TaxMasters files for bankruptcy. Is this how they get out of paying their taxes?
I have long been intrigued by the ads I see for outfits that claim to help out those who have problems with the IRS.
I have also been colossally pissed off by them. None of the “success stories” profiled in them seems the least bit sheepish, let alone flat out ashamed, by the fact that they were so incompetent, so clueless, so unlucky, or so dishonest, that they got into that magnitude of trouble to begin with.
I owed $100,000 in back taxes, and I was able to settle with the IRS for thirteen cents.
Now I completely understand that people make money mistakes, get in over their head, didn’t really know they owed. Etc. Small businesses who paid their people rather than their SSI. Folks who experienced a windfall, or an unanticipated loss, or a major uninsured health incident. Self-employed folks who haven’t quite got with the estimated tax program.
But I really only want people to get excused from what they owe if they have some totally extenuating, three-hankie excuse, or are dead-broke and, in the opinion of an actuary and a committee composed of equal parts financial planners and humanitarians, will die broke.
Most of the those who screwed up on their taxes, well, I actually expect them to pay it back over time.
But so many of the people in those “I settled ads” just seem so preposterously proud that they managed to get away with something.
My favorite ad, which I haven’t seen for a while, showed a blond and gleaming middle aged couple, standing in front of a sun-drenched hacienda, smiling and talking about how they were able to settle with the IRS and maintain their lifestyle. (I guarantee you that the word used was lifestyle.)
While I don’t want to see anyone thrown into debtors’ prison or forced to work on a chain gang to pay off their back taxes, if you can’t pay your taxes, maybe it’s your lifestyle that’s the problem, not the IRS. And, heartless bee-otch that I am, I don’t want you to maintain a lifestyle greater than or equal to my lifestyle if it requires thumbing your nose at the IRS in order to do so. Stop gleaming. Stop smiling. Stop looking like you just stepped off the yacht that some tax resolution service has enabled you to keep.
Mostly, my reaction to these ads was “these have got to be bogus.” Yes, I’m sure people settle with the IRS all the time, but don’t they have rules?.
Well, yes, apparently they do.
If we are to take the IRS at their word, with respect to an Offer in Compromise – one of the options for settling your taxes - it doesn’t look like it’s quite as automatic as those tax settlement advertisers might lead you to believe.
An offer in compromise allows you to settle your tax debt for less than the full amount you owe. It may be a legitimate option if you can't pay your full tax liability, or doing so creates a financial hardship. We generally approve an offer in compromise when the amount offered represents the most we can expect to collect within a reasonable period of time.
We consider your unique set of facts and circumstances:
- Ability to pay;
- Expenses; and
- Asset equity.
And it sounds like they expect you to exhaust your sources.
If you do not have sufficient cash to pay for your offer, you may need to consider borrowing money from a bank, friends, and/or family. Other options may include borrowing against or selling other assets.
So, even if the gleaming, yachting blonds couldn’t get squat from a bank, friends, and/or family, it looks like the IRS might expect them to do something about the sun-drenched hacienda.
Anyway, you do have to wonder whether those aggressively advertised tax settlement outfits can wiggle you out of what you owe as easily-peasily as they imply. Or whether they can do very much for you at all.
In the case of TaxMasters, the wonder is up.
…the company which once spent millions annual on advertising, listed assets of less than $50,000. It also estimated liabilities between $1 million and $10 million.
Wonder whether those “estimated liabilities” include back taxes.
The filing comes as the Texas Attorney General’s Office is set to begin a trial against the tax resolution firm for misleading consumers under the Texas Deceptive Trade Practices Act. According to court documents, TaxMasters’ advertisements encourage taxpayers to call its toll-free number for a “free consultation” with a “tax consultant.” But the state alleged callers are not connected to an employee qualified to give tax advice, but rather with a TaxMasters’ salesperson who recommends a “solution” for thousands of dollars. Furthermore, the AG’s office alleged TaxMasters offered payment plans to consumers, but failed to reveal that it would not begin work on a case until the entire fee was paid. In many cases, important IRS deadlines were missed, according to court documents.
The state of Texas was looking for restitution for some of those who were screwed by TaxMasters – promised that they’d be forgiven most of what they owed, and getting nothing (except a Tax Masters bill) in return. Looks like those poor folks (who obviously never heard about something sounding too good to be true) will be out of luck.
Guess I won’t be seeing any TaxMasters ads any time again soon. (Maybe that’s why the gleaming blonde lifestylists went off the air.)
Labels: bad business behavior