MSNBC Holding Empty Bag
TaxMasters, the Tommy Hilfiger Outlet heavily advertised “tax resolution” company that filed for bankruptcy last month, has left several big media companies, as well as its clients and law firms, holding an empty bag. In a court filing yes Tommy Hilfiger Outlet terday, TaxMasters listed TimeWarner’s CNN unit at its largest unsecured creditor, owed $2.6 million. Its second largest creditor is the Philadelphia based law firm of Blank Rome, owed $2.3 million.
TaxMasters’ unsecured creditors are unlikely to see much, if any, cash. In its new filing, TaxMasters listed just $1.7 million in assets. Moreover, according to the Texas Attorney General, last Friday a Travis County Texas jury returned a $195 million verdict against TaxMasters and Patrick Cox, its founder and CEO, for 110,383 violations of the Texas Deceptive Trade Violations Act. Some $113 million of that total is a refund of client fees, and another $81 million is civil penalties. TaxMasters’ clients typically owe the Internal Revenue Service large amounts of back taxes they can’t pay and may be facing IRS enforcement actions, such as liens and levies. The Texas AG charged in its lawsuit that TaxMasters misled potential customers, both in its advertising and in its customer contacts, about its policies for example, failing to disclose that it wouldn’t start work on a case until a customer paid in full for its services, even it meant missing important IRS deadlines.
According to TaxMasters’ restated first quarter 2011 financial report the last quarter it has reported to the SEC the company had Tommy Hilfiger Outlet $13.1 million in quarterly revenues, and spent $4.1 million on advertising during those three months. “The Company believes advertising is the engine that drives sales,” the report states. TaxMasters’ best known ads featured the red bearded Cox assuring potential clients that his staff of tax Tommy Hilfiger Outlet pros, including former IRS agents, had helped “many good people just like you.”
TaxMasters is the third heavily advertised tax fix it service to go into bankruptcy and out of business after being sued for deceptive practices. JK Harris Co., a South Carolina based firm which once operated hundreds of locations in dozens of states, filed for bankruptcy last October after being sued by both states and unhappy customers. Last December, it ceased operations In 2010, California Attorney General (now Governor) Jerry Brown sued “Tax Lady” Roni Deutch, who also had a big presence on TV, claiming she “engaged in a scheme to swindle taxpayers” by overstating the ability of her firm to gain concessions from the IRS. Deutch called the charges politically motivated. But last year, she filed for bankruptcy and surrendered her law license.
In addition to CNN, TaxMasters’ 20 largest listed creditors include News Corp.’s Fox News Channel (owed $938,414); Houston advertising firm Maxximedia (owed $1,326,676); American Express (owed $679,497); radio network Westwood One, now a part of Dial Global (owed $676,000); the History Channel (owed $653,820); MSNBC (owed $259,441); Yahoo (owed $196,475); Dial Global’s Weather Channel (owed $172,233); The Discovery Channel (owed $136,850) and Disney’s ESPN (owed $94,265).