The IRS Goes After H&R Block

J&M Securities LLC, a major stock trading company, has had its restraining order to remove an H&R Block lawsuit from the courts denied by a U.S. District Judge on Monday, according to an article in the Kansas City Star.

H&R Block claims that J&M Securities, Inc., had tried the following on several occasions: at least seven times within the past seven years to garnish delinquent H&R Block customers’ bank accounts; J&M Securities also allegedly asked the courts to issue a federal court directive instructing H&R Block that any person who requests such action “is hereby notified that he is immediately and permanently banned from ever using or making use of a H&R Block or its banking or investment property for any activity whatsoever.” The article continued, “The court is reviewing the motions and will determine if there is sufficient evidence to support this motion.” So, basically, H&R Block is accusing J&M Securities of not following the proper procedures required by law when attempting to collect a debt from its clients. They say they are innocent and say the lawsuit is without merit.

 H&R Block Lawsuit

What exactly did J&M Securities do wrong? According to H&R Block’s attorney, the answer lies in an examination of how the tax preparation industry works. He says the Complaint misunderstands how CPAs work and points out that POS devices were never designed to collect debts.

This was apparently a minor point for H&R Block’s counsel, but according to Joseph Coty, President of the American Institute of CPAs, “It’s really not that significant to the rest of the world, but it does matter in the tax preparation world.” In other words, perhaps it doesn’t matter whether or not they originally filed their lawsuit for fraud or breach of contract purposes – they are still asking a judge to force J&M Securities to admit that they relied on outdated pos devices.

This isn’t the only problem with the lawsuit, either. In order for a tax preparer to collect a tax refund, they need to have access to all records regarding that year’s taxes.

Not every tax preparer has the time to keep track of such records, which is what makes H&R Block’s reliance on taxpayer fraud a problematic situation. Taxpayers who owe back taxes are often confused about what deductions they can use, and end up using deductions that don’t amount to much.

For this reason, some people end up getting a refund they believe is coming from H&R Block even though it is technically under federal tax law to receive them through your federal tax return.

It’s also worth noting that the IRS has actually sued tax preparation companies over their reliance on illegal tactics to get their clients to settle.

In one case, the Internal Revenue Service alleged that a company used illegal methods to try to get a client to settle for less than the full amount owed. In another case, the agency claimed that a tax preparation firm tried to take advantage of an audit by claiming that a client was being charged higher tax fees than allowed by the audit agreement.

The IRS doesn’t have any shortage of motivation to haul tax preparers out of the shadows.

The agency wants to ensure that everyone pays their taxes, but they also want to make sure that taxpayers get their fair share of the tax refunds they’re entitled to.

With so many tax issues floating around this year, the IRS wants to make sure that everyone pays their due. A settlement from H&R Block isn’t likely, so other taxpayers stand a better chance at receiving their regular refund.

As we’ve seen, there are many problems with the way that H&R Block treats clients who owe taxes, and we suggest avoiding them like the plague.

If you do end up in such a situation, the best course of action is to contact a reputable tax attorney to help you resolve the matter. If you think you’re going to get hosed, consider trying to recoup some of your losses through refund anticipation settlements or other debt relief techniques instead of risking a lawsuit with a company like H&R Block.

The worst case scenario for these lawsuits is not a lawsuit at all, but the threat of a future lawsuit that could very well force you to liquidate your retirement accounts, sell your assets, or even worse, have to go into bankruptcy.

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