, LLC. The page can seen here: JK Harris BBB Report
As of 04-27-06 the BBB states on their JK Harris web page that the BBB has received 773 complaints against JK Harris within the last 36 months. This web page does not list how many total complaints the BBB has ever received against JK Harris & Company, LLC.
Google Directory Listing
Google has compiled multiple listings about the J.K. Harris tax law firm. View the Google Directory.
Hersh & Hersh Class Action Lawsuit Against J. K. Harris & Company
Hersh & Hersh law firm which has filed a class action lawsuit claim against JK Harris
The particulars of the lawsuit are as follows:
Lawsuit was filed: Superior Court of California, County of Alameda
Civil Case No.: RG03100226
When it was filed: 06-06-2003
To see actual court information on the case you can go to Alameda Court Public Access
Enter case number: RG03100226
“Submit”, this will take you to the case information.
Collins-Simons VS JK Harris & Company, LLC
Register of Actions
Rulings & CMC Orders
Newspaper Article About the Class Action Law Suit
An article about JK Harris in the Oakland Tribune about a class action lawsuit against JK Harris, which is reprinted below, can be seen at FindArticles.
Oakland couple files suit against tax assistance firm
Oakland Tribune, Oct. 15, 2004, by Glenn Chapman, STAFF WRITER
In the Oakland Tribune searchable database this is Article ID: 2469875
OAKLAND — An Oakland couple is suing a South Carolina firm that bills itself as a champion for taxpayers in trouble with the Internal Revenue Service.
The suit charges that the company, J.K. Harris, takes an up-front fee from people and then leaves them at the mercy ofIRS auditors.
Lily and Rene Guzman paid Harris a $3,800 retainer fee in June 2003 to represent them in an IRS “offer and compromise” process regarding a tax debt. If taxpayers can demonstrate a tax is unfair, inequitable or creates an economic hardship, the IRS may agree to a settlement, according to San Francisco law firm of Hersh and Hersh, which represents the Guzmans in what they believe has the potential to be a class-action lawsuit.
A Harris representative reportedly told the Guzmans the firm would deal with the IRS for them and prevent enforced collection, including levying of wages, or additional debt penalties. Harris promised to settle the Guzmans’ tax debts for a significantly lower amount than presently owed, according to the suit.
Harris never followed through on its part of the bargain, the Guzmans charge. In the two months after entering into the agreement, the IRS began sending the Guzmans notices of intent to levy Lily Guzman’s wages.
The Guzmans took their grievance to an arbitrator, who concluded Harris “failed to perform their obligation in any manner,” according to attorneys at Hersh and Hersh.
The suit asks a judge to stop Harris from using “deceptive and misleading” business practices and orders the firm to pay restitution to Californians who paid fees to Harris and never received services as promised.
Harris is to file the company response with Alameda County Superior Court after being served with a copy of the suit.
In February, the IRS issued an alert advising taxpayers to beware of promoters promising tax-debt settlements of “pennies on the dollar” through the offer-in-compromise program.
“We are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program’s requirements,” the IRS advisory warned. “We urge taxpayers not to be duped by high-priced promises.”
The IRS reportedly granted about 35 percent of the 128,000 settlement offers made. The Guzmans’ suit was filed in Alameda County Superior Court on Tuesday. Friday is the last day for taxpayers to file extended tax returns for 2003.
Article by the San Francisco Chronicle.
Connecticut Attorney General Sues JK Harris Financial Recovery System
The Connecticut Attorney General has sued J. K. Harris Financial Recovery Systems LLC for allegedly deceptive mailings.
Kansas Attorney General Sues JK Harris and Company
The Kansas Attorney General has sued has filed suit against JK Harris and Company for numerous alleged violations of the Kansas Consumer Protection Act.
The official press release, which is reprinted below, can be seen at Access Kansas.
FOR IMMEDIATE RELEASE
December 13, 2004 CONTACT: Jan Lunsford
ATTORNEY GENERAL SUES SOUTH CAROLINA COMPANY FOR OPERATING ALLEGED TAX-HELP SCHEME
Attorney General Phill Kline has filed suit against a South Carolina company for numerous alleged violations of the Kansas Consumer Protection Act.
In a petition filed in Shawnee County District Court, Attorney General Kline alleges that J. K. Harris and Company of Charleston, South Carolina, has committed numerous violations of the Kansas Consumer Protection Act through deceptive and unconscionable business practices and the unauthorized practice of law in Kansas.
The suit alleges that J. K. Harris and Company accepted money from consumers as payment to negotiate settlements with the Internal Revenue Service without ever providing such services.
