Former TaxMasters Manager Says Company 'Cheats' Customers


He said at first he had a good working relationship with Patrick Cox, the company's founder, CEO and highly visible on-air spokesman. Cox, a car enthusiast who used to drive a Bentley to work, even took Lee to see the racetrack he was building in Texas.

But Lee said that people working at TaxMasters told him that Cox was unconcerned with questions about the company's business practices. He said they told him, "Pat really doesn't care about what happens, you know. If he gets all of his money, millions of dollars upfront and something happens, he's got his." And Lee said he has no doubt Cox knew how his business was run, with sales representatives making promises that, in most cases, couldn't be kept.

Tapes of actual TaxMasters sales calls show the deceptive practices alleged by the Texas and Minnesota lawsuits, including one in which a salesman promises the IRS stops collection efforts once a customer hires TaxMasters.

"That's what the IRS, consultation does," says the salesman. "It pulls your name, it pulls your number out of the collection process."

Click Here To Listen To The TaxMasters Sales Call

Minnesota Attorney General Lori Swanson, whose office obtained the taped calls from TaxMasters, told ABC News that TaxMasters can't automatically stop collections from happening. "In fact, when you hire this company, sometimes the situation even gets worse. They may garnish you, they may put down liens."

In another call, the TaxMasters sales representative claims the company can easily get back taxes reduced to pennies on a dollar.

"You're owing $19,000," says the salesman. "I mean, we can get you down to basically, next to nothing, and our job, and our goal is to get you to zero. We're 97 percent successful.

Click Here To Listen To The TaxMasters Sales Call

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Attorney General Swanson calls that "another falsehood" and that the person making the claim is "a salesperson, who is trying to get you to pay thousands of dollars to the company, not somebody with tax expertise." The IRS will only forgive a tax debt if the taxpayer has no assets and no hope of earning money to repay a tax bill.

TaxMasters Denies Allegations

TaxMasters CEO Cox declined to be interviewed by ABC News, and in a written statement he did not address the specific allegations in the Texas and Minnesota lawsuits. TaxMasters has denied the allegations in the lawsuits and Cox said the company "prides itself on honest customer service, a transparent process with our customer, and seeking fair treatment from the IRS."

Lloyd Lee told ABC News he agreed with Attorney General Swanson's assessment of TaxMasters' business practices "wholeheartedly."

"I was there," said Lee. "After being there six months, I saw what was going on. But there was nothing you could do about it. If you tried to do something about it, you'd end up unemployed.

Ultimately, claims Lee, that's what happened. He says he was fired in 2010 after 16 months at the firm when he began to raise questions internally.

In his statement, Patrick Cox said Lee is a former employee who was let go because of his performance and that he has a financial motive to criticize TaxMasters because he now operates a rival tax business that he started with other former TaxMasters employees.

Click Here to Read Patrick Cox's Full Statement to ABC News.

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Lee disputes the company's version of his departure, and stands by his criticisms of TaxMasters. He adds, however, that TaxMasters may not be unique among tax resolution firms. "You know, TaxMasters isn't alone in this," said Lee. "Every big company that does this, they've got problems."

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