TaxMasters files for Chapter 11 bankruptcy

[March 20, 2012]  HOUSTON (AP) -- TaxMasters Inc. has filed for bankruptcy protection following a legal challenge from Texas prosecutors who say the company's famed TV commercials mislead potential customers.

The Houston-based tax resolution company filed Chapter 11 reorganization documents in federal court on Sunday.

The filing says TaxMasters has assets of less than $50,000 and estimated liabilities of $1 million to $10 million.

Company founder and president Patrick Cox fronts the company's national advertising campaign.

KHOU-TV (http://bit.ly/zaIvyT) says Texas is suing TaxMasters for violating the Texas Deceptive Trade Practices Act. It says TaxMaster commercials encourage people to call for a free consultation with a tax specialist but the calls are answered by salespeople unqualified to provide tax advice.

A TaxMasters spokesman and attorney did not immediately respond to calls for comment Monday.

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Online:

http://www.txmstr.com/

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Information from: KHOU-TV, http://www.khou.com/

[Associated Press]

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