Houston-based Taxmasters Inc. files for bankruptcy

HOUSTON -- Houston-based TaxMasters Inc., known nationwide for its television commercials with tough-talking company founder and front man Patrick Cox, has filed for Chapter 11 bankruptcy protection.

In a three page document tendered to the U.S Bankruptcy Court for the Southern District of Texas Houston Division, the company which once spent millions annual on advertising, listed assets of less than $50,000. It also estimated liabilities between $1 million and $10 million.

The filing comes as the Texas Attorney General’s Office is set to begin a trial against the tax resolution firm for misleading consumers under the Texas Deceptive Trade Practices Act. According to court documents, TaxMasters’ advertisements encourage taxpayers to call its toll-free number for a “free consultation” with a “tax consultant.” But the state alleged callers are not connected to an employee qualified to give tax advice, but rather with a TaxMasters’ salesperson who recommends a “solution” for thousands of dollars. Furthermore, the AG’s office alleged TaxMasters offered payment plans to consumers, but failed to reveal that it would not begin work on a case until the entire fee was paid. In many cases, important IRS deadlines were missed, according to court documents.

The State of Texas originally sued TaxMasters in May 2010, but last month the I-Team exposed how consumer complaints continued to pour in despite the state’s enforcement action.

http://www.khou.com/news/local/Houston-based-Taxmasters-Inc-files-for-bankruptcy-143299066.html