LIBERTY TAX SERVICE Franchise Complaints

UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiarliberty_logo with the Liberty Tax franchise, please share a comment below.

Entrepreneur magazine has ranked the Liberty Tax Service franchise #3 behind  McDonald’s & Subway.  However, some commenters who claimed to be former Liberty Tax franchisees left stern warnings on the Franchise-chat forum.

BostonTax wrote:

I’m a former Liberty Tax Franchisee

I hope you are ready for a little enlightenment! I held a successful Liberty Tax Franchise for 5 years until I decided to let the franchise agreement lapse. I did this for a few reasons:
1. The royalty fees were outrageous! 14% went to normal royalty while and ADDITIONAL 5% went for so called advertising royalties. The ad royalties were supposed to be put back into your local market to build the brand name. This was never done! All advertising in addition to the ad royalty I had to pay for because it did not fit into Liberty’s concept of advertising. I don’t know exactly what the concept was because our AD could not give an answer and the approved methods changed by the week.
2. Corporate was totally unresponsive to the needs of the franchisees. The AD system is designed to recruit anyone who can write a check for 100K. No other skills or ability required.
3. The minute you are behind in a royalty payment, they send you a notice to cure. After that, if you don’tpay, they try to terminate your franchise agreement.
4. Upon termination, Liberty enforces through legal proceeding a 2 year, 25 mile radis non compete clause that is in the franchise agreement. This is enforceable in the Eastern Division of the Federal District court, where, at least 2 Liberty friendly judges preside.
5. Liberty does not recognize chargebacks for bad debts as an adjustment for your royalty fees. All royalties are based on your gross, not your net collectable. This was an ongoing issue with them and the accounting department did not have the ability or the inclination to resolve!
My best advice is do not go with these guys, they are bad news. If you like to have people collect royalties and provide no support, then this is the franchise for you! It is very expensive to get into, the initial fee is around $32K just to buy the territory plus those pesky royalties. You can’t make money on this concept.

Most of the surviving franchisees I’ve talked to in the last 2 years have experienced great difficulty not only in making a profit, but in the corporate support or lack thereof.Remember, 19% of your gross is getting kicked back to Liberty, which is excessive by any standards. Please do yourself a favor and call former franchisees ,those that are currently getting sued (they are very likely to talk, as I found out), and current ones to try to get the straight poop.

Barbara Green wrote:

I too was a Liberty Tax Franchisee and I agree with everything you said.

The only reason for purchasing any franchise is because the business model is a proven marketing success as evidenced by the profitable franchisees. That is why you pay a license fee of $25,000. Being profitable is not in the cards for a Liberty Tax franchisee. Liberty Tax’s market/ business model is aimed at individuals who have very simple tax returns, i.e one W-2 and standard deduction which is why they were very successful in Norfolk, Va. That market is full of military people with one w-2.

Liberty will sell anyone a franchise at any location, in any georgraphic area, even if there is not a chance in hell of the franchisee being successful.

At one time, I too owned a Liberty Tax Franchise for one tax season. It was only one season because of the behavior of the Regional Manager who called me on January 15th demanding and screaming “Why had I not generated 200 tax returns and that maybe this business was not for me. I was stunned and confused since employers are given until January 31st. to give w-2’s to employees. Apparently, he thought that I was in Norfolk, Va. where that is possible.

It only goes downhill from there. The bottom line is I lost all of my investment in this businees (approx. $80,000) because I closed it rather than becoming a victim of this unethical company. NOthing would make me happier than to be a part of a class action lawsuit.

WHAT DO YOU THINK?  DO YOU OR HAVE YOU OWNED A LIBERTY TAX SERVICE FRANCHISE?  ARE LIBERTY TAX SERVICE FRANCHISEES HAPPY?  WHY OR WHY NOT?




5,100 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • August 11, 2016 at 7:25 pm
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    Mwangi – gullible is not the same as making money the whole retail industry not just retail tax is hurting bad Macy’s announced a 100 stores are closing today.

