Wednesday, February 22, 2012


I have just spent the last three hours walking some Canadians through completing 2006 through 2008 tax returns for their American mother with Alzheimer's (hence the need to file tax returns from that far back).  As we worked our way through these forms and worksheets, the sheer insanity and Rube Goldbergesque nature of these forms became more and more apparent.

Even worse: they paid Tax Masters $5400 back in September to take care of this matter.  We have now discovered that they did...nothing.  Tax Masters told them do not contact IRS, "now that we are taking care of it."  When I talked to IRS collections this morning, I found out that Tax Masters had not contacted them at all.  Nor, as near as I can tell, have they done anything about this matter at all, except cash the check.  Nor has their experience been unusual.  The Texas Attorney-General's office is the next step on this.

UPDATE: And it turns out that Texas is already almost two years into legal action against Tax Masters:

Texas Attorney General files enforcement action against TaxMasters, Inc.; cites nearly 1,000 complaints about defendants’ conduct and business practices
HOUSTON – Texas Attorney General Greg Abbott today charged Houston-based TaxMasters, Inc., and its chief executive officer, Patrick Cox, with multiple violations of the Texas Deceptive Trade Practices Act and Texas Debt Collection Act. 


  1. A friend of mine works for H&R Block. A few months ago Tax Masters came up and she said that this is SOP for them. They collect their money up front and then do nothing to help the client for months, if ever.

    There seem to be several investigations of the company going on and hopefully there will be some prosecutions.

  2. I can heartily recommend TurboTax for general tax filing, if you want to DIY but don't want to actually fill out forms and have to read the tax code.

    (Did that once, moved on.)

  3. Was the American Mother living in Canada at the time? If so there's a nifty tax treaty that reduces/offsets American taxes owed compared to Canadian taxes she has paid.

  4. To me, I hold the creators of the tax system as much responsible for this, as Tax Masters. Granted, Tax Masters committed fraud, and I hope they suffer greatly for it...but the fact is, our tax system has become so complicated, that we need to get help just for filing taxes! And the tax system is so complicated, neither me, nor the tax accountant I hired, nor the IRS itself, knows whether or not I filed "correctly".

    This opens the door for all sorts of fraud, from tax filers to tax preparers to IRS agents themselves.

    Yet another reason to abolish income tax altogether! (Although the Fair Tax, in its attempt to be "revenue neutral"--as if anything that taxes us the amounts we currently pay could be called "fair"--will likely look just as bad a few decades from now.)

  5. Aaron: all the income was from the U.S., and she was not subject to Canadian income taxes.

    Epsilon: My experiences over the years with IRS have generally been quite positive, and this was no exception. I may even write a heretical article and see if PJMedia will take it: "My pleasant and professional encounter with IRS Collections."

    I use TurboTax, but I did not want to try and find the 2006-2008 versions somewhere in my desk and reinstall them. In retrospect, it would have been faster.

  6. I don't doubt that IRS agents themselves can be pleasant to work with. While trying to fill out our taxes, my wife had to call them to ask a few questions, and we got them answered as well as we could expect, given the complexity of the tax code. It's just that, our tax code has reached a certain complexity so that no one could be sure just what it says, exactly. And that's what scares me the most.

    Indeed, I once worked with a church clerk, who was a former IRS agent (retired), and I thought he was a pleasant person to work with!

    When I mentioned IRS agents committing fraud, I had in mind a specific story, of an IRS agent (there may have been two different agents, or two different stories about the same agent) who committed fraud by changing forms so that a person would get a "bigger" return, and then would pocket the difference. This is why I included IRS agents as potential sources of fraud, along with tax preparers and individual filers themselves.

    The more complex the tax code becomes, the easier it will be to get away with such fraud! (Good luck trying to simplify it, though...)

    In the meantime, I really hope that Tax Masters gets what's coming to them! As well as that IRS agent or two, and tax cheats in general.

    (My sympathy goes to the tax protesters, though, because they are either idiots who believe the law isn't what it is, or they are standing on their principles, even if I disagree with one or two of them. It's hard work, tilting at windmills, or even facing legitimate giants without the means and support to actually successfully challenge them!)