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South Dakota Joins 17 States to Stop Tax Relief and Credit Repair Companies from Misleading Consumers

South Dakota Joins 17 States to Stop Tax Relief and Credit Repair Companies from Misleading Consumers 

PIERRE, S.D.-    Two South Carolina companies, a tax-relief company that claimed it could settle debts with the IRS for “pennies on the dollar” and a credit repair company that sent out bogus notices to make people think they needed credit help, have agreed to stop misleading consumers and pay $1.5 million in refunds, announced Attorney General Larry Long.

Long and 17 other state attorneys general entered into consent judgments and assurances of voluntary compliance with JK Harris and Company, L.L.C and Financial Recovery System. L.L.C., both of North Charleston, SC, and their managing member, John K. Harris.  

The attorneys general claim that JK Harris did not help consumers with their tax problems as advertised and refused to give refunds when consumers complained that promised services were never completed.   They also claim that Financial Recovery Systems attempted to frighten consumers into signing up for credit repair services they did not need by sending them bogus notices about judgments against them.  The company’s services also violated state and federal credit repair laws.

Under the terms of today’s consent judgment, JK Harris must clearly explain to consumers under what circumstances they would qualify to reach a compromise with the IRS on back taxes.  JK Harris will also make several reforms to its advertising and sales practices.  Financial Recovery Systems is barred from offering or performing credit repair services that don’t comply with state and federal laws.  Both companies will pay a total of $1.5 million in refunds to consumers.  The judgment also applies to Professional Fee Financing Associates, L.L.C, a related company that provided financing for consumer contracts with JK Harris.

Long’s Consumer Protection Division has received 6 formal complaints, but expect more to be filed. Any South Dakota consumer who filed a complaint or who files a complaint within the next 90 days will be eligible for a partial refund.  Consumers who think they have been affected can contact the South Dakota Attorney General’s Office at 1-800-300-1986 or consumerhelp@state.sd.us.

Today’s agreement resolves allegations that JK Harris regularly advertised that it could help people who owed back taxes to the IRS by filing an Offer in Compromise (OIC) on their behalf and consumers would only have to pay “pennies on the dollar” of what they owed.  JK Harris charged money upfront for this service without actually determining if consumers qualified for an OIC or while knowing that consumers didn’t qualify.   The IRS approves only a small percentage of OIC’s each year.

JK Harris also said that consumers’ files would be handled by “tax experts” or “ex-IRS agents” when in fact the people handling the cases did not have tax expertise as advertised.  JK Harris case managers changed frequently, and consumers complained that they often had to provide the same information to the company several times.

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