  • August 11, 2016 at 7:59 pm
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    TEA, the reason retail is hurting is that there is too much retail! Any metro area has malls and strip malls selling clothes and shoes and groceries and fast food. I live in a somewhat rural area where everything is 10 miles away. Yet drive 15 miles in any direction and I probably have a choice of 50 shoe stores. And 100 stores selling shoes and clothes. And 100 places to eat. They can’t all survive because I and my neighbors only have two feet each and can only eat so much.

    Same with retail tax prep. HRB used to be the only game in town until lucrative fast refunds came into being. JH and then Liberty opened stores within spitting distance of HRB locations to share in the wealth. Just like I only have two feet and only need so many shoes, people only file one tax return (hopefully) and don’t really need 15 nearby locations to choose from. Some of them have to go under simply because there are too many of them. Only the fittest will survive.

    For what it’s worth, I work in a CPA office and we don’t take many new clients. When I meet with one and see EITC, I refer them to HRB. Their preparers are way better trained than I am to deal with those complexities. I have never referred anyone to Liberty because their reputation is so bad. Prospective franchisees might want to read this paragraph again.

  • August 11, 2016 at 10:07 pm
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    SaraEA, I agree with you to much supply for the amount of demand in retail. Only the strong will survive my question is how bad will it get before they (LTS) start to fall is the million dollar question.

  • August 12, 2016 at 10:22 pm
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    SaraEA and TEA it’s starting to look like all need a strategy for the next couple years. But I think we forget that about 65% of paid tax prep with mom and pops. I bet it won’t change much. Just consolidation.
    It will be interesting if HR Block, JH, or Liberty get sold. Could happen. There is some speculation on Seeking Alpha about HRB. Maybe Liberty and JH will merge?
    HRB stock down about 30%. Liberty stock also down.

    I agree, too many stores, but only the strong will survive the next couple years. Sale of the companies will only make the shareholders richer. Does’nt help store owners.

  • August 14, 2016 at 4:35 pm
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    SaraEA, you can send the EITC my way as well. I provide more superior service to HRB anyday.

  • August 14, 2016 at 8:31 pm
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    Guest, here’s a strategy: Competent, well-trained employees who behave like professionals. Pay them enough that they will return year after year so clients can develop relationships with “their” tax pro. Year-round service is a must. Over the years we added many new clients during the off-season because the place where they had their return prepared was closed when the IRS letter arrived, they lost a job or got a big raise, etc. Oh yea, charge fees that are reasonable for the amount of work the return entails. A little more if there is risk of preparer penalties for things like EITC and Schedule C. (For example, we add $25 to the cost for EITC, not $250.)

    Strategy sound familiar? It should. This is the way most independent tax preparation businesses are run. It was HRB’s model before EITC and rapid refunds corrupted their founding approach. Liberty never had this model so I’m not sure it could adapt.

  • August 15, 2016 at 10:21 am
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    http://www.accountingtoday.com/news/tax-practice/tax-fraud-blotter-bipartisan-fraud-78947-1.html

    “Baltimore: Lateisha Kone has agreed to an injunction permanently barring her from preparing federal returns for others or from owning, operating or profiting from a tax prep firm, according to published reports.

    Though she agreed to the order’s entry, Kone didn’t admit to the claims against her, reports added.

    Authorities reportedly said that Kone and her employees at six Liberty Tax Service franchises filed returns that, among other things, had false business profit or loss information and intentionally omitted W­-2 and Social Security income. In all, 1,222 returns reported fictitious household help income, news outlets added.

    Kone then reportedly kept each refund as a preparation fee and gave each customer a $50 cash payment as part of a Liberty Tax promotion.”

  • August 17, 2016 at 6:43 pm
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    I looked up the article in accounting today just to make sure what I was reading was correct. Here the franchisee not only made up the returns, but kept the refunds. If Liberty turned them in it was because they were upset they were only getting 19% of the net fee.

    Everyone of us knows how well Liberty tracks their franchisees, they monitor their return counts, there net fees etc. But somehow they can plead ignorance when it comes to these rogue franchisees. Even when their collecting 19% of the net fees from these fraudulent returns.

