Tax Services TaxMasters Bankruptcy Shows Why Not To Get Help From TV Pitchmen if You Owe The IRS
Tax Services Miami CPA Firm Gustavo A Viera says if you’ve got problems paying the Internal Revenue Service, don’t look for help from the ads on late night cable television from TV Pitchmen promising to reduce tax liability. Reducing tax liability, 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 Tax Services Houston-based TaxMasters had been accused of deceptive business practices by the attorneys general of Texas and Minnesota, it continued to buy millions of advertising on CNN, FoxNews and other cable channels Pitchmen promising to reduce tax liability for pennies on the dollar. 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.”
According to TaxMaster’s three page filing in the Southern Texas bankruptcy court, it has less than $5,000 in assets and up to 5,000 creditors.
Tax Services Miami VieraCPA notes this is just the latest bankruptcy by a “tax resolution” Tax Services 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. Last December, it ceased operations and went into liquidation, leaving 5,400 active clients in the lurch. Harris’ former clients, including those who won legal judgments against it, aren’t likely to see any money from the liquidation. (Another firm, Resolute Tax Services, has purchased access to JK Harris’ customer list; according to the privacy terms set by the bankruptcy court, customers must contact Resolute and agree to the transfer of their files, at which point Resolute says it will offer them a “credit of up to 50%” of the fees they paid JK Harris.)
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 tax services firm to gain concessions from the IRS. Deutch called the charges politically motivated. But last year, she filed for bankruptcy and surrendered her law license.
If you’ve got problems with the IRS, here are a few pointers—that you won’t get from a Tax Services cable pitchman.
• Tax Services CPA Firm Gustavo A Viera says some people do win “offer in compromise” deals from the IRS allowing them to settle what they owe for “pennies on the dollar”—but only those who genuinely can’t pay, when all their assets and future earnings are taken into account. In fiscal 2010, the IRS received 57,000 applications for OICs and granted only 14,000 of them, according to its annual data book.
• CPA VieraCPA notes that if you can pay what you owe the IRS over time, you may be able to work out a deal without paying big bucks to a tax pro. Earlier this month, as part of a bid to help strapped taxpayers, the IRS announced that taxpayers owing up to $50,000 in back taxes, interest and penalties (up from $25,000) can enter into a streamlined installment agreement to pay over up to 72 months–without supplying the IRS with a detailed financial statement. Be careful, however, not to sign an installment agreement unless you’re reasonably certain you can live up to.
•If you believe you are being treated unfairly by the IRS and can’t get anyone to listen to you, there is an independent office within the IRS —known as the Taxpayer Advocate Service—that may be able to intervene or call Tax Services CPA Firm Gustavo A Viera
•If you need professional help, choose carefully. If you’re in deep trouble with the IRS, you’ll generally want to hire a lawyer, a CPA or an enrolled agent, who is licensed to practice before the IRS.