Complaint Review: Greenlaw Tax Group - Encino California

Dear Sir/ Madam,

We are a retired couple who are currently living off our combined social security payments.  In 2015 my wife lost her job and we were forced to tap into her 401K to survive and avoid foreclosure or bankruptcy.  Unforunately, we did not realize there was a tax penalty associated with an early withdrawal. Subsequently, our tax liability to the Internal Revenue Service amounted to $16000.  We made an arrangement with the IRS to pay $290.00 monthly and did so religiously for several years only to realize that interest and penalties essentially kept our balances owed constant, keeping us trapped in a cycle of debt. 

We were then contacted by a Greenlaw Tax representative Mr Tom Davis via email solicitation in which he claimed to be able to help us reduce, settle or even eliminate our tax indebtedness to the IRS.  With a view to achieving this objective we provided all our personal and financial information Greenlaw requested with the intent to establish a “Hardship Resolution” with the IRS.  We paid the requested fee of $2900 which was stated to be the “Total of all fees.” See exhibit A attached. Additionally, Greenlaw also requested that we sign powers of attorney which we never signed or agreed to.

We subsequently received a call from Mr. David Knight – compliance manager for GreenLaw Tax Group, during which he stated that since we did not have the money to pay the IRS, GreenLaw Tax Group had made an arrangement to help us obtain a loan of $7800.00 to pay the IRS.  Believing that Greenlaw Tax Group and its representatives were our advocates and owed us a fiduciary duty of care we went along with obtaining the loan. We assumed the loan proceeds would be applied to our balance owed to the IRS. 

It is important to note that at this point we had not received a response from the IRS regarding our request for a hardship resolution.  We questioned Mr. Knight as to how he knew the amount the IRS would settle our debt for since we had not received any correspondence for them regarding a settlement.  Mr. Knight stated that typically a case like ours would be settled for the amount we borrowed.  We felt confident that the loan proceeds would be applied to our IRS debt balance as we already paid all legal fees as stated in - Exhibit A.  At no time during our conversation did Mr. Knight indicate that the proceeds of the loan were for additional legal fees.

Approximately three weeks after filing the hardship letter, we received a response from the IRS in which they stated –

They were temporarily suspending efforts to collect the debt owed for a period of five years, while the case is being reviewed. In the interim they are placing a lien on our home and all other property we owned, upon the sale of any of which the remaining debt must be paid. During this period interest and penalties will continue to accrue daily until the remaining balance is paid.

A check of the IRS web site showed our indebtedness was unchanged at $160,00.00.  None of the loan proceeds were applied to the IRS debt balance.  Surprised and confused by this development we contacted Mr. Tom Davis who was our initial point of contact at Greenlaw Tax Group.  We asked why the money from the loan was not paid to the IRS to reduce our indebtedness, to which he replied the loan proceeds is payment for future services. 

He then transferred our call to Mr. Knight to whom we asked the same question. Mr. Knight stated that the loan proceeds were for additional legal fees and he had sent us a form which I had signed agreeing to additional legal fees.  I informed Mr. Knight that I never receive such a form and I never signed or agreed to any additional legal fees.  I then requested him to resend a copy of the said form to me.  Mr. Knight subsequently resent the form which on examining I had never seen before and the signature on the said form was not mine but was a docu sign signature which was unfamiliar to me.

In conclusion, we find ourselves financially in a much worse position than prior to contacting GreenLaw Tax Group.

-          Our indebtedness to the IRS remains unchanged, except the balance has been reduced by forfeiture of our 2020 tax return of $3000.  Additionally, a lien has been placed on our property for the next five years, with interest and penalties accruing daily to the unpaid balance.

-          We are now repaying a loan for $7800.00 at 14% interest for 36 months which amounts to $11856.00 after 3 years.

-           From an initial debt of $16000.00 our indebtedness has now increased to $27856.00, not withstanding the initial legal fees of $2900.00 paid in full.

If one were to apply “a reasonable person standard” to this case, no reasonable person would expect to pay a sum total of $27856.00 to settle a debt of $16000.00 over period of 5 years, simultaneously risking an IRS lien on property owned with interest and penalties accruing daily.  In the final analysis Greenlaw Tax Group as our advocate / fiduciary did not exercise the duty of care expected and we the clients were damaged in the process.  We need to be made whole, by Greenlaw Tax Group and its representatives refunding to us the $7800.00 loan proceeds or paying same to the IRS on our behalf as was the assumed original intent.

Thanking you in advance for your assistance in helping to bring a fair and just resolution to the matter.

Respectfully Yours,

David Simmons