Tax Lady Roni Deutch Sued for "Heartless Scheme"

(MoneyWatch)  Roni Deutch, television's "Tax Lady," was sued Monday for perpetrating a"heartless scheme" that swindled thousands of people across the nation into paying huge fees to stop the IRS from collecting back taxes.

"Tax Lady Roni Deutch...promises to significantly reduce [client's] 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," said California Attorney General Jerry Brown when announcing the suit.

Brown is attempting to permanently stop Deutch's allegedly misleading advertisements and force her to pay $34 million in restitution to thousands of former clients. Deutch failed to return phone calls prior to press time.

Brown says that Deutch "manufactures credibility" by spending $3 million annually on late-night television ads and by offering tax advice on credible news shows, such as NBC's Today Show, CNN, CNBC and FoxNews.

She also claims, in an advertisement titled "It's Your Turn," to have "saved" numerous clients from having to pay thousands to the IRS. But the Attorney General says that all three clients in this advertisement still owe the IRS the full amount of their tax bills, plus interest and penalties. In reality Deutch put these clients on "currently not collectible" status with the IRS. That's what Brown's office refers to as "tax collection purgatory" because the government stops trying to collect but continues to accrue fines and interest.

Hundreds of Deutch's clients have complained to the attorney general's office and other agencies, Brown said in a news release.

Web sites proclaiming that Deutch's services are a scam are almost as ubiquitous as her advertisements, showing up at the Complaints Board, PissedConsumer and Rip-Off Report.

Jennifer Geronimo, a San Francisco small business owner, counts herself among Deutch's victims. In an interview Monday, Geronimo said she paid Deutch's California law firm just shy of $2,000 to settle her $30,000 tax debt last July. By October, she was getting nasty notices from the IRS, saying that they were about to levy her assets.

Geronimo said she called the IRS herself and was able to get on a payment plan, with no help from Deutch. After complaining to the Better Business Bureau, Geronimo got a partial refund from Deutch's office, but she says she's still out the better part of $1,000 and claims she got nothing in return.

Brown, who is running for Governor of California, issued a press advisory earlier this year warning consumers to beware tax relief scams that charge up-front fees.

If you think you've been victimized by Deutch or other tax relief services, you can contact Brown's office at 1-800-952-5225 or file a complaint online.

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