by Brian Mahany
JK Harris. Roni Deutch. And now Tax Masters. Besides having very questionable business ethics and financial practices, all are out of business. Tax Masters is the latest “tax resolution” firm to go under. (No surprises here… we first warned our readers about them in 2010.)
While we aren’t sorry to see any of these companies go under, we do know how they ruined the lives of many of their clients. People who seek out tax resolution specialists are already under water. Many had to borrow the $2000 to $15,000 in up front fees charged by these companies. Now they are still broke, lost their money and still owe the IRS.
These businesses prey on those who are desperate. People who can afford proper representation usually seek a tax lawyer or a CPA. Still, many are lured by the promise of paying just “pennies on the dollar.” Instead they paid thousands of dollars for ineffective representation.
TaxMasters tells the bankruptcy court that it has $1.7 million in assets but it owes hundreds of millions of dollars to creditors. Recently, the Texas Attorney General obtained a $195,000,000 judgment against the company and its founder. A jury found the company committed 110,383 violations of the Texas Deceptive Practices Act. And Texas isn’t alone in its enforcement action. Minnesota and other states as well as many former clients are seeking money back from the company.
Obtaining in offer in compromise from the IRS isn’t easy. The paperwork and documentation necessary to convince the government to reduce a tax debt is usually quite large. Overall, less than 15% of the offers submitted are approved.
If you truly can’t pay, bankruptcy may be one option. Income taxes are usually dischargeable, although there is often a waiting period. If the debt isn’t too large, collection personnel can usually work out a payment plan. Taxpayers can request a collections due process hearing or seek the assistance of the Taxpayer Advocate, an independent body within the IRS charged with helping people.
If your debt is over $100,000 and you can’t pay within a reasonable period of time, if at all, consider a hiring a qualified tax attorney and going the offer route. While you may have to pay more than a few pennies on the dollar, if properly documented offers are accepted everyday by the IRS.
The tax lawyers at Mahany & Ertl help taxpayers with a wide variety of tax compliance and audit problems including audit defense, collection due process hearings, offshore tax amnesty (OVDI) and of course, offers in compromise. For a no obligation, completely confidential consultation, contact attorney Brian Mahany at (414) 704-6731 (direct) or by email at
Mahany & Ertl – America’s Tax Lawyers. We give taxpayers a voice nationwide from our offices in Milwaukee, Wisconsin; Detroit, Michigan; Portland, Maine & Minneapolis, Minnesota.