Aug 31st 2010
You’ve probably seen the hard-hitting advertisements from Roni Deutch advising taxpayers who owe federal taxes to let her help them fight the Internal Revenue Service. Now, California Attorney General Jerry Brown is fighting her.
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Brown has filed a lawsuit claiming Deutch is a swindler. If he has his way, he will force her to stop advertising that she can solve tax problems, and return $34 million to customers.
“Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems," Brown said in a statement. "She promises to significantly reduce their IRS tax debts, but instead preys on their vulnerability, taking large up-front payments but providing little or no help in lowering their tax bills.”
Brown also alleges that Deutch “manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC’s Today, CNN, and CNBC.”
Brown claims that taxpayers who were desperate to resolve huge tax problems turned to her for help, based on “misleading ads that feature fictional testimonials.” Clients paid up to $4,700 for help, said Brown, and got what he called “a bevy of false promises.” He also asserted that Deutch’s firm takes client fees then puts their tax cases into an “endless loop” that eventually pushes up her fees and, because of delay, causes taxpayers to ultimately pay not only their tax debts but also fees and penalties.
Deutch’s tax preparation business, which operates in 21 states, is not included in Brown’s lawsuit.
Brown's news release described how one client from Pico Rivera, California, sought Deutch’s help when she owed a $13,000 tax bill. According to the client, she paid Deutch a retainer of $1,900, but no “effective action” was taken on her behalf by the tax attorney. In the end, she said, her tax bill was increased by hundreds of dollars in additional interest and penalties, and a levy was placed on her Social Security benefits. When she asked for a refund, she said Deutch refused.
Approximately 10 percent of clients get their IRS debts successfully resolved by Deutch’s firm, said Brown, and those who want their money back are shown what he described as “phony billing statements to systematically cheat clients out of refunds by exaggerating amount of time spent on matters.” Brown did not explain in the news release how he determined the billing statements were phony.
This is not the first time Deutch has been challenged in court. The Sacramento Bee reported that in 2006, Deutch paid $300,000 to settle a lawsuit filed by the New York City Department of Consumer Affairs concerning her advertising practices. Deutch told reporters that the lawsuit was groundless and she was advised to pay what to her seemed like “a small amount of money to resolve it." In California, the State Bar Web site shows Deutch has no public record of discipline or administrative action.
One day after Brown filed his complaint in Sacramento Superior Court, Deutch said she would fight the $34 million lawsuit. In a statement, she reminded the public that Brown is running for governor in California. She said he is “engaging in election-year politics” by challenging her with a lawsuit, accusing her firm of false advertising, and of misleading the public.
She also stated that, over nearly two decades, she has saved thousands of people tens of millions of dollars by negotiating with the IRS.