A Texas jury voted to slap $195 million in civil penalties on Friday against the tax advisory firm TaxMasters and its CEO Patrick Cox, who were accused by the state of defrauding consumers.
TaxMasters, the Houston-based tax consultation firm whose ads had been a TV fixture in recent years, has been ordered along with its founder to pay $195 million on charges that it defrauded customers nationwide.
A jury in Texas' Travis County handed down the verdict in the civil trial Friday, finding that TaxMasters, its predecessor companies, and founder Patrick Cox had committed over 110,000 violations of the state's Deceptive Trade Practices Act.
Houston-based TaxMasters became a household name due to commercials featuring Cox, who promised consumers his firm could walk them through audits, settle tax disputes and recover property seized by the IRS.
The verdict includes $113 million in restitution to the firm’s customers, $81 million in civil penalties and $1 million in attorneys fees, Texas Attorney General Greg Abbott said in a statement today. The jury in Travis County found the Houston- based company and Cox liable for violating the state’s Deceptive Trade Practices Act after an eight-day trial, according to the statement.
It gained more dubious recognition in 2010, when Texas Attorney General Greg Abbott filed a lawsuit saying some of the company's claims were false.
According to Abbott, TaxMasters led consumers to believe it would begin working on a case immediately, when in truth it would delay work until a client's fees were fully paid - even if that meant missing IRS deadlines. The company also hid policy terms, according to Abbott, who reported receiving more than 1,000 customer complaints. TaxMasters also failed to consult with the Internal Revenue Service on behalf of customers and failed to appear at audits and hearings to postpone or stop garnishments and liens, according to the statement. Abbott’s office received 891 consumer complaints against TaxMasters from 2005 to 2012.
TaxMasters, the Houston-based tax consultation firm whose ads had been a TV fixture in recent years, has been ordered along with its founder to pay $195 million on charges that it defrauded customers nationwide.
A jury in Texas' Travis County handed down the verdict in the civil trial Friday, finding that TaxMasters, its predecessor companies, and founder Patrick Cox had committed over 110,000 violations of the state's Deceptive Trade Practices Act.
Houston-based TaxMasters became a household name due to commercials featuring Cox, who promised consumers his firm could walk them through audits, settle tax disputes and recover property seized by the IRS.
The verdict includes $113 million in restitution to the firm’s customers, $81 million in civil penalties and $1 million in attorneys fees, Texas Attorney General Greg Abbott said in a statement today. The jury in Travis County found the Houston- based company and Cox liable for violating the state’s Deceptive Trade Practices Act after an eight-day trial, according to the statement.
It gained more dubious recognition in 2010, when Texas Attorney General Greg Abbott filed a lawsuit saying some of the company's claims were false.
According to Abbott, TaxMasters led consumers to believe it would begin working on a case immediately, when in truth it would delay work until a client's fees were fully paid - even if that meant missing IRS deadlines. The company also hid policy terms, according to Abbott, who reported receiving more than 1,000 customer complaints. TaxMasters also failed to consult with the Internal Revenue Service on behalf of customers and failed to appear at audits and hearings to postpone or stop garnishments and liens, according to the statement. Abbott’s office received 891 consumer complaints against TaxMasters from 2005 to 2012.
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