TaxMasters, a tax resolution firm based out of Houston, TX, had been under investigation by the Texas Attorney General since 2010 for unethical sales practices. After finally going to trial earlier this year, a jury has passed down a verdict of $195 million against the firm. This amount includes $113 million in restitution to the firm’s customers, $81 million in civil penalties, and $1 million in attorney fees. The company was found guilty of 110,000 violations of Texas consumer protection laws.
Founder and CEO Patrick Cox himself must pay well over $40 million of the award from his own personal fortune.
The firm was primarily accused of failing to disclose it’s no-refund policy, and for failing to immediately start work on a client’s case, but rather waiting until fees were fully paid before even doing anything to protect clients.
The firm recently filed for Chapter 11 bankruptcy protection during the course of the trial.
If you were a TaxMasters client, however, don’t expect to get any money. In it’s bankruptcy filing, the company only listed $50,000 in assets, and it is unlikely that Patrick Cox possesses the $40 million assessed against himself.
So, what can you do if you are a victim of TaxMasters, or any other company? Here are some quick tips:
- Contact your Revenue Officer immediately, to find out the status of your case in the collections process.
- If you have tax returns that are overdue, get them filed immediately.
- Assemble any financial information requested by your Revenue Officer.
- Request a 120 day collections hold in order to give you time to put everything together and prepare a plan of attack, particularly if you can’t pay your tax debt in full.
- If your tax situation is more complex than you are comfortable handling, then seek professional assistance from a licensed taxpayer representative (Enrolled Agent, CPA, or tax attorney).
It’s a travesty that unscrupulous companies such as TaxMasters, American Tax Relief (shut down by the FTC with a $105 million judgement), Roni Deutsch (shut down by the California AG), and JK Harris (went bankrupt in 2011) have been stealing from hardworking taxpayers for years (TaxMasters complaints ran back to 2005). Always conduct proper due diligence before hiring any tax resolution firm.
Even if you already have representation, if you want a second opinion about your case, be sure to contact a local tax firm in our directory.