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'Tax Lady' accused of unladylike behavior

August 24, 2010

California's ~~Aspiring Governor~~ Attorney General Jerry Brown has sued Attorney Roni Deutch, who blogs as the "Tax Lady," for "swindling" taxpayers who hire her to get taxes forgiven. From the AG's press release:

"Tax Lady Roni Deutch is engaged in a heartless scheme that swindled people with tax problems," Brown said. "She promises to significantly reduce their 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."

Deutch manufactures credibility by boasting that her tax resolution law firm, which has annual revenues of at least $25 million, is the largest of its kind in the nation. She spends $3 million a year on advertising, much of it on late-night cable TV, and frequently offers tax advice on NBC's Today Show, CNN, and CNBC.

Desperate debtors turn to Deutch based on her misleading ads that feature fictional testimonials claiming she secured large reductions in the featured clients' federal tax debts.

Her blog has no mention of the suit yet.

TaxGrrrl ("no relation") notes that Ms. Deutch paid $300,000 to New York to settle similar claims. The California lawsuit seeks $34 million.

While I have no insight on whether there is anything to the lawsuit, taxpayers shouldn't assume that TV "tax settlement" outfits really can perform the magic they claim. The limited work I've seen from TV tax settlement outfits was very unimpressive -- though I've never seen any work from the Deutch firm. The IRS usually will forgive debts only if you are really a "turnip" with no ability to ever pay the debt off. If you are that upside-down, though, you probably need more than just tax relief; you likely should be working with bankruptcy counsel.

The TaxProf has more.