The suit further alleges that the company notified consumers of pending litigation and offered to settle the lawsuits, when no litigation was actually pending.
Attorney General Kline has asked the court to permanently enjoin J. K. Harris and Company from these practices and from engaging in the unauthorized practice of law. The suit also seeks restitution for all affected Kansas consumers in addition to civil fines and penalties totaling $560,000 for violations of the Kansas Consumer Protection Act plus all court costs, investigative fees and expenses.
Missouri Attorney General Files Lawsuit Against JK Harris
The Missouri Attorney General has filed a lawsuit against John K. Harris of North Charleston, S.C., who does business under the names JKH Holding, JK Harris & Company, JK Harris Financial Recovery Systems and JK Harris Advisors. The suit alleges that through an Internet Web site and a toll-free telephone number, Harris offered to help consumers “get the IRS off your back.” At least nine Missourians from throughout the state paid from $390 to $2,700 for services that were not delivered.
Newspaper Article Reporting JK Harris Settlement
JK Harris Paid $43,000 to Settle with Missouri Attorney General, and Says 12 Attorneys General are Investigating JK Harris
Posted on Wed, Jun. 22, 2005
JK Harris pays $43,000 to settle Missouri lawsuit
CHARLESTON, S.C. – A national tax resolution firm will pay about $43,000 and change its advertising practices to settle a lawsuit with the Missouri attorney general’s office.
North Charleston-based JK Harris & Co. also will pay $18,118 in restitution to nine Missouri residents who signed up for debt-relief services and $25,000 to the state of Missouri to cover attorney fees and other costs.
JK Harris admitted no wrongdoing but agreed to abide by that state’s law against unfair and misleading trade practices. “We felt that it was in the best interest of the company not to litigate this matter further,” president John K. Harris said in a statement.
It is the first settlement in a number of legal actions filed against the company, which settles tax disputes between clients and the Internal Revenue Service. JK Harris, which opened in 1997, also helps clients resolve disputes with creditors.
Both of lines of business have drawn hundreds of complaints filed with the Federal Trade Commission, Better Business Bureau and South Carolina Department of Consumer Affairs. Many claim the company failed to resolve debt and would not respond to complaints or refund money.
In Missouri, the company agreed to change or stop 18 specific advertising or business practices. For example, it agreed to stop billing itself as able to “settle consumers’ tax debt for ‘pennies on the dollar,’ or similar representations, unless such representations are accurate and are neither deceptive nor misleading.”
At least six lawsuits seeking class-action status are pending against JK Harris. Also, a group of 12 state attorneys general, including South Carolina Attorney General Henry McMaster, is investigating the company. Missouri’s attorney general was not part of that group.
Missouri Attorney General’s Press Release About JK Harris Settlement
The official press release, which is reprinted below
June 30, 2005
Nationwide company offering deceptive ‘debt relief’ services to pay $43,000 in agreement with [Attorney General] Nixon
Kansas City, Mo. — J.K. Harris Holding Co., a company that advertised it would settle delinquent tax debt for “pennies on the dollar,” will fully reimburse $18,118 to nine consumers and pay the state $25,000 in costs under an agreement with Attorney General Jay Nixon.
In a consent judgment filed in Jackson County Circuit Court, J.K. Harris Holding of North Charleston, S.C., will cease deceptive sales practices and will refund the fees paid for services to negotiate lower tax liabilities. Individuals paid from $390 to $2,700 for services that either were not delivered or were not delivered as promised.
“This company told Missouri consumers that it could reduce their tax debt to practically nothing, but for several consumers, that was not the case,” Nixon said. “Companies need to know that deceptive sales pitches are against the law in Missouri, and we will zealously protect the rights of the consumer in these matters.”
In a lawsuit filed in January, Nixon alleged that J.K. Harris conducted business in Missouri without being registered with the Secretary of State, and made misleading claims that the company could settle tax debt for “pennies on the dollar.” The company also made claims that tax professionals and former IRS agents were available to consult with clients. In reality, consumers only talked to sales representatives.
In addition to the monetary restitution and payment to the state, J.K. Harris must provide a full listing of all complaints it has received from consumers located in Missouri. Under the consent judgment, for the next 90 days J.K. Harris will remain liable for any new verifiable complaints it might receive related to allegations in the lawsuit.
Augusta Chronicle Newspaper Article About Lawsuit Against JK Harris
This 01-08-2005 article can be seen at:
[requires login] Augusta Chronicle
View the Google cache of Augusta Chronicle article
It can also be seen here as an article on Charleston’s ABC television station’s web site
Two Former Customers File Suit Against JK Harris
CHARLESTON, S.C. – Two former customers of JK Harris & Co. have filed a lawsuit against the South Carolina-based national tax resolution firm claiming breach of contract and breach of fiduciary duty.
