Lily and Rene Guzman needed help with a federal tax debt, but the firm they hired did nothing more than take their money and leave them to fend for themselves.
Those allegations are contained in a lawsuit the Guzmans, of Oakland, Calif., filed Tuesday in Alameda County Superior Court. The Guzmans allege that they paid $3,800 for the South Carolina-based firm of J.K. Harris to represent them in an Internal Revenue Service “offer-in-compromise” process, the Argus of Oakland reported.
The Guzmans were assured that the firm would work with the IRS, stop enforced collection, such as levying of wages, and prevent additional penalties. Harris representatives promised a settlement would be reached that would be far less than the amount they presently owed, the lawsuit states.
Instead, the IRS began sending notices of its intent to levy Lily Guzman's wages.
The lawsuit seeks restitution for all Californians who paid Harris but didn't receive the promised services. The Guzmans want a judge to stop the firm from using “deceptive and misleading” business practices.
The IRS can agree to less than full payment under the offer-in-compromise program if taxpayers can demonstrate a tax is unfair, inequitable or creates an economic hardship. However, the IRS grants only about 35 percent of the settlement offers made. The IRS has stated that some taxpayers use the program as a way to delay the collection process and many times candidates make offers that are not viable.
The agency has warned taxpayers not to be fooled by high-priced promises.
An IRS advisory said: "We are increasingly concerned about unscrupulous promoters charging excessive fees to taxpayers who have no chance of meeting the program's requirements.”