TaxMasters, the Houston-based company that claimed to offer tax relief, is seeking its own relief through bankruptcy. The company filed for Chapter 11 bankruptcy over the weekend while facing claims of allegedly deceiving consumers when it comes to their tax relief services. The company founder is,Patrick Cox, the bushy-beard late night pitchman seen in dozens of commercials on various television stations.
It has been reported through court documents that the company has less than $50,000 in assets but owes possibly up to $10 million to more than 1,000 creditors. As if owing creditors wasn't enough to deal with, TaxMasters has been facing allegations of deceptive practices. Consumers who call the toll-free number shown during the commercials were not transferred to a tax professional, but to a sales representative of the company, according to the Attorney General's office. TaxMasters didn't disclose to consumers that fees for services had to be paid up front, meaning that some missed tax deadlines with the IRS.
TaxMasters claimed to help individuals settle their tax debt with pennies on the dollar but many consumers felt the saying was a fabrication. There have been several complaints about the company and its practices from numerous consumers with some consumers paying the company more than $3,000 and received nothing in return. The State of Texas has a case pending against the company.
Recent talks with the attorney for TaxMasters claims the company laid off many of its workers recently and is no longer accepting new business. The company is basically shut down with its offices nearly vacated. Although the bankruptcy petition has been filed, it's unclear if refunds will be issued to consumers whether or not the State of Texas wins its trial.