It’s been a few years now since the infamous failure of JK Harris & Company, LLC “The Nation’s Largest Tax Resolution Firm.” Why did the company grow so big so quickly, and what was the cause of its downfall? This article aims to cover the rise and fall of JK Harris in order to give some insight into these questions.
JK Harris and Company first started up in 1997 with a trial run of its business model in six cities. Shortly thereafter in 1998, the company started to explode into a major rollout by opening 450 sales centers and eight regional operation locations over the next three years. The company seemed poised to take advantage of newer relaxed IRS Offer in Compromise requirements by offering advertisements and marketing materials claiming they could settle their clients’ tax debt problems easily for “pennies on the dollar.”
What’s interesting here is what the company’s founder J.K. Harris was doing at the time.
In addition to recording video for commercials for his tax resolution firm, J.K. Harris was also into the business of advising other companies on how to achieve “rapid-fire sales growth.” This appears to have been his main area of expertise and he was clearly practicing it full-force in his tax-preparation business. In fact, during 2010 he published two books that focused primarily on super-fast sales growth for businesses. Only then did he publish anything whatsoever on taxes.
Clearly, the founder’s focus on sales growth and getting paying customers through the door was a much higher priority than any depth of knowledge about taxes, especially the intricate, difficult art of getting the IRS to accept anything less than the full amount they are owed! But the idea of the IRS accepting “pennies on the dollar” spread with big advertising dollars drew people in, especially vulnerable people who thought they had no other hope.
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Well, pretty soon the complaints started rolling in on such websites as Consumer Affairs, with most comments reading along the lines of “I paid JK Harris $XXX amount with zero response, nothing settled, and the IRS is still on my back.” The Attorneys General of several states started to get involved, notably Texas, which in its case claimed that JK Harris had materially misrepresented its ability to help Texans resolve their unpaid tax obligations, having very few actual tax experts on their staff to complete the claims they made.
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It turns out that JK Harris would charge their clients before even reviewing their case to see if they qualified for an Offer in Compromise, which very few of the customers were able to do. In addition it was shown that the company often never filed any forms with the IRS at all, actually taking zero steps to help their clients move ahead in resolving their tax debt problems. After the customers realized they were being charged with no result, they often demanded refunds which JK Harris mostly failed to provide.
The case against JK Harris was joined by 18 state attorneys general, and it was successful! Good News, Right?
Well, not so fast. The settlement was for $6 million, to spread over more than 18,000 wronged taxpayers, but the company stopped making payments after about $2 million was paid, leaving the situation hanging for most of the former clients. In addition, more states demanded settlements, increasing the debt owed. Now JK Harris was in the same situation as most of their clients, out of money with increasing demands for payment.
JK Harris himself has been brought into court by the trustee of the company bankruptcy, who has attempted to have him fined and successfully had his cell phone and laptop seized for examination. Forensic experts have found that more than 26,000 files had been deleted, completing a pattern of failing to cooperate with the trustees who have been trying to find assets to reimburse the creditors.
What can we learn from this event which has turned out so horribly for so many people?
It’s not about SALES, it’s about TAXES, and finding relief from the terrible burden of the debt cycle. At IRSmedic, we have a team of deeply-qualified, highly experienced tax attorneys, CPAs and enrolled agents working hard and succeeding at finding the relief so much needed! We invite you to examine our track record of success and allow us to get your tax debt problem solved forever.