    It just doesn’t make sense to me why the IRS hasn’t done anything. There might not be as much blatant abuse by Liberty compared to the Instant Tax Case but there certainly enough evidence that the company by it’s silence encourages a culture of tax abuse. Just look at the numerous documented case of Liberty Tax Franchisees found to be filing fraudulent tax returns.

    Buyer Beware!!!

  • August 17, 2016 at 7:11 pm
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    You seem to be wishing innocent, law abiding franchisees to pay for law breakers who know what they are doing. Ms. Kone is old news. Her case may come up again, but it’s old news. The company has probably had reviews, but thousands of people franchise. We are not all crooks and criminals.

  • August 17, 2016 at 7:39 pm
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    Guest by no means but I do question the ethics and morals of someone who would not take meaningful action to distance them selves from such a tainted name. Would you open a “Madoff Investments” location. “It takes many good deeds to build a good reputation, and only one bad one to lose it. – Benjamin Franklin” Im sorry guest but the LTS name is tainted for ever.

  • August 18, 2016 at 1:28 pm
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    Guest: nobody is wishing anything on the franchisees. The fact is because the company your with doesn’t care about you or the brand you are already paying for it.

    I don’t know how you can call it old news when it just was published. In the first
    4 months of this year 10% of Liberty offices were closed due to filing fraudulent returns. When you read the reports its interesting how similar the fraud was at all these offices. Liberty sells these franchises as not needing any tax experience so where did these franchisees learn how to submit fraudulent returns?

    Buyer Beware!!!

  • August 18, 2016 at 2:20 pm
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    Bill:

    As usual you are 1000% right on target…..in both posts from yesterday & today. It couldn’t be any clearer where these franchisees “learned” how to submit fraudulent returns.

    C’mon Guest: No one wants to harm law abiding franchisees. After all, that’s how we all began. But even you must realize that if you report fraudulent franchisees to the IRS after you taught them (verbally of course) how to do it, you get the territory back again and sell it all over again for more $$ and then you also get all the customers that the poor franchisee spent years cultivating. It’s a win-win for JTH and nothing for the franchisee. So what else is new? They have to find ways to earn $$ now that the RAL’s are gone……

    Bill: The IRS hasn’t done anything about it because it’s most likely a money machine. After seeing how the federal gov’t REALLY works these last several years, I no longer have such ignorant view points. Everyone gets a piece of the action, right down to the prosecutors, lawyers, judges, court reporters, etc.,etc.,etc.,etc.,etc.

  • August 18, 2016 at 8:58 pm
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    San Fran, I strongly disagree that the IRS allows fraud to happen because it means more money for them in fines etc. It costs a fortune to prosecute these people, money the IRS doesn’t have. IRS Criminal Investigation unit is decimated because of funding cuts, so cases are taking longer to prosecute. Also, they do not prosecute unless several layers of legal departments agree they should (including the US Justice Dept.) This is why CI wins over 90% of the cases it brings–they don’t file any they aren’t almost sure to win.

    The Kone case is not old news. It may seem to be because the arrest was made some time ago. The trial was only concluded recently (Americans are innocent until proven guilty, remember?).

    I agree with Bill. Liberty tracks everything. It has bragged about turning in its own franchisees and complained about why it took the IRS so long to take action. (Read what I just said. CI has to get permission to proceed from its own legal depts, which have to seek permission from other legal depts, which have to go up a few more levels, just so the case can be filed.) If Liberty was concerned about the integrity of its brand, it would itself shut these people down at the slightest hint of funny stuff going on. Instead they wait until the heat is on and then blame the IRS. The honest franchisees, who are the majority, are the ones who suffer because Liberty execs care more about collecting their fees than the brand they sold.

  • August 19, 2016 at 10:40 am
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    LTS is guilty even by omission. Their systems are set up to spot anomalies. With my little, teeny, tiny store, it would send emails about too many EIC filings in the first week of filing. So it does work.

    I agree with SaraEA, all the stars have to a line or they will not pull the trigger to take to court. They can’t afford to waste money and loose.

    Basically, if EIC was taken away and given to people in another vehicle, 1/2 of H & R Block’s offices would be closed and probably 70% of LTS would be closed and most of JH would close down. With LTS, 50% of the business is due to EIC. Some stores may have more percentage of EIC.

