Wednesday, March 21, 2012
Another Tax Chain Files for Bankruptcy
Another one of the tax resolution chains is going out of business. The newest one is TaxMasters, whose commercials featured a red-headed and -bearded fellow. That fellow was Patrick Cox, the CEO. TaxMasters had battled the attorneys general of Texas and Minnesota for fraudulent practices. I am reading that Texas had accused them of not commencing work for their clients until TaxMasters was fully-paid. So much for deadlines. Did you know that they were publicly-traded?
They follow on the heels of JK Harris, which was based out of South Carolina and filed for bankruptcy last October. JK Harris had been battling the attorneys general of Texas, West Virginia and Missouri.
Before JK Harris was Roni “Tax Lady” Deutch, who was sued by California, forfeited her law license and closed shop. She had done an “Arthur Andersen” and shredded documents. Nice.
I work tax representation, and I am not particularly surprised by the fate of these companies. They were working a specific area of representation – collections. Why? Many taxpayers first take the matter seriously only when the IRS sends them a letter indicating intent to lien or levy.
I cannot begin to tell you how many times I have heard the refrain “What are they going to do to me? Put me in jail?” No, they will not put you in jail unless you crossed the line into criminal tax. They will take your stuff, however. We presently have a revenue officer here in Cincinnati who seems quite determined to take a client’s house, for example. At that moment those late-night commercials promising pennies-on-the-dollar sound appealing and one is willing to suspend disbelief. Don’t. If it were true I would have reduced my own taxes to pennies-on-the-dollar.
How can tax representation fit into a publicly-traded company? I am at a loss. There is no way I could do what I do being constantly worried about quarterly earnings and stock performance. Hey, sometimes it takes a client forever to assemble paperwork, or an examiner is unreasonable, or every issue goes to Appeals, or we spend time fending off an overly-aggressive revenue officer. We are not profitable on that engagement. It is part of practice. We do not rock the house every time.
My advice? If you are in a collection situation, find a local practitioner who works tax representation. Please stay away from those national tax warehouses. Ask yourself: who is paying for this airtime? You know better.