The suit was filed this week in Charleston County against the tax resolution services company that has grown during the past eight years from a lone certified public accountant to a $100 million national company.
The plaintiffs are represented by the Motley Rice firm of Mount Pleasant, S.C., and the Strom Law Firm of Columbia.
A statement from Harris said company attorneys were reviewing the complaint.
The lawsuit alleges that one plaintiff was told he would qualify for an offer in compromise but that the Harris company did not prepare the offer promptly. As a result, the government is garnishing the plaintiff’s Social Security check, and he is no longer eligible for the program, the suit claims.
A J.K Harris customer from Alabama flies a public complaint in the Ripoff Report
Washington Times Newspaper Article: JK Harris Being Investigated By 15 State’s Attorneys General
The article, which is reprinted below, can be seen at the Washington Times.
Negotiating back taxes can turn out to be costly
By Tom Ramstack
THE WASHINGTON TIMES
Published April 17, 2006
Ina, a Silver Spring secretary, owed the IRS for three years of back taxes after she neglected to file her returns. Meetings with Internal Revenue Service agents who demanded she file her returns and pay back taxes merely aggravated her, prompting her to seek the help of a tax negotiator.
“I thought because it was just a stupid error, I shouldn’t be penalized at all,” she said, blaming the problem on an accountant. “It didn’t matter: I was anyway.” She asked that her last name not be used to protect her privacy. The IRS originally demanded that she pay about $6,500 in back taxes, penalties and interest in a year in which she earned $20,000.
“It almost gave me a nervous breakdown,” Ina said.
An Internet search led her to a tax negotiator, Steven Kassel, who filled out her missing tax returns so she could make the payments and clear up the dispute. Tax negotiators can be lawyers, certified public accountants or “enrolled agents,” which means they are licensed by the IRS.
Negotiators are hired after IRS audits to help reach resolutions that can prevent the federal government from diverting money from their clients’ bank accounts or wages to pay taxes. Ina’s experience with professional tax assistance ended amicably, but a report by the Treasury Department inspector general for tax administration told a different story. The report said some tax preparers and negotiators have criminal convictions or other infractions that should disqualify them from practicing.
“Some tax practitioners who have been convicted of tax-related crimes or whose licenses have been suspended or revoked by state authorities have not been suspended from practice before the IRS,” the inspector general’s report said.
Even negotiators say taxpayers should be cautious.
“There are a lot of companies that will prey upon the fears of people who have tax problems,” Mr. Kassel said. Many tax negotiators are competent and honest, he said. Others charge clients $5,000 to $7,000 for results that are questionable, he said.
“They’ve paid a whole lot of money to get absolutely nothing,” Mr. Kassel said.
Like many of the nation’s 46,000 enrolled agents, Mr. Kassel is a former IRS employee, which he acknowledges is no guarantee of quality. Former IRS agents provide the best service when they perform private-sector jobs similar to the ones they did for the government, said Jim Dougherty, director of tax-controversy services for the D.C. office of Deloitte Tax LLP, a tax-services company. He previously worked for the IRS handling taxpayer appeals.
“I think the advantage is that when you’ve worked for an organization for a number of years, you get to know the processes, you get to know the procedures,” Mr. Dougherty said. The IRS has “a very good tax-training program,” he said.
But Jim Dupree, IRS spokesman for the D.C. area, said former agents have no special advantage for tax negotiation.
“There are standards or regulations for anyone who practices before the Internal Revenue Service,” Mr. Dupree said.
J.K. Harris & Co., the nation’s largest tax-resolution firm, employs former IRS agents. The company has been running television ads during tax season. It also is being investigated by 15 state attorneys general.
“J.K. Harris’ track record is fraught with complaints from consumers who paid sizable upfront fees to resolve their IRS problems only to discover that the company had no intent of delivering these services,” said Nancy Hersh, a San Francisco lawyer who is suing the company on charges of “deceptive business practices” on behalf of a group of clients. J.K. Harris officials say any complaints represent a small minority of customers.
“We’ve had over 160,0000 people come to us for relief, and we’ve helped an awful lot of them save millions of dollars,” spokesman Josh Baker said. “I feel we help the vast majority of our clients with the problems they have.”
Georgia Attorney General’s Allegations Against JK Harris Settled
The ’s office lists the following issues concerning JK Harris during 2005. The web site can be found at the official office of the Georgia Attorney General.