    As an Independent, I have about 10% with EIC and using a bank product to pay their tax return with their refund. The rest pay up front.

    Speaking of H & R, they are trying to recruit everyone with a PTIN in my area to join their team after they decimated the original team last season. So, H & R is really trying to take over the areas, because they will not survive as profitably with competition and the amount of money they need to charge to clients.

  • August 19, 2016 at 11:59 am
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    Franchisee,
    I’m a little confused
    You name is franchisee yet your post says your an independent.
    I’m curious….did you use to be a franchisee then became an independent? Also, if this is the case how did dropping the Liberty name drop you percentage of bank products? Also, if this is the case was you bank percentage the same prior to going independent?
    One more point….H&r block had nearly as many offices prior to RAL and RAC and massive eitc and survived and grew and thrived. There was no jh or Liberty prior to this. The bank products and eitc made jh and Liberty. They didn’t exist prior to this. They are the only reason that theses nationally branded companies exist. Block existed and thrived long before this. The vast majority of the franchisees would be forced to close if these went away as the average store in these chains do about 550 returns. Lose half of those and there isn’t enough left to pay the rent.
    The average block store does about 1200 returns (the real percentage is about 40% bank) and no loan product. Lose half and it’s about 650 returns. Add to that some slack form the closed liberty and jh stores say 750 total returns average.
    That’s a good bit more than the current store averages for Liberty and jh.

    Care to comment on this and explain why block will fail when evidence shows a track record of thriving without these products?

  • August 19, 2016 at 8:45 pm
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    Greg, I fully agree. Block used to be “America’s tax preparer,” well before EITC and rapid refunds. Greed took over when these practices started and they drifted away from their core clientele. With so much money to be made, JH and Liberty came on the scene and became the first competition HRB every had. With better management, Block can return to its roots. They still have the best training in the business. They just have to adjust their fees so most people can afford them. Without EITC and bank products, JH and Liberty have nothing to offer.

    When I worked at Block, with over 100 stores in the district only two did little business after first peak. I was in a working class neighborhood, but there were plenty of owner-occupied two-family rentals and small businesses to keep us busy between peaks. Liberty never went after this type of client. Now I work in a CPA firm that does upwards of 1500 returns, maybe half of them small businesses and entities. We do less than a dozen EITC returns and do not offer any bank products. If we closed our doors tomorrow, I suspect that some of our clients would consider Block but wouldn’t even think about going to Liberty.

    Franchizee, what do you mean that Block decimated its team and is trying to build a new one in your area? For that matter, who is filling the void in Baltimore after so many Liberty stores were closed?

  • August 19, 2016 at 10:35 pm
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    I’m enjoy reading the posts but you are thinking only about your area. A lot of what you’re saying is wrong. First, there’s nothing wrong with preparing EITC returns. I’ve had clients going through some low income years who were entitled to EITC. I had to talk them into taking their correct refund. By the way, we have more than 1700 clients across more than one store. About 30% use a bank product. It’s notable that the JH stores are very quiet in my area, but they are still open. So somebody is miscalculating. We did notice that HRBlock has a ‘tuition free’ tax school but you pay for books. Massive mailing for preparers and some HRBlocks having an open house to hire preparers. Sound familiar?
    Sometimes independents have fees so low the customers don’t expect a bank product. We have all types of returns. Its how the store is run that makes the difference.

  • August 21, 2016 at 3:45 pm
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    SaraEA:

    To just follow up on your post of Aug. 18th, It’s really the Dept. of Justice that needs to build their budget by making more successful prosecutions. The IRS is an easy vehicle for this purpose because the nature of the cases are not “deep pocket” corporate targets but small operators that don’t have the legal resources to fight them. I agree with you to the point that the IRS could be underfunded in this area, however because of the easy smaller targets, this is where they are concentrating their efforts and don’t give up until they find something, even if it takes years. (Fact) We have to agree that the Gov’t does NOT have to answer to any bottom line (or shareholders) and therefore can take their sweet time to investigate and prosecute. That’s partially why they’re running out of money.

    You also need to understand that the nature of criminal investigations for the IRS is to be as aggressive as possible as how they define Tax Law. The ‘normal’ person is not able to challenge them at this level………..and they know it.

