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'Tax Lady' is broke, out of business and still facing charges in California

Roni Deutch, a California tax attorney known nationally as the Tax Lady thanks largely to her cable television ads, is bankrupt, out of business and facing state charges that she cheated clients out of $34 million.

The California Attorney General's office last August filed suit against Deutch alleging that she and her law firm "regularly violate California law while preying on consumers who cannot afford to pay their tax liability and are facing collection actions by the Internal Revenue Service (IRS)."

The complaint by then-California AG Edmund Brown, Jr., charges that Deutch falsely promised clients that she could help them get into one of the IRS tax liability resolution programs. But after taking the taxpayers' fees, contends the complaint, she and her firm "usually provide[d] little or no assistance to their clients."

Deutch initially refuted the Calfornia complaint, posting on her blog that that the legal action appears "to simply be election year politics. … I look forward to a full and fair airing of this matter in a court of law where my law firm and I will aggressively and vigorously defend the claims against us, and I am absolutely confident we will prevail."

She changed her mind last week, though, announcing that she will close her law firm of 20 years and surrender her license to practice law.

Since the original filing, a Sacramento Superior Court has frozen her assets and Deutch subsequently has been accused by California officials of destroying millions of pages of documents, failing to pay about $435,000 in refunds to clients and diverting assets to family, friends and creditors in violation of court orders.

She said she's unable to defend herself against the state charges because her firm is $10 million in debt and she personally owes $5 million.

Check out your tax help: I'll leave it to California to sort out Deutch's situation. But her case is a good reminder of the need to carefully check out a tax professional before you turn your tax and financial life, and money, over to that person.

Yes, there are lots of good tax pros out there. But make sure that the person you choose not only is competent and ethical, but also fits your personal filing needs.

If you got an extension, now is a good time to look for a tax pro so that you file a correct and less-costly return by the Oct. 17 deadline. With the main filing rush over, more accountants, tax attorneys and other tax pros should have clearer schedules.

And if you're done with filing this year, good for you. Now you can start preparing for your 2011 taxes.

Getting some professional tax planning help early could help you pay less taxes when next year's filing time rolls around.

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