The popular and controversial tax advisory firm, TaxMasters Inc., filed for bankruptcy on Monday, as it was preparing to head to court in defense from charges of deceptive practices leveled by the Texas attorney general. The company was the subject of an ABC News investigation in April 2011, in which customers reportedly claimed that the company persuaded them to pay large upfront fees, but failed to deliver on promises of helping them resolve their tax problems.
Texas Attorney General Greg Abbott said that TaxMasters’ ads have been deceiving. He said, “In the midst of a national economic downturn, TaxMasters used a nationwide marketing campaign to offer services for distressed taxpayers who needed help dealing with the IRS. A state investigation and nearly 1,000 customer complaints indicate that the defendants routinely misled customers about the nature of their tax resolution service agreements – and worse, attempted to enforce those improper agreements through unlawful debt collection tactics.” TaxMasters also has a few lawsuits against them, which includes one from the landlord that owns the building where the company is headquartered, alleging that TaxMasters failed to pay its January rent, and another from a contracting firm handling the construction at the office, alleging that the company had not been paying its bills. The court papers filed on Monday revealed that TaxMasters filed for bankruptcy with liabilities between $1 million and $10 million.
