TaxMasters

Customer Complaints Summary

Additional Complaint Information

In a recent complaint received on 7/21/11, the consumer alledged the business responded "The BBB never solves anything.  The BBB only gives their members good reports".  The BBB has received consistent responses from this business that Taxmasters is not a "member of the BBB and would respond directly to the consumer".

This company has an unsatisfactory report for a pattern of complaint activity regarding service and for unanswered and unresolved complaints.  BBB complainants allege consumers are required to pay for the company's service before the company releases a copy of the contract and their policies for the consumer to review and sign. Numerous complaints alleged that after collecting an advance fee, Taxmasters failed to provide the promised tax relief and refused to the advance fee consumers paid them. TaxMaster's has stated that it does not guarantee the outcome of a negotiation, but states that they do not charge a fee for the negotiation if the negotiation fails. 

As a general rule, the BBB recommends consumers ask any company they are doing business with about their refund, return, and/or exchange policy in advance of authorizing payment. The company has stated that their refund policy is clearly stated to new clients and is discussed on the company's website on their disclaimer page (htt://www.txmstr.com/disclaimer/) as well as outlined in the agreement with its clients.

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• Government Actions

  Houston-based "Tax Resolution" Firm Charged With Unlawful Conduct, Misleading Customers
  On May 13, 2010 Texas Attorney General Greg Abbott charged Houston-based TaxMasters, Inc., and its chief executive officer, Patrick Cox, with multiple violations of the Texas Deceptive Trade Practices Act and Texas Debt Collection Act.
  
  According to the state’s enforcement action, the defendants unlawfully misled customers 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 customers paid in full for services, even if that delayed response meant taxpayers missed significant IRS deadlines.
  
  The defendants advertise a tax resolution service for federal taxpayers who have received notice from the IRS of an audit, garnishment, lien, levy or tax deficiency. Citing a self-styled “national advertising campaign” and high-profile “endorsements,” TaxMasters purports to have “one of the most effective tax relief teams in the tax representation business.” However, a state investigation – and nearly 1,000 complaints submitted to the Office of the Attorney General and the Better Business Bureau of Houston – indicate that the defendants have unlawfully misled their customers and failed to disclose material facts about their service agreements.
  
  TaxMasters’ advertisements encourage taxpayers to call its toll-free number for a “free consultation” with a “tax consultant.” Court documents filed by the state indicate that callers are not connected to an employee qualified to give tax advice, but rather with a TaxMasters salesperson who recommends a “solution” for between $1,500 and $9,000 or more.
  
  According to court documents, many callers were offered an installment plan so that they could pay the defendants’ fee over a specified period of time. However, callers who asked to see written terms and conditions prior to making a payment were informed that a credit card or bank account number is necessary to generate a written TaxMasters service contract. As a result, TaxMasters customers were unaware – and the defendants’ personnel did not have a practice of disclosing – multiple aspects of the TaxMasters service agreement that were harmful to taxpayers.
  
  For example, the defendants did not disclose that all customer payments submitted to TaxMasters are non-refundable. Because customers were not provided written contracts and sales personnel did not reveal the no-refunds policy, customers did not know that they would not be able to recover any installment payments they submitted to TaxMasters – even if they ultimately decide to cancel before TaxMasters actually did any work on their tax case.
  
  The state’s enforcement action also cites TaxMasters for failing to reveal that it would not begin work on a case until all installment payments had been remitted and the entire fee was paid. Multiple complaints indicate that customers entered into an installment agreement with the understanding that TaxMasters would immediately begin work on their case – only to discover later that no action was taken. Customers often learned that there was a problem when they received a notice from the IRS indicating that an important deadline had been missed or that additional fees and penalties had accrued.
  
  Court documents filed by the state also indicate that the defendants failed to disclose TaxMasters’ requirement that customers pay the entire service fee – even if they opt to cancel their contract. Because customers are not provided a written contract, they were not properly informed that agreeing to make a single payment over the telephone obligated them to pay the entire fee quoted by sales personnel. Further, not only did TaxMasters attempt to obligate its customers to a fee in the absence of a signed contract, the defendants used unlawful debt collection tactics to enforce the unauthorized obligation.
  
  According to the state’s enforcement action, the defendants not only failed to disclose material terms and conditions governing its services, but also failed to properly provide the “tax resolution” services that were advertised. Customer complaints obtained by the Attorney General’s Office cite TaxMasters for failing to contact and consult with the IRS on the client’s behalf; failing to appear on the client’s behalf at an IRS audit or hearing; failing to postpone or stop a wage or bank account garnishment; and failing to stop a levy or lien against a client’s property.
  
  When customers who were unhappy with the defendants’ services sought refunds, TaxMasters refused to return the customers’ money. Court documents indicate TaxMasters not only refused to honor refund requests, it also pursued debt collection efforts against clients who cancelled their contracts. The state’s enforcement action charges TaxMasters with unlawfully threatening to pursue customers in Harris County courts, even if those customers did not reside in the county. Under Texas law, entities seeking to enforce a consumer contract can only do so in a county where the agreement was executed or where the consumer resides.
  