This following is a direct quote from their web site:
- J.K. Harris & Company, LLC – J.K. Harris advertised tax related services to consumers in such a manner as to represent or imply that the services had characteristics or benefits (such as obtaining IRS settlements at pennies on the dollar) that they did not have. In settlement of this matter, J.K. Harris agreed to refrain from using unsubstantiated written testimonials and statements out of context. The company further agreed to correct all outstanding advertisements, implement new internal policies and procedures for development of future advertisements, and pay consumer restitution and administrative costs. (Filed May 27, 2005)
- J.K. Harris Financial Recovery Systems, LLC and JK Harris Debt Negotation Services, LLC – This limited liability company located in South Carolina provided debt management and related services to Georgians. It was alleged that J.K. Harris:
- provided debt adjustment services in Georgia prior to July 1, 2003, when such activity became legal;
- following that date, failed to file requisite documents with the state and utilized a fee schedule that was not in compliance with O.C.G.A. Section 18-5-2; and
- advertised offered credit repair services which the company neither provided, nor was authorized to provide.
Under the terms of the settlement, J.K. Harris agreed to
- cease and desist offering debt adjustment services until it was in compliance with Georgia laws,
- halt all advertising expressly or impliedly offering credit repair services, and
- require servicing agents to make adequate disclosures to consumers about the specific fees to be charged for services provided.
The company agreed to pay restitution to affected consumers and administrative costs, fees and expenses to the state of Georgia. (Filed May 27, 2005)
Newspaper Article About Federal Agents Raiding JK Harris Headquarters Offices
An article about JK Harris, which is reprinted below, can be seen at the St. Petersburg Times
Maybe it should read its own report
By HELEN HUNTLEY
St. Petersburg Times, published September 11, 2000
J.K. Harris & Co. advertises what it calls an “insider” report on “How to End IRS Problems Forever.” Turns out it might be able to use some of its own advice. The tax resolution service, which has three offices in the Tampa Bay area, is the subject of an IRS investigation.
Federal agents raided the company’s Charleston, S.C., headquarters in July and hauled off a truckload of records. Founder and president John K. Harris said the company got its active files back in two days but he expects the investigation to take six to 12 months. He said he is confident the company will be found innocent of any wrongdoing. The feds declined comment.
It’s no surprise that J.K. Harris attracted the IRS’ attention. Founded just three years ago, the company has 380 offices in 32 states. Its specialty is helping small business people settle tax debts through the IRS’ “offers in compromise” program.
The company’s Web site features anonymous testimonials from people who got the IRS off their backs by paying as little as 2 to 5 cents on the dollar. Chris Westphal, who manages the company’s Tampa Bay offices, says settlements of 10 to 20 cents on the dollar are more typical.
“We’re here to help this segment that can’t afford high-priced tax attorneys,” he said. “But they make enough money so that they’re pursued rather aggressively by the IRS.”
Wall Street Journal Article About IRS Agents Raiding JK Harris Offices
Information about John K. Harris’ Earlier Changing His CPA Status to Inactive “to Skirt… Restrictions on Advertising”
An article which appeared in the Wall Street Journal on Aug 8, 2000, is reprinted below:
Tax-Resolution Firm Finds Trouble With IRS
- JOSH PRAGER, Staff Reporter of The Wall Street Journal. From The Wall Street Journal Online
Every month, hundreds of individuals and small businesses in trouble with the Internal Revenue Service turn to J.K. Harris & Co., for help. Now, the nation’s biggest tax-resolution firm could use some help itself.
On July 27, agents from the IRS criminal investigation division together with agents from the Treasury inspector general’s office raided the company’s headquarters in Charleston, S.C. “They showed up here with the darn agents, the badges and stuff,” says John Harris, the founder of the company. “It petrified our employees.”
Mr. Harris, 47 years old, says the subpoena was for thousands of documents he had signed that gave him the right to represent taxpayers before the IRS. One specific issue behind the raid is whether Mr. Harris had relinquished that right last year, when he gave up “active” status as a certified public accountant. But the probe may be widening. Several former employees say they have been contacted by Treasury officials looking into the firm’s business practices.
Last year, Mr. Harris gave up his license as a certified public accountant in South Carolina and transferred the status of his CPA certificate in North Carolina to “inactive.” He says he voluntarily gave up his active CPA status to skirt sundry restrictions on advertising imposed by the states’ boards of accountancy. And, he says, he thought his inactive status in North Carolina would enable him to continue to represent clients from all over the country against the IRS. An accountancy official acknowledged that such issues were something of a “gray area.”
A spokeswoman for the IRS declined to comment on any aspect of the case. Scott Schools, an assistant U.S. attorney in the judicial district in Charleston, says only that such investigations generally take at least six months. He adds, “There’s no legal prohibition for [Mr. Harris] to continue doing business at this point.”
