TaxMasters Files For Bankruptcy
March 20, 2012 by UPI - United Press International, Inc.
HOUSTON (UPI) — Nationally advertised income tax consulting firm TaxMasters Inc., which is under suspicion of fraud in Texas, has filed for bankruptcy, court papers show.
The company, which is based in Houston, is the defendant in a multi-count civil case filed by Texas Attorney General Greg Abbot.
Abbott has charged the firm with misleading sales practices. ABC News reported Monday that a spokesman for Abbott’s office said he was unaware of the bankruptcy filing.
Minnesota’s attorney general’s office is also considering filing charges. “This is a company which is taking advantage of people, and unfortunately, when people see it on TV, they do believe in it, Attorney General Lori Swanson said.
At the heart of the controversy are $2,000 to $8,000 fees customers are charged upfront. “When you pay these upfront, advanced fees, now you’re signed up, you’re stuck, and the promised [tax] help doesn’t materialize,” Swanson said.
In a taped sales pitch, a company representative says, “You’re owing 19,000 … I mean we can basically get you down to basically next to nothing.” The tape also says, “We’re 97 percent successful.”
Court papers say TaxMasters has between $1 million and $10 million in liabilities.
The company, which has been publicly traded since 2010, had revenues of $45.7 million in 2011.