Citing nearly 1,000 complaints, Texas Attorney General Greg Abbott filed a lawsuit on Thursday, accusing Houston-based TaxMasters, Inc of multiple violations of the Texas Deceptive Trade Practices Act and Texas Debt Collection Act. According to the state, TaxMasters misled customers about service terms. Attorney General Abbott outlined the state's case against TaxMasters, stating that the "tax resolution" company would routinely tell clients that it would immediately begin work on a case, despite the fact that TaxMasters would not begin work until the client had paid in full for services. Some of the Texans mentioned by the Attorney General actually incurred more penalties from the IRS while waiting on TaxMasters to begin work on cases. According to court documents, many of the customers were placed on installment payment plans, believing that TaxMasters would begin work on their cases immediately. San Antonio resident and Army reservist, Aubrey Mason is one of the people who filed a complaint with the AG's office against TaxMasters. Mason says while on back-to-back deployments to Iraq in 2006-2007 he failed to file taxes. Fearing the IRS he contacted TaxMasters and was quickly charged $3,000 for services. Mason says it wasn't until after TaxMasters took his money that he was told by a friend to call the IRS directly and see if he could work out the problem. As it turned out all Mason needed to do was fill out a few forms to clear up the problem, which he did. He then contacted TaxMasters to ask for a refund since he has solved his own problem, after months of waiting on a reply he was to "no". Attorney General Abbott says cases like Mason's have been reported all across the state with people claiming to have paid TaxMasters money for services that were never carried out. Thursday afternoon in Travis County's 200th District Court, representatives from the AG's office field for a restraining order against TaxMasters. The suit names TaxMasters, Inc and its CEO Patrick Cox. In filing the restraining order, the Attorney General's office hopes to "prohibit the defendants from continuing to violate the law and seeks restitution for the financially struggling taxpayers." The state is seeking civil penalties of up to $20,000 for each violation of the Texas Deceptive Trade Practices Act.
