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TaxMasters is gone and left some major players holding the bag.
The writing was all over the wall on this one. The word on the street, the last of the big 3 to be taken down.With hundreds of complaints and AG filings everyone in the industry knew this was coming, it was only a matter when. You cannot falsely advertise and get away with it.
TaxMasters was one of the big three that advertised heavily on TV, Cable …… and it seems almost on every station.
The airwaves were full of tax attorney Patrick Cox telling people he could settle their tax debt for cheap. Thousands bought the pitchman’s adds and they are now all holding the bag.
The biggest loser on this was not the television show but CNN with a $2.6 million owed to them. Sad!
According to reports filed and Janet Novak, ” TaxMasters’ unsecured creditors are unlikely to see much, if any, cash. In its new filing, TaxMasters listed just $1.7 million in assets. Moreover, according to the Texas Attorney General, last Friday a Travis County Texas jury returned a $195 million verdict against TaxMasters and Patrick Cox, its founder and CEO, for 110,383 violations of the Texas Deceptive Trade Violations Act. Some $113 million of that total is a refund of client fees, and another $81 million is civil penalties. TaxMasters’ clients typically owe the Internal Revenue Service large amounts of back taxes they can’t pay and may be facing IRS enforcement actions, such as liens and levies. The Texas AG charged in its lawsuit that TaxMasters misled potential customers, both in its advertising and in its customer contacts, about its policies—for example, failing to disclose that it wouldn’t start work on a case until a customer paid in full for its services, even it meant missing important IRS deadlines.
According to TaxMasters’ restated first quarter 2011 financial report—the last quarter it has reported to the SEC—the company had $13.1 million in quarterly revenues, and spent $4.1 million on advertising during those three months. “The Company believes advertising is the engine that drives sales,’’ the report states. TaxMasters’ best known ads featured the red-bearded Cox assuring potential clients that his staff of tax pros, including former IRS agents, had helped “many good people just like you.”
The bottom line, large companies cannot manage all the work that comes in. There advertising dollars far exceeds there personnel to work these cases. Also, many of the calls TaxMasters received were based on deceptive advertising and offering to settle for pennies on a dollar. While true, few taxpayers get there cases settled.
So who got stuck footing the advertising bill?
In addition to CNN, TaxMasters’ 20 largest listed creditors include:
News Corp.’s Fox News Channel (owed $938,414);
Houston advertising firm Maxximedia (owed $1,326,676);
American Express (owed $679,497);
The Radio Network Westwood One, now a part of Dial Global (owed $676,000);
History Channel (owed $653,820);
MSNBC (owed $259,441);
Yahoo (owed $196,475);
Dial Global’s Weather Channel (owed $172,233);
The Discovery Channel (owed $136,850)
and Disney’s ESPN (owed $94,265).
If you have an IRS tax issue, owe back taxes, unfiled tax returns, tax problems, owe IRS – call us today to get your problem permanently resolved.
