Roni Deutch Prosecution
One of today's AccountingWeb headlines is about the Tax Lady prosecution.
Roni is right about one thing, this IS election campaign time. What better way to get high visibility publicity than to go after highly visible names.
Jerry Brown is not a fool. Nor is he as wealthy as Meg Whitman. He jumped on the Bell payroll and pension scandals in a big way. Now he's after Roni. Why now? If this were a big issue, why didn't he do it before? After all, she's been running those ads for years?
And why is Brown only going after her, personally? The income is generated by her franchise offices nationwide, where the work is done, or not done. How many of those clients do you really think Roni is working on herself?
OK...to the hard question - are those claims really true?
Can the firm really get those results for everyone?
I don't know about Roni Deutch, But I spent several years working for a tax resolution firm that was doing extensive advertising, like her.
Here's what I learned:
1) Their advertising was deceptive. However, the president did allow me to re-write their copy so the ads became truthful.
2) Regarding of the billing (inflated charges?) - like in all accounting firms, everything was chargeable. Time spent calling IRS, time spent following up with the client to get their records or their information. Time spent following up with the client to get their records or their information. Time spent following up with the client to get their records or their information. Time spent following up with the client to get their records or their information. Oh...sorry, am I repeating myself? No. What ate up a lot of time was the clients themselves not meeting deadlines, not submitting the information or the records, or submitting incomplete information. These same people who were uncooperative with IRS, were (surprise, surprise) uncooperative with their representatives. Then, they would get angry because their retainer had been used up and nothing had been accomplished. Those are the people who would often play the victim card.
3) The staff working for the firm, all former IRS Revenue Officers (collections officials) really cared. They worked their heart out for these people. They did their very best to get them fair and reasonable settlements, ethically.
4) The owners started out that way, too. But when they saw how much money they were making, they got greedy. They started doing so many unethical things (perhaps not entirely illegal), that we literally had such vehement screaming matches that the law firm across the hall had to come over and close the doors our offices.
a) They signed contracts with new clients even if it didn't really appear the firm could help them.
b) When the client could not pay the whole retainer up front, the contracts often called for installment payments. If the client had paid $2,000, but not the last $1,000, they would stop working the case until the full fee was paid. They would stop even if they had only used up $500 of the $2,000 retainer and let the client hang out to dry, because the final intallments were late. (a BIG screaming match about this!)
c) They arranged to receive a commission from a company (name was Boston something....) that would arrange to take over the homeowners' upside-down loan, with the idea that when it foreclosed, the foreclosure would appear on the Boston company's credit not the homeowner's. And that the ultimate cancellation of debt income would accrue to them, not the taxpayer. They charged several thousand dollars for this service. (Another big screaming match - not only unethical to collect the commission, but every one of their claims, with respect to credit and tax issues was proven to be false - and the company was ultimately in the news about the fraud.)
d) They started taking cash off the books. In fact, one client where I had done about 11 years worth of tax returns - and had collected the fee from them myself, showed up in their computer billing system as being 'pro bono'. I quit when I learned about this.
Anyway, there were enough complaints that the IRS raided that company (and two others) right after April 15th one year, long ago.
The other two companies went under.
This one survived - and is still operating.
What will happen to Roni Deutch?
Probably a bunch of publicity - and a heap of legal fees.
It will be hard to prove fraud...because - see point 2.
Eva Rosenberg, MBA, EA, is the publisher of TaxMama.com, and author of the weekly syndicated Ask TaxMama column. She provides answers to tax questions from taxpayers and tax professionals worldwide.