Practice Management

Radio and TV advertisements seem to be dominated by recession inspired debt reduction and tax reduction services that claim to save a person thousands of dollars or extract them from huge IRS liabilities for just pennies on the dollar. I've always wondered how that can be true. Well, maybe it's not!

The State of California has brought suit against "The Tax Lady" Roni Deutch, one of the best known advertising lawyers on television. In their complaint, the California Attorney General states the defendant(s)

"regularly violate California law while preying on consumers who cannot afford to pay their tax liability and are facing collection actions by the Internal Revenue Service (IRS). In order to convince consumers to pay Defendants thousands of dollars in fees, Defendants falsely promise them that they qualify for one of the IRS's programs to resolve taxpayers' back tax liability. In return for these fees, however, Defendants usually provide little or no assistance to their clients."

Ouch.

The complaint further states that the Deutch law firm employs 160 people--including a sales force of 45--and earns annual revenues of $25 million, and that bonuses are liberally employed to incentivize staff to generate high fees. Notably, $3 million a year was spent on radio and TV advertising.

Probably the most damning charge specifically uses one of her own commercials against her. In the commercial, three Deutch clients claim she saved them from having to pay the IRS thousands of dollars when in fact they were merely placed into an existing IRS program that permits them to temporarily not have to pay, but does not forgive the IRS debt.

I hope The Tax Lady has her day in court, but it sounds like she is going to need a good team of lawyers. I wonder if she will hire ones who advertise on television?