Texas Attorney General Announces Important New Information for Texans and Individuals across the Country Who Were TaxMasters Clients
AUSTIN The Texas Attorney General’s Office today provided an update for thousands of TaxMasters' former clients in Texas and across the country, who have been affected by the company’s closing and bankruptcy.
Now that the dust has cleared, thousands of former TaxMasters clients may be wondering what the bankruptcy and judgment against the company means for them, Texas Attorney General Greg Abbott said. The Texas Attorney General’s Office has been working closely with the bankruptcy court, the Chapter 7 Trustee, the IRS and other stakeholders to ensure that anyone defrauded by TaxMasters has easy access to information about the resources that are available to help them.
Following a March jury verdict against TaxMasters, its predecessor companies and its founder and chief executive officer, Patrick Cox, the company was forced into Chapter 7 liquidation. The bankruptcy court appointed a Trustee to liquidate the firm’s assets and help pay off its debts including millions of dollars in restitution that is owed to its former clients.
The Texas Attorney General’s office, together with the Chapter 7 Trustee, successfully urged the court to keep more than 50,000 former TaxMasters clients’ names under seal so that their privacy is protected and they are not targeted by other fraudulent tax advisory schemes. The State also worked with the Chapter 7 Trustee and the University of Houston Center for Consumer Law to set up a call center that former TaxMasters clients can contact to receive help and advice. Further, the State has worked with the IRS Taxpayer Advocate Service to ensure the Internal Revenue Service is aware of the thousands of former TaxMasters clients who may have outstanding tax issues because of TaxMasters’ conduct.
Over the next few weeks, all former TaxMasters clients will receive a letter from the Chapter 7 Trustee detailing all relevant information about the case and their rights. All former TaxMasters clients are urged to be on the lookout for the Trustee’s letter.
Important contact information for former TaxMasters clients: The University of Houston Center for Consumer Law can be contacted by calling (877) 839-8422 or by visiting www.uhccl.org. The IRS Taxpayer Advocate Service can be contacted by visiting http://www.irs.gov/advocate/. Letter from the National Taxpayer Advocate to TaxMasters Clients is available at www.taxpayeradvocate.irs.gov/TaxMasters. Information about the TaxMasters bankruptcy and liquidation is available at www.txmstr.com.
Facts of the case: In March, a jury returned a $195 million verdict against Houston-based TaxMasters, Inc., its predecessor companies and its founder and chief executive officer, Patrick Cox, for violating the Texas Deceptive Trade Practices Act. In all, the jury found that over 110,000 violations of the Texas Deceptive Trade Practices Act were committed. The Final Judgment and Permanent Injunction were signed on Tuesday, June 5, awarding consumers $113,099,820 in restitution, with $81,205,000 going to the State for civil penalties and $845,998.01 for attorneys’ fees. The so-called tax resolution firm misled Texans by aggressively advertising its services to federal taxpayers who have received notice from the IRS of an audit, garnishment, lien, levy or tax deficiency. TaxMasters misled clients about their service contract terms, failed to disclose its no-refunds policy, and falsely claimed that the firm’s employees would immediately begin work on a case despite the fact that TaxMasters did not actually start to work on a case until its clients paid in-full for services, even if that delayed response meant taxpayers missed significant IRS deadlines. TaxMasters also failed to contact and consult with the IRS on the client’s behalf, appear on the client’s behalf at an IRS audit or hearing, or postpone or stop a wage or bank account garnishment or stop a levy or lien against a client’s property.