Missouri AG Sues Tax Resolution Firm

The Missouri attorney general has filed suit against tax representation chain JK Harris & Co., saying the firm did not provide the services promised to resolve its clients' state and federal tax problems.

The Missouri lawsuit follows on the heels of a $1.5 million settlement by the chain with 18 other state attorneys general in June, and a $6 million settlement of a class-action lawsuit last year (see Tax Debt Firm to Pay $1.5M in Restitution). The AG's suit is seeking full restitution from JK Harris for Missouri customers who paid up to $4,500 for the services they did not receive.

"JK Harris promises it can help consumers who are having tax problems, but the Missourians who complained to my office told a different story - one of unreturned phone calls, lost paperwork and a worse financial situation than when they started," said Missouri AG Jay Nixon in a statement.

A spokesman for the firm defended its practices. "JK Harris has become the nation's largest tax resolution firm in the United States, having served over 225,000 customers since 1997 because of proven results and satisfied customers," said a statement from Josh Baker, executive vice president of client advocacy at JKH. "Customer complaints are taken seriously at JK Harris. At this time, we have not been served with a lawsuit, nor have we read details in the complaint, so we cannot comment on any specific filings. What we can say is our customers and their satisfaction are our top priority."

In a recent interview, CEO John K. Harris (pictured) discussed the settlement with the 18 attorneys general (see Industry Leader Q&A with John K. Harris). "No question we had some faults," he said. "I agree that we did and we corrected all that and we are trying to lead the industry in the direction of full disclosure, honesty and integrity in the business."

In the Missouri case, consumers complained to Nixon's office that after they paid for debt relief services, JKH failed to follow the process it advertised in handling customer cases. Consumers also reported that they often had to resend their financial disclosure information and supporting documentation because JKH kept losing their paperwork, and they would learn that their assigned case specialists were no longer working on their files only by calling JKH for updates. Consumers who requested full refunds were denied.

Also named as a defendant in Nixon's lawsuit was a business affiliated with JK Harris called Professional Fee Financing Associates LLC, which makes consumer credit loans as part of the JKH contract process. Nixon said PFFA's forms fail to disclose crucial information about finance charges, payment schedules, the total number of payments and the total price that consumers will have to pay. PFFA also does not have the required certificate of registration from the Missouri Division of Finance.