TaxMasters, Inc. Lawsuit Follow-up: How You Can Avoid Being Scammed

[Watch this hilarious TaxMasters Spoof]

TaxMasters, inc. along with the infamous Roni Deutch franchise- faced legal trouble around this time last year. The Texas Attorney General charged the company with unlawful business practices. As I looked back on the facts, I realized this lawsuit highlights some key signs you must avoid when looking for professional help.

Avoid High Pressure Tactics

"Before they could even get the contract to find out what the details were, they were charged money..."

- Texas Attorney General Greg Abbott

TaxMasters apparently employed high pressure tactics with their clients. Don't let anyone pressure you into paying them for help right then and there. You have a right to read contracts, take part in consultations, and ask questions before you pay one red cent.

Avoid "Pennies on the Dollar" Claims

TaxMasters' aggressive ad campaign consistently promised callers they could have their tax debt settled for low amounts. The fact I'll say again and again is that the IRS is not in the business of settling tax debt.

A "Tax Debt Settlement" (Offer in Compromise) is only for extreme cases, very few people will qualify. Avoid companies or individuals that claim you will qualify off the bat without looking into your tax situation.

Not All Tax Help is Bad

Companies like TaxMasters, Inc are giving the rest a bad name. Not all tax representation companies and individuals (like CPAs, IRS licensed enrolled agents, and attorneys) are bad people.

They are not all out to rip you off. If you need help, definitely seek it. Just make sure you do a little research on the company (check their BBB Rating, for example) to make sure you've picked the right one.