    How many Criminal Investigations are currently underway against Corporations versus the small franchisee? My educated guess would be very few, if any at all. They all get the “little guy”. The DOJ has known about JTH and LTS for years and still are not doing much about it, except gathering more information. Why do you suppose that is? Hmmmmm

    BTW: Not only does Liberty track everything, but they load spyware into every piece of software. True fact. Any prospective franchisee needs to understand what a mess they are getting into and are better off walking, no running away.

  • August 21, 2016 at 8:08 pm
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    SanFran, I go to many IRS liaison meetings where CI presents, and a CI person presented more than once in my university graduate program. We know them as the guys who go after the big cheats and bad preparers, but much of their time is devoted to money laundering. When you read about the BIG cases (think Bernie Madoff, hedge fund tricks, insider trading, drug lords), look beyond the headlines and you’ll see that besides SEC, DOJ, Homeland Security, CI was involved in the prosecution. So actually they spend very little time on the “little guy.”

    Their leads about bad preparers come from the IRS Office of Professional Responsibility. These cases are given a lot of publicity, particularly during tax season because they want to scare the *** out of the preparers and taxpayers who knowingly use them. Yet this type of case is a small portion of the work they do. Note that the fraud in the MD Liberty offices in 2016 was picked up by the State of MD. Now it will go to CI, but they didn’t go looking for it. And you do know that big corps have an IRS agent in the complex, with his or her own office. Audits are ongoing, and funny stuff is usually picked up by the SEC because the auditor was given the “second” set of numbers. Not the bailiwick of CI.

  • August 25, 2016 at 6:10 pm
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    Regionally, some CI units are concentrated on bigger businesses because there are just more of them in that area. In a smaller region, the concentration is more wide-spread to include both large and very small businesses because they have the manpower to do so. Yes, I am well aware of IRS agents in big corps.

    ^^^what you’ve said above is true……..but I’ll leave my comments at this little paragraph & encourage others to focus on new topics, not on these issues.

    We’re here to talk about Tax preparing and LTS….let’s keep our focus on that and the bigger picture……….the eventual downfall of LTS and JTH.

  • August 26, 2016 at 2:33 pm
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    I just concluded the 3 days annual tax forum in washington and I noted that BOth H&R and LTS were not represented as exhibitors. I know these is where they get most of their prospective franchisees. Does aunybody have an idea why the two companies skipped the event.

  • August 26, 2016 at 2:35 pm
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    I just concluded the 3 days annual tax forum in washington and I noted that BOth H&R and LTS were not represented as exhibitors. I know these is where they get most of their prospective franchisees. Does aunybody have an idea why the two companies skipped these event.

  • August 26, 2016 at 3:53 pm
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    Only way to get a HRB is to buyout an established one or sellout your independent location to them there are not any populated places left that aren’t taken. Maybe LTS does have some shame to embarrassed to show?

  • August 30, 2016 at 8:09 pm
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    Testing. Just to see if this site is still accepting comments. What happened?

  • August 30, 2016 at 10:35 pm
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    SaraEA:

    We had to update some outdated software that ceased working.

    FYI now you can subscribe to comments by checking the box below when you post.

    Thanks,

    ADMIN

  • September 3, 2016 at 12:22 am
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    Drawing on credit so soon wow never realized LTS corporate didn’t cash flow its self worth a darn.

    http://seekingalpha.com/article/4003827-liberty-taxs-tax-ceo-john-hewitt-q1-2017-results-earnings-call-transcript?page=3

    “Now, let’s take a look at the balance sheet and cash flow. As expected, we began to draw on our revolver in June. We generally plan to draw on the revolver from June or July through January each year and then pay it back completely by the end of April as we receive funding from the IRS. We used more cash for operating this year, primarily as a result of higher cash tax payments and other year-end expenses along with prepayments, which will mostly be recovered during the season. The remainder of the increase was due to higher company store salaries and slightly lower franchise sales.”

