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We created the Tax Problem Resolution Blog to aid the average person to become more discerning buyers of tax resolution and tax representation services. Please read the index of articles below to learn more about the tax resolution industry and to assist you in solving your specific tax problem.

Jay Freeborne, Enrolled Agent at Washington Tax Services, open for business since 1989

Thursday, October 6, 2011

JK Harris to File For Bankruptcy

Well, it happened: our oldest competitor in tax resolution, JK Harris, filed for bankruptcy to avoid being punished for their failure to fully pay a $1.2 million judgement against them to the Texas Attorney General:   JK Harris to File for BK.   It looks their bankruptcy is going to take the form of an asset purchase.  According to the article,  Taxmasters might be buying their assets using a code 363 of the bankruptcy law.  But I think it is safe to say that this isn't a reorganization.  But we'll see. 

UPDATED:  JK HARRIS DISSOLVED IN CHAPTER 7 :  http://taxresolutiontalk.blogspot.com/2011/12/no-reorganization-one-of-oldest-tax.html

I never thought this day would come.  They were the first tax resolution company to go big on television marketing.  And perhaps the first tax resolution company to bank on a franchise system: with "offices" all around the country while the cases were handled in a central office in South Carolina. A year 2000 article in the Wall Street Journal mentioned an IRS investigation of them while also mentioning Washington Tax Services as their 2nd largest competitor.  Boy, times have changed.

The big class action lawsuit and various problems with Attorney Generals really started to gnaw at their profitability.  The judgement from the class action lawsuit was pretty heavy although not very generous to their disgruntled clients who received $69 a piece after lawyers were paid.  Here's a list of the creditors as per the comment's section below:  http://media.charleston.net/2011/pdf/jkharrissmallbizchapter11petition.pdf

As I said before, it was pretty difficult to run the JK Harris high volume model while having an F rating at the BBB and a class action lawsuit against them.

If Taxmasters buys JK Harris, it will be an F rated BBB company BBB record --   buying a F rated BBB company -- BBB record  that's not the most attractive bride and groom -- the Addams Family redux?

I alluded to JK's financial trouble in previous blog entries HERE and HERE.

If your are a JK Harris customer and need some guidance, give me a call at 1-866-525-7302. Jay Freeborne, Enrolled Agent, Washington Tax Services.

5 comments:

Anonymous said...

http://media.charleston.net/2011/pdf/jkharrischapter11petition.pdf shows what is owed, not including back wages to employees.

Jay Freeborne - Tax Resolution Issues said...

Correct link : http://media.charleston.net/2011/pdf/jkharrissmallbizchapter11petition.pdf

Joe Mastriano, CPA said...

From what we heard (ex Taxmasters employees do talk), John Harris has been visiting the Houston Taxmasters office for at least a few months now trying to reorganize the companies together. So form will change, but they will continue to operate and do the same things as usual! In fact, our sources have told us that Taxmasters has now substantially increased their staff! Oh well, the law will never be able to stop people from taking money from innocent tax payers who won't take the time to do due diligence before paying money for tax help!

Jay Freeborne - Tax Resolution Issues said...

Thanks for writing Joe. Hopefully we can educate and foster smarter consumers of tax resolution services so F rated companies are ignored.

Yes Taxmasters and JK together is quite a potential Frankenstein.

Anonymous said...

John Harris belongs in prison!