Reuters: Bankruptcy News: TaxMasters files for bankruptcy in Texas

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TaxMasters files for bankruptcy in Texas Mar 19th 2012, 18:14 Mon Mar 19, 2012 2:14pm EDT * Firm faces allegations it misled customers * Goes bankrupt as $25 mln equity deal delayed By Nick Brown March 19 (Reuters) - TaxMasters Inc, whose claims of solving taxpayers' IRS problems landed it in hot water with Texas regulators, declared bankruptcy in court papers on Sunday. TaxMasters, which listed as much as $10 million in liabilities, became a household name for commercials featuring its bearded CEO, Patrick Cox, promising consumers his firm could walk them through audits, settle tax disputes and recover property seized by the IRS. 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 had been slated to receive as much as $25 million in equity financing from a micro-cap financier, the company announced last month. But in a filing on Monday with the U.S. Securities and Exchange Commission, TaxMasters said the funding agreement had been "unexpectedly delayed" and that a closing date was now uncertain. TaxMasters lodged its Chapter 11 bankruptcy petition in U.S. Bankruptcy Court in Houston, Texas, listing assets of less than $50,000 and liabilities of between $1 million and $10 million. The company said its unsecured creditors can expect to see some recovery. The firm put four total units into bankruptcy, two of which it plans to liquidate under Chapter 7 of the federal bankruptcy code. An attorney for the company did not immediately respond to a request for comment. A TaxMasters representative could not immediately be reached. The cases are In re TMIRS Enterprises Ltd, In re TM GP Services LLC, In re Taxmasters Inc fka Crown Partners Inc, and In re Taxmasters Inc dba Texas Taxmasters, U.S. Bankruptcy Court, Southern District of Texas, Nos. 12-32062, 12-32063, 12-32064 and 12-32065. Link this Share this Digg this Email Reprints

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