Owe The IRS? TaxMasters Bankruptcy Shows Why Not To Get Help From TV Pitchmen

3/18/2012 @ 5:57PM
Owe The IRS? TaxMasters Bankruptcy Shows Why Not To Get Help From TV Pitchmen
Janet Novack, Forbes Staff


If you’ve got problems paying the Internal Revenue Service, don’t look for help from the ads on late night cable television. That’s one of the lessons from an SEC filing Friday by TaxMasters Inc., disclosing the publicly-traded company will file for voluntary bankruptcy. As ABC reported last April, even after Houston-based TaxMasters had been accused of deceptive business practices by the attorneys general of Texas and Minnesota, it continued to buy millions of advertising on CNN, FoxNews and other cable channels. The ads featured Patrick Cox, the red-bearded TaxMasters CEO, assuring potential clients that his staff of tax pros, including former IRS agents, had helped “many good people just like you.”

(Monday update: According to TaxMaster’s three page filing in the Southern Texas bankruptcy court, it has less than $5,000 in assets and up to 5,000 creditors.)

Moreover, this is just the latest bankruptcy by a “tax resolution” service that advertised heavily—and made allegedly exaggerated claims–on cable TV. JK Harris & Co., a South Carolina-based firm which once operated hundreds of locations in dozens of states, filed for bankruptcy last October after being sued by both states and unhappy customers. Last December, it ceased operations and went into liquidation, leaving 5,400 active clients in the lurch. Harris’ former clients, including those who won legal judgments against it, aren’t likely to see any money from the liquidation. (Another firm, Resolute Tax Services, has purchased access to JK Harris’ customer list; according to the privacy terms set by the bankruptcy court, customers must contact Resolute and agree to the transfer of their files, at which point Resolute says it will offer them a “credit of up to 50%” of the fees they paid JK Harris.)

In 2010, California Attorney General (now Governor) Jerry Brown sued “Tax Lady” Roni Deutch, who also had a big presence on TV, claiming she “engaged in a scheme to swindle taxpayers” by overstating the ability of her firm to gain concessions from the IRS. Deutch called the charges politically motivated. But lat year, she filed for bankruptcy and surrendered her law license.

If you’ve got problems with the IRS, here are a few pointers—that you won’t get from a cable pitchman.

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http://www.forbes.com/sites/janetnovack/2012/03/18/owe-the-irs-taxmasters-bankruptcy-shows-why-not-to-get-help-from-tv-pitchmen/