  The state's enforcement action is seeking restitution for each TaxMasters customer who was financially harmed by the defendants’ unlawful conduct. In addition, the state is seeking civil penalties of up to $20,000 for each violation of the Texas Deceptive Trade Practices Act.

  Minnesota Attorney General Sues Large "Tax Relief" Company For Misstating The Help It Will Provide People With Tax Bills
  

  Citizens Who Pay Thousands of Dollars In Advance Fees Minnesota Attorney General Lori Swanson today filed a lawsuit against TaxMasters, Inc.-a Houston-based "tax relief' company that advertises heavily on television, radio, and the Internet-for overstating the tax help it will provide to citizens who pay the company advance fees of up to $8,000.
  
  The lawsuit alleges that the company got consumers to pay advance fees of $2,000 to $8,000 by misstating the help it would provide people with unpaid tax bills. In some cases, the company claimed it could substantially reduce people's tax bills by up to 90 percent, but then delivered little or no help. In other cases, the company falsely promised that it could stop IRS collection efforts against consumers who hired it.

  Contrary to TaxMasters' promises, most citizens do not qualify for special IRS programs that reduce a person's tax debt. Attorney General Swanson said that while the IRS won't reduce most people's tax bills, it will work with them on repayment plans-something people can do on their own without paying a tax relief company thousands of dollars.

  TaxMasters heavily advertises on late-night television. In 2009 the company spent nearly $14 million on its television, radio and Internet advertising campaigns. Consumers who call TaxMasters talk to a "tax consultant," who is actually a salesperson. A job ad for this position states: "Previous tax knowledge is not required, but a firm understanding of the sales process and of selling services ... is a strong plus." Salespeople often make unrealistic promises of the company's ability to help in order to dupe consumers into paying thousands of dollars in advance fees. The company also falsely told some consumers it could put an immediate stop to collection efforts, such as wage garnishments, levies, or liens. The lawsuit alleges that TaxMasters sometimes left people in worse financial shape after paying the company's advance fees, failing to respond to important deadlines or requests of tax authorities.

  The lawsuit alleges that TaxMasters salespeople told consumers things like:

  • "... based upon our success rate and our experience, on average, our clients see a savings of anywhere between 80 and 90% of what the IRS claims they owe."
  • "We're highly successful; we are the most successful tax resolution company. We're 97% successful."
  • "We'll save you anywhere from 65 to 90% is our goal on ... savings off the total tax debt. 97% of the time we reach that goal, the other 3% are the people who just flat out lie to us."

  Among other things, TaxMasters:

  • Overstated its ability to reduce or settle peoples' tax obligations.
  • Charged consumers thousands of dollars in advance fees for help in reducing tax bills that the company knew or should have known would not be negotiated by the IRS.
  • Failed to deliver on its promises and sometimes even failed to meaningfully contact the IRS.
  • Failed to make refunds to consumers who complained that the company did not take the promised action.
  For more information or to file a complaint, call the Minnesota Attorney General's Office at (651) 296-3353 or (800) 657-3787, or visit the office's website at www.ag.state.rnn.us.

  Florida Attorney General Pam Bondi Initiates Investigation of Taxmasters
  Florida Attorney General Pam Bondi has initiated a civil inquiry into Texas based Tax Masters following the receipt of 26 complaints. The company solicits clients nationwide promising to reduce anxiety and debt to the IRS.
  
  Tax Masters is being investigated for allegations of unfair competition and deceptive trade. Consumer complaints allege violations consisting of: failing to provide service as initially contracted, misrepresentation of the breath of services to clients, charging for unnecessary services, unauthorized credit card transactions, as well as failing to provide refunds.
  
  According to the Internal Revenue Service, three professionals are authorized to represent taxpayers before them - attorneys, certified public accountants and enrolled agents, all whom must pass an IRS test and take refresher courses.
  
  In the absence of representation, consumers can negotiate back taxes and penalties directly with the Internal Revenue Service.
  
  Regulators and consumer advocates warn against using companies guaranteeing what the Internal Revenue Service calls an "offer in compromise" — a settlement for reduced tax payment. Although increasing, IRS statistics show that only 25 percent of compromise applications are granted.
  
  Taxpayers seeking relief from IRS debt should also be aware that companies claiming to be tax specialists may simply be advertising the services of a third-party. Unlike the debt settlement and loan modification industry, tax resolution services are unregulated in Florida.
  
  In addition to filing a complaint with the BBB, Floridians may also file a complaint with the Florida Attorney General at www.myfloridalegal.com or (866) 9-NO-SCAM (866-966-7226).
  
  

  What government actions does BBB report on?

• Advertising Review

  BBB has nothing to report concerning TaxMasters's advertising at this time.

  What is BBB Advertising Review?