JK Harris arrested for contempt of court
JK Harris, former CEO of JK Harris & Co. has been arrested for contempt of court, regarding the failure to appear after being ordered to appear in a case that held Mr. Harris personally liable for a $355K judgement for unpaid rent on his company’s former offices. JK Harris had been ordered to appear to divulge his assets and income, and provide an explanation as to why the court should not dispose of his property. The judge who issued the arrest warrant, stated that “it appears to the respondent Harris will attempt to evade personal service as he has done at least 13 times in this matter over the past several months.”
Another bad apple off the branch.
Tax Masters Files for Bankruptcy
Houston based Tax Masters Inc., currently being sued by the Texas Attorney General, has filed a three page petition with the US Bankruptcy Court in Houston, TX, seeking Chapter 11 protection. Front man Patrick Cox alleges that the company as less than $50,000 in assets and liabilities of between $1 million and $10 million dollars. The filing comes on the heels of the Texas AG’s trial against Tax Masters for misleading consumers under the Texas Deceptive Trade Practices Act.
JK Harris files for bankruptcy
JK Harris & Co. plans to seek bankruptcy protection in Charleston to head off an attempt by the Texas attorney general’s office to force the company into receivership, said company founder John K. Harris. The company, a national tax-debt-resolution service based in Goose Creek, has been dogged by cash-flow problems and the cost of large settlements related to claims that it misled consumers.
The bankruptcy filing is aimed at selling the business quickly while writing off debt. The company would continue operations in the meantime.
Consumers who were to get millions of dollars in compensation from previously agreed-upon settlements, from a class-action suit and from complaints by multiple attorneys general, could receive dimes on the dollar, as could JK Harris’ creditors. About 30 employees of the company who were laid off last week also are owed wages.
Texas is one of about 20 states — South Carolina is not among them — where [...]read more
IRS Warns Employers of Outsourcing Payroll
The IRS has issued a reminder to employers who outsource their employee payroll processing to a third party, to be careful about the due diligence performed on the payroll company. Third party payroll processors receive tax deposits and then forward those tax deposits on to the IRS. Recent IRS prosecutions of individuals and companies who act under the guise of a payroll service providers, have stolen funds intended for payment of employment taxes, leaving the employer left holding the bag for the tax deposits that were stolen, as well as the penalties and interest on those deposits assessed by the IRS. Typically, we see this scenario with small businesses that keep the task of processing payroll in-house, but recently according to the IRS, companies and individuals offering payroll services have been caught stealing tax deposits and informing their clients that those tax deposits have been remitted to the IRS on time.
When using an outside source for payroll services, verify from [...]read more
House Democrats’ Wish List of Revenue Proposals
Last week, the House Democrats proposed an unofficial summary of revenue raising provisions to the Joint Select Committee (Super Committee) of Congress, most of which are not new at all, but some of the main proposals for individual taxpayers and businesses are listed below.
Tax Changes for Individuals: A surtax which would reduce a taxpayer’s savings from “expenditures” by 5% of the amount by which AGI exceeds some threshold amount. Tax expenditures would include special exclusions, exemptions, or deductions from gross income or which provide a special credit, a preferential rate of tax, or a deferral of tax liability.
* A new proposal would also authorize the government to DENY the application for a new US Passport application or renewal of an existing passport if the individual owes more than $100K in unpaid federal income taxes. The government can also revoke a passport upon reentry into the US for such individuals.
Tax Changes for Businesses: Proposed changes for businesses would repeal the depreciation [...]read more
Tax Court Ruling on Installment Agreement Cancellation by IRS
The US Tax Court has ruled in a recent case, Rosenbloom v. Commissioner of Internal Revenue, (U.S.T.C. 2011), that the IRS cannot arbitrarily decide to cancel an Installment Agreement, and criticized their “Heavy Handed” collection action levy after the cancellation of the Installment Agreement as an “abuse of discretion”. The tax court held that the statute of limitations to collect had expired, and the IRS determination to continue collection was an abuse of discretion.
The taxpayer, an attorney, had entered into one or possibly two installment agreements (the opinion acknowledged confusion over this point). Then, at a point when the IRS decided the installment agreement was canceled, it persuaded the taxpayer to sign an extension of the statute of limitations.
Several years later, the IRS commenced collection again on the ground that the taxpayer had agreed to extend the statute of limitations on collection. The taxpayer argued that the request was made while his [...]read more
IRS Eases Innocent Spouse Eligibility Requirements
The IRS has announced a few new items regarding the eligibility requirements surrounding the filing of an Innocent Spouse claim for relief from a joint tax liability. The IRS has stated that they are eliminating the 2-year time limit that now applies to file the claim, along with easing the evaluation of claims. The IRS commissioner Doug Shulman has said, “In recent months, it became clear to me that we need to make significant changes involving innocent spouse relief, this change is a dramatic step to improve our process to make it fairer for an important group of taxpayers. We know these are difficult situations for people to face, and today’s change will help innocent spouses victimized in the past, present, and the future.”
Under the law, taxpayers who file joint returns are generally liable for the tax debt of their partners. However, spouses may qualify for relief if they didn’t know their partner was cheating [...]read more
IRS’s Regulation of Paid Tax Return Preparers
Most individuals, 8 out of 10, now rely on software or a paid tax preparer to file their tax returns because of the increasing complexity of the U.S. tax code, but the preparers often make mistakes, and some have criminal backgrounds. The IRS wants to set up a system to regulate them, but the program won’t be fully in place until 2013. This has Congress worried because of the rapidly growing number of preparers and errors found on returns. For example, errors related to refundable tax credits have led to an estimated $106 billion in improper payments over the last decade.
In response, the IRS in 2010 launched an oversight program to aid in limiting or stopping completely, the intentional abuses and unintentional mistakes. It wants preparers to register with the IRS, pay an application fee, and be assigned a unique identification number (PTIN). To date, the service has registered more than 717,000 preparers. Next year the IRS will start requiring [...]read more
Ten Tax Tips to Assist Military Personnel
The US Military personnel have some very unique duties, expenses and transitions throughout their service. Special tax benefits may apply when moving to a new base, traveling to a duty station, returning from active duty and more. These tips may help put military members a bit at ease when it comes to preparing, and filing, their taxes.
Moving Expenses If you are a member of the Armed Forces on active duty and you move because of a permanent change of station, you can deduct the reasonable unreimbursed expenses of moving you and members of your household. Combat Pay If you serve in a combat zone as an enlisted person or as a warrant officer for any part of a month, all your military pay received for military service that month is not taxable. For officers, the monthly exclusion is capped at the highest enlisted pay, plus any hostile fire or imminent danger [...]read moreJK Harris Defaults on Class Action Settlement
JK Harris has stopped making payments on a $6 million class action settlement suit reached in 2007 with more than 18,000 former clients. The company has paid about $2 million towards that settlement, but still owes about $4 million. Apparently, no payments have been made since early last year. The South Carolina Department of Consumer Affairs has received 137 complaints about JK Harris in the past three years, according to Carri Grube Lybarker, the acting administrator for the department. For those awaiting the next payment from the class-action settlement, it’s unclear when the check might arrive. Mario Pacella, a Columbia attorney representing the plaintiffs in the class action case, said the settlement would have been larger to if not for the limited finances of the company (JK Harris). “They paid JK Harris to settle their tax debts for pennies on the dollar,” he said of the plaintiffs. “Now, they have gotten pennies on the [...]read more