Firm Could Stay in Business
Even if Mr. Harris himself were barred from practicing, the company could still operate because it employs several lawyers and CPAs other than Mr. Harris eligible to represent taxpayers before the IRS. But the federal government appears to be probing other aspects of the business. The 20 or so agents who raided J.K. Harris also seized copies of all of its closed files, 135 of its current files and its bank statements. Robert Forbes, a tax attorney who last year worked six months at J.K. Harris, says he was contacted by Treasury officials. Mr. Forbes, who says he earned about $2,000 a week as a senior tax consultant at J.K. Harris (while continuing to operate his own tax-resolution company, which he founded in 1997), says he told the IRS that once most clients are on board at J.K. Harris they are simply ignored. “They either quit paying [their monthly premiums] because they were disgusted, or the IRS came in and seized their property.” Mr. Harris says Mr. Forbes is disgruntled because he was fired; Mr. Forbes says he quit the firm.
Maurice White, another former employee, says he, too, spoke to a Treasury official. “The taxpayer was being misled as to what could be accomplished and in what time frame,” says Mr. White, a CPA who left J.K. Harris in January after working at the company for four months. He now runs a competing business. Mr. Harris denies the charge. He says that most of his clients are accurately told that it will take about a year to straighten out their tax problems.
Better Business Bureau Inc., in Columbia, S.C, has received just eight complaints on J.K. Harris in the three years since the company opened. “It’s nothing we would be concerned about,” says Valerie Rankin, who handles disputes for the bureau.
Since Mr. Harris founded J.K. Harris in September 1997, it has quickly become the nation’s largest tax-resolution company. Many of its clients are proprietors of small businesses. Often, such people are susceptible to trouble with the IRS because they don’t incorporate their business.
All told, an estimated 50 million people have delinquent IRS accounts outstanding. And tens of thousands of licensed tax practitioners, in addition to CPAs, lawyers and former IRS agents, are eligible to work in tax resolution.
It’s a good time to be in the tax-resolution business. The IRS, through its “Offers in Compromise” program, is steadily accepting more offers by taxpayers to settle delinquent accounts. In fiscal 1998, the IRS accepted 25,052 offers. Last fiscal year, that number rose to 30,542. And in the fiscal year 2000, through July, the IRS has already accepted 26,756 offers.
J.K. Harris has handled some 18,000 clients, boasts about 380 offices in 32 states, and has projected revenue this fiscal year, ending September, of $32 million. Its closest competitor, Washington Tax Services in Seattle, has one office and revenue of about $4 million a year.
J.K. Harris has grown by attracting delinquent taxpayers with little money. It has done so primarily in three ways: by enabling them to pay for its service in installments, setting up a finance company to provide loans to help foot the bill, and through the blunt advertising that Mr. Harris says led him to trade in his CPA status.
“Is the IRS ruining your life?” begins a radio spot for the company. “Are you afraid you will lose everything?”
Television Station’s Article About JK Harris
The article from television station WFMY’s web site, is reprinted below:
WFMY News 2 – Greensboro, NC
Ask Questions When It Comes To Your Debt
Created: 11/23/2004 5:25:21 PM
Greensboro, NC — Cheryl and Michael Miller received a letter from J. K. Harris Financial Recovery. It showed a $3,000 judgment against the Millers. The company offered to help.
“We were kind of in a financial pinch at the time, and we went to them to help us out,” says Michael Miller.
So the Millers agreed to pay almost $1,300 over the next year to J. K. Harris Financial Recovery. But in the end, Michael Miller says he only got one thing.
“I got a headache is what I got. Because it was constant phone tag. And they continued, just continued to take the money,” says Miller.
The Millers contacted Call for Action. We called J. K. Harris Financial Recovery, and they told us they did a lot of work on the Millers’ case.
“We do take it seriously. We do investigate the customer’s inquiry very carefully and with alot of care because again we want to get to the bottom of it. We want satisfied, happy customers that’s our main goal,” says Josh Baker of J. K. Harris Financial Recovery.
Now the Millers say J. K. Harris just contacted them to work out the judgment, but in the end the Millers paid off their debt on their own.
“There was a lot of hot dogs and macaroni cheese. When feeding four kids it’s kind of hard, so you lump through it,” says Michael Miller.
So before you pay any service to get out of debt, the Federal Trade Commission has a few questions you should ask:
- What services do you offer? You want a wide range including how to budget and save.
- Do you offer educational materials for free? Avoid any organization that charges for them.
- Will you also help to avoid future problems?
- What are your fees? Get a specific price quote in writing.
Finally, you can first contact your local county family services, they offer free credit counseling.