Abusing Power: TaxMasters Declare Bankruptcy

by Victory Tax Solutions on March 22, 2012 in Blog

Over 1,000 company complaints with the Better Business Bureau in only three years combined with pending charges from attorneys general from Texas and Minnesota for “deceptive practices,” should have been enough to alert consumers.  But, reassurance by TaxMasters’ CEO, Patrick Cox, that the company’s staff—including former IRS agents—had “helped many good people just like you” was still enough to win over the minds (and pocket books) of many desperate Americans facing trouble with the IRS.

Hypocrisy is always astounding, but in this case, it’s outrageously so!  TaxMasters, a Houston-based company, who advertised their ability to help anyone solve their issues with the IRS, filed for Bankruptcy on March 18th, listing assets of less than $50,000 and liabilities up to $10,000,000 (CNN Money). Ironically, March 18th was the eve before TaxMasters was scheduled in court due to fraud accusations made by Attorney General of Texas.

Fraud accusations against TaxMasters were based on deceptive practices such as promising quick settlements, not informing clients of a non-refundable front-end fee, misleading sales calls, and collecting money from clients, but not doing any work—often resulting in clients missing important deadlines set by the IRS (Chicago Tribune).  These complaints were what led Texas Attorney General to file a lawsuit against TaxMasters.

Unfortunately, current clients are now left in a lurch and cannot depend on any of the work they filed with TaxMasters to have been completed and many cannot depend on receiving a refund for their incomplete services.  For clients who paid TaxMasters with a credit card, they should be able to file a dispute with their credit card company, claiming that they never received the services they were charged for.  For those who used a check or debit card to pay fees, they will need to file a claim against TaxMasters as a creditor, which may or may not be fruitful.

To all of the people who have experienced loss due to the actions of TaxMasters, our deepest apologies.  To TaxMasters—shame on you for hurting instead of helping, and for perpetuating the negative stigma of tax resolution companies.