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Associated Press, Published December 16 2010

Minnesota sues firm over claims of help with tax debts

ST. PAUL, Minn. (AP) — Minnesota Attorney General Lori Swanson is suing TaxMasters Inc., a company that runs frequent TV ads promising to help consumers struggling with tax debt.

The lawsuit filed Thursday alleges that the Houston-based company collected up-front fees of as much as $8,000 while falsely claiming it could reduce tax debt by as much as 90 percent and stop the IRS from garnishing wages or making other collection efforts.

Swanson says most people don't qualify for IRS programs to reduce tax debt but the IRS will work directly with consumers on payment plans.

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.

Copyright 2010 The Associated Press.