We’d all like to settle our taxes for pennies on the dollar. Sadly, two of the biggest providers of pennies-on-the-dollar tax settlements — JK Harris and Roni Deutch — have left their clients with, well, pennies on the dollar in liquidation. Only the best neck-beard in the late-night TV tax settlement business carries on. Being able to settle tax debts that cheap would seem to be quite valuable, which makes the demise of these outfits puzzling. But you don’t need TaxMasters if you can walk away with the sweet deal Ford T. Johnson Jr. got.
A US District Court held Mr. Johnson liable for $887,726.78 in unpaid employee withholding for his business, Koba Associates, Inc. (Koba? Really?), "a small company engaged in, among other things, community planning and economic development in the District of Columbia." With penalties and interest the bill swelled to over $2,474,000 by the end of 2010.
That put Mr. Johnson in a bind. His wife earned a measly $130,000 from Koba Associates, and the company paid another $63,787 — over $5,000 a month — to rent his family home.
Even though this is grinding poverty by D.C. standards, the heartless trolls in the collection division had no mercy on our economic development specialist. With unfeeling brutality, they put him on a plan requiring to pay… are you sitting down?
$400 per month.
As Jim Maule points out
, this isn’t enough to even cover interest on the tax debt. Yet it was apparently intolerable to Mr. Johnson, who went to district court to fight it. He lost
. But not so much. If you discount the 400 monthly payment at 3% forever
, it’s worth $160,000. So our taxpayer has settled a $2,474,000 debt for $160,000 — about 6.5 cents on the dollar. If taxpayers can get deals like that, why would they ever hire TaxMasters anyway?
In fairness, this is a winning-the-lottery kind of deal. You and I would never get that. It just shows that naming your business after one of history’s greatest monsters
might not be as unwise as it might seem.
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