TaxMasters Files for Bankruptcy

Forbes, Owe The IRS? TaxMasters Bankruptcy Shows Why Not To Get Help From TV Pitchmen, by Janet Novack:

If you’ve got problems paying the IRS, 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 attorney generals 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.”)

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. ...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.

Update:  Forbes, Bankrupt TaxMasters Lists Less Than $50,000 In Assets, Up To 5,000 Creditors, by Janet Novack:

In a bare-bones three-page bankruptcy filing Sunday, TaxMasters Inc. reported it owes 1,000 to 5,000 creditors up to $10 million, but has less than $50,000 in assets. The filing, which became available on the web site of the U.S. Bankruptcy Court for the Southern District of Texas this morning, calls into question whether the Houston-based tax resolution firm will be able to continue to operate. The lengthy creditors list no doubt include thousands of individuals who have paid TaxMasters for  help resolving their IRS debts and now could be left in the lurch.