A tax debtor is suing TaxMasters for deceptive business practices. The company failed to disclose its no refund policy and used harassing debt collection tactics to obtain money from customers. The tax debtor is owed nearly $4,800 in penalties and interest. Although the customer paid $4,800 to TaxMasters for help with his tax bill, he ended up owing thousands more in interest and penalties. The IRS rejected his settlement offer and kept adding thousands of dollars to his debt. The customer’s story is not the only one. Hundreds of complaints have been filed against TaxMasters by former customers. The company has not commented on specific cases.
TaxMasters is accused of deceptive business practices
Several customers have reported that TaxMasters has been guilty of deceptive business practices. While the company claims that its sales representative will always consult with the IRS, this does not happen. The IRS will continue to collect on the debt, even though taxpaying citizens have the right to cancel at any time. Additionally, a TaxMasters salesperson will often change the verbal agreement with a consumer by charging hidden fees and putting down liens on their property without obtaining a valid license to practice law.
A customer who used TaxMasters allegedly ended up paying thousands of dollars in interest and penalties, despite paying $4,800 for a tax consultation. The entire process took several months, and the IRS ultimately rejected the settlement offer. Further, after a year passed, the customer was still left with thousands of dollars in unpaid interest. In addition, officials in Texas and Minnesota have received hundreds of complaints about TaxMasters. The company has not commented on specific cases, but its actions suggest that it may be engaging in deceptive practices.
In 2010, the company spent nearly $16 million on advertising, eating up 37% of its revenue. It even went so far as to advertise on CNN, the parent company of CNNMoney. In addition to CNN, TaxMasters owes Fox News Channel more than $938,000 and MSNBC nearly $260,000. This is over $5 million in unpaid debt. So, there is a growing number of consumers calling for the company’s bankruptcy.
It failed to disclose its no-refunds policy
Texas Attorney General Greg Abbott has sued a Houston-based company that advertised as helping individuals and businesses deal with an IRS audit. He claims the firm did not disclose its no-refunds policy, resulting in nearly one thousand complaints against the company. A spokesman for TaxMasters said the company would not comment on the lawsuit. It is unclear what exactly went wrong with the company, but it seems that its no-refunds policy was a big factor in its demise.
The Texas Attorney General alleges that TaxMasters’ salespeople were misleading consumers by failing to disclose its no-refunds policy and charging fees based on a false promise that they would begin work on the case immediately after payment. The company also missed important IRS deadlines, which may have been preventable with proper disclosure of its no-refunds policy. It is unclear how much money consumers will be left with, but the company has been sued multiple times since 2016.
Texas’s Travis County court found that TaxMasters had violated the law 110,000 times. The company will pay $113 million to customers as a result of the verdict. The company will also pay $81 million in civil penalties and $1 million in attorneys’ fees. It was found that TaxMasters had misled customers through aggressive TV ads and falsely claimed that their services would stop IRS actions. In addition, it failed to disclose its no-refunds policy and did not begin working on the case until customers paid in full. In many cases, these delayed response times were so severe that the IRS had to delay the collection of tax money.
It allegedly used harassing debt collection techniques to get money from customers
According to the lawsuit, TaxMasters allegedly used a wide range of harassing debt collection techniques, including claiming to lower customer debts to the IRS. The company claims to use such techniques to get money from customers and even change the terms of the agreement with the customer, resulting in higher debt than originally anticipated. This type of conduct is considered unfair and illegal.
The New York Attorney General Letitia James and the Consumer Financial Protection Bureau have taken action against several companies that were using abusive practices to collect money from customers. These companies allegedly harassed consumers with repeated phone calls, used intimidating tactics when calling, and even threatened to use their friends and family to collect debts. The lawsuit aims to make these practices illegal, and the companies involved have been permanently barred from the debt collection industry.