  • September 5, 2016 at 12:16 pm
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    “slightly lower franchise sales” According to statement of operations Franchisee Fees for the 1st quarter 2016 is $240,000 compared to a year ago when they were $608,000. A decrease of 60.5%.
    Not sure how you call that slightly lower but then again were working with a known spin artist.

    Cash flow has always been an issue for this company but the principal owners’ are more concerned with pulling as much money out of this company as they can. That’s why they have continued to pay dividends which primarily benefits Steven Ibbotson and John Hewitt.

    Here is a company that’s in a very competitive business with a limited season but doesn’t believe in paying for advertising. But over the past 4 quarters has paid out 8,000,000 in dividends.

    This company is dead and it is only a matter of time before Hewitt is out and the bank is left with the ownership of the company. Just like the creditors ended up with Jackson Hewitt.

    Buyer Beware!!! El comprador tenga cuidado!!!

  • September 5, 2016 at 7:59 pm
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    Thanks for the link T.EA. Some very interesting contradictions in the Q&A session. After Donovan stated, “We’re having lots of conversations with regulators. We’re … expanding our [compliance] staff” the question was asked about how much of the compliance budget increase was due to added staff and how much to outside consultants. “That’s all outside consultants.” Which is it? If not permanent staff, it sounds as if compliance is going to be a one-time focus. Hope not.

    It was also noted that the company now owns double the number of stores it owned last year. John stated that while Liberty has in the past focused on franchising, JH & HRB own most of their stores and rake in “hundreds of millions of dollars.” (Said that number a few times.) As more franchisees are leaving through “accretion,” “now it’s an opportunity to bring more of those profits to the company.” He said that “due to the events of this tax season” (we all know what those events were), Liberty was able to acquire franchisees dirt cheap and now can presumably gets its hands on all those profits.

    Before you all breathe a sign of relief that Liberty is looking to let you off the hook, Donovan countered that the company stores “are immediately available if we can find strong buyers….” Sounds like one executive isn’t talking to the other. Now may not be the time to buy into this franchise until there’s a clear, consistent message about the company’s direction. Probably not a good time to buy the stock either.

  • September 5, 2016 at 10:32 pm
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    If you don’t want a liberty store there are plenty of jackson Hewitt stores for sale. It’s a good time to buy if you get a reasonable price. But the better client base is probably a mom and pop since it will likely have both early and late season returns.

  • September 6, 2016 at 8:18 pm
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    Don’t forget that Mom & Pops have all year returns too. There are the folks on extension (some entities on Sept 15 deadlines, others and individuals due Oct 15). Estates with their own fiscal years, due whenever. Assessors reports are due at the end of Oct around here. Come early January there are W2s and 1099-MISCs to prepare. Clients call all the time, either wanting to adjust estimated payments or withholding, someone died and they need to understand the tax implications, bought or sold something with a gain/loss, found some old Series EE bonds they need to cash, need copies of this or that. I try to work 3-4 days a week during the summer, but it doesn’t always work out that way. In our office, October is just like April 15.

    JH used to be like HRB–good reputation and could serve taxpayers with complex situations. Apparently they too got caught up in the rapid refund/EITC profit-makers and eventually went under. Looks like they are trying to return to their roots, just like HRB is, and prepare returns for all taxpayers. (Both need to assure well-trained preparers and reasonable prices before regular clients return.) Liberty never had that model; came on the scene to serve the lower-income people who get big credits and refunds and want their money fast. They never realized that these people have complex filings (ever try to figure out who qualifies for Head of Household?) that require knowledgeable preparers. Some franchisees bought in because they know tax and can serve any type of client well, but it appears that Liberty was a mismatch for them.

    Today the IRS announced the new appointees for the Electronic Tax Administration Advisory Committee. There are reps from private firms, software companies, and both HRB and JH. Unless I missed it, no one from Liberty was accepted to the committee. Why is that?

