NH's Ayotte got $10K from Tex. biz said to deceive

By NORMA LOVE/None
Sept. 3, 2010 at 4:03 a.m.

CONCORD, N.H. (AP) - New Hampshire Republican U.S. Senate candidate Kelly Ayotte - a former attorney general - received more than $10,000 from executives of a Texas company charged with deceptive trade practices.

Texas Attorney General Greg Abbott charged Houston-based TaxMasters Inc., and its chief executive officer, Patrick Cox, in May with multiple violations of that state's deceptive practices and debt collection act. Cox, sales vice president Alex Clamon and salesman James Welch contributed a total of $10,600 last year to Ayotte's campaign, according to Federal Election Commission filings.

"If they're found to have violated the law, we'll return the contributions immediately," said Ayotte campaign spokesman Jeff Grappone.

The contributions were first reported Friday by the Concord Monitor.

A call to the company's media relations office was not immediately returned.

TaxMasters promises on its web site to intervene with the Internal Revenue Service on taxpayers' behalf to resolve tax problems. Texas charged the company with misleading customers about the terms of their contracts, failing to disclose a no-refunds policy and falsely claiming it would begin work on cases immediately when no work started until customers paid in full for the services. The state said the delayed response meant some taxpayers missed significant IRS deadlines.

Texas authorities also said the company attempted to enforce the improper agreements through unlawful debt collection tactics.

The state said it investigated nearly 1,000 customer complaints submitted to the attorney general's office and Better Business Bureau of Houston.

The Better Business Bureau serving Greater Houston and South Texas posted a warning on its web site May 13, the same day the charges were filed, for consumers who have fallen behind in their taxes to be careful before relying on a third party to help cut their bills. The organization said it had given TaxMasters an "F'' rating and said it has been the subject of 684 complaints over 36 months.

The Texas attorney general's office said TaxMasters' advertisements encourage taxpayers to call its toll-free number for a free consultation with a tax consultant. Prosecutors said the callers are instead connected to a sales person unqualified to give tax advice who recommends a solution that typically costs $1,500 to $9,000. Callers were not allowed to see written terms of the contract until after providing a credit card or bank account number, the state said.

Some customers reported finding out no work had started on their case when they received a notice from the IRS that a deadline had been missed or that additional fees and penalties had accrued, the state said. TaxMasters refused to refund money to customers unhappy with the services, the state said.

Texas is seeking restitution for customers harmed by the company's conduct and civil penalties of up to $20,000 for each violation of the state's Deceptive Trade Practices Act.

In response to the charges, the company issued a statement reported by the Houston Chronicle saying it and Cox were working with the attorney general's office to "negate any wrongful charges."

"While we do charge for the services that we are hired to perform, let me categorically state that TaxMasters is not a scam," Cox said in the statement. "We are not a fraud. We do not cheat people."

The Monitor reported that Cox and Clamon have donated large amounts to a number of Republican U.S. senators and Senate candidates besides Ayotte.


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