Minn. sues firm over claims of help with tax debts
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Minnesota Attorney General Lori Swanson is suing a Texas-based company that she says is taking advantage of people who are struggling with tax debt.
Swanson announced a consumer fraud and deceptive trade practices lawsuit Thursday against TaxMasters Inc. The company advertises heavily on television, offering to help people reduce their unpaid tax bills or stop IRS collection efforts. But clients who've paid the company up to $8,000 in advanced fees say they've received little or no help.
Swanson said TaxMasters makes promises it can't keep.
"Unless you are near death or completely unemployable and destitute, the IRS generally will not reduce your tax bills," Swanson said. "Generally they won't reduce them unless the amount you owe is far greater than everything you own today and everything you'll earn tomorrow."
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Swanson said that if you have enough money to hire a company like TaxMasters, the IRS is not going to make your taxes go away.
Swanson says she expects to see more businesses trying to take similar advantage of consumers' misfortunes until the economy rebounds.
A spokesman for TaxMasters didn't immediately respond to phone messages.
The lawsuit filed in Hennepin County District Court in Minneapolis alleges consumer fraud and deceptive trade practices. Swanson is seeking restitution for consumers and civil penalties.
(The Associated Press contributed to this report.)