  • September 8, 2016 at 6:32 am
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    The outside consultants are John Hewitts hand picked top franchisees Ads or both. These auditors are not independent, they are current franchisees buried in Liberty tax debt that have to work in the off season to pay off their debts to John Hewitt. They open up the book of business and review compliance for franchisees so it’s perceived that Liberty Tax is complying and trying to fix things. That’s a complete waste of time,and money. These top Zees are hand picked inside auditors of John Hewitt are the ones most likely to be committing fraud. Now they are doing the all the audits? That is ridiculous. Why would anyone feel safe with another franchisee coming in and auditing your operation when all the top Zees that John Hewitt flaunts and promotes on promo videos, trainings and convention go down every year for fraud. These John Hewitt appointed auditors can’t be trusted. In fact they should be feared.

  • September 8, 2016 at 11:01 am
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    Concerned Zee: Thanks for the scoop about the so called outside consultants who are actually current franchisees “buried in Liberty Tax debt”. I remember going to the dog and pony show before I signed up with Liberty. They took us to this beautiful tax office on Hampton Road. The franchisee was a women and she was telling us how great she was doing. Two years later she’s a presenter at one of the trainings. She lost the store but Liberty keep her as an employee.

    I know Liberty cuts off loans to franchisees in the beginning of January. Last year there were some posts that said this was a hardship for franchises because of refund delays. With the new IRS anti fraud effort this should mean even tighter cash flow issues for franchisees.

    The fact that Liberty now owns double the amount of stores it owned last year just speaks to how many franchisees fail in this system.

    Buyer Beware!!!

  • September 8, 2016 at 1:29 pm
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    The use of inside consultants that are AD’s is not a new concept to Hewitt. When I had my franchise, Liberty sent an AD to “Audit ” my procedures. This was presented to me as punishment for my open criticism on ZeeNet of the tax software and the complete and utter lack of support from the corporate office. I was even banned from posting. The AD who came to visit said that she was “here as punishment” and that I would get an adverse report. This was even before she even began to look at my files for 2 days. It was fairly evident that she had no clue as to what she was doing since the only files she ever looked at were the e file permission forms. The IRS also looked at them as well and were quite pleased as to how they were organized and tracked. Liberty was not pleased and reported this to my AD who started to harass me. I would say that these self auditors have absolutely no credibility or integrity. Some things just never change.

    As for the issues of increased company stores and reduced franchise revenue, this was overdue. The market seems to be getting wise to the Liberty fraudsters and this will always affect the bottom line. I’m still amazed that the stock is trading even this high in light of the future prospects of this company. When Liberty goes bankrupt, we’ll see who got out in time and who didn’t. I can guess….

  • September 9, 2016 at 9:19 am
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    I think this is going to be the tax season that Liberty takes the big hit.
    If block has a tax loan product they will pull significantly from Liberty.
    Add that to the terrible year last year….delayed funding due to irs delays for eitc and child tax credit (Liberty core business)
    It is a perfect storm for Liberty
    I think ts18 will see far fewer Liberty stores than ts17
    Then probably bankruptcy.
    That should be the end

  • September 9, 2016 at 4:23 pm
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    ^^That would be wonderful, Greg, but JTH seems to continue to evade the lawmakers of this country and if the DOJ won’t move in to grab him, what’s the point? He should have been in jail long ago. :(

    He keeps re-inventing himself with new ways to rip off the public. Can you say Siempre Tax?

  • September 9, 2016 at 7:46 pm
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    Greg, the delayed refunds for EITC and additional child tax credit don’t kick in until the 2017 filing season, when no refunds claiming either will be issued until at least Feb 15. Delays for the 2016 filing season were most likely due to added filters to catch fraud. Both practices will be in force this season.

    Not sure if HRB will have a loan product, but for all the chains many early filers choose to have their tax prep fees withheld from their refunds, which won’t come until after Feb 15. HRB will still be able to pay the rent and meet payroll until this money flows, but I fear for the Liberty franchisees. Even if corporate decides to extends loans until Feb, that’s a heck of a lot of interest to pay.

  • September 9, 2016 at 8:44 pm
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    Big lawsuit will be filed in a few days in Maryland against Corporate for how they handled Vanessa Dickens and how they resold the offices to other franchisees who later got suspended because she was still being investigated by the Comptroller of Maryland. The brand is destroyed in Maryland. John Hewitt was too scared to face franchisees last Tuesday at a Mega Training. Pathetic!

  • September 11, 2016 at 9:56 am
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    I would love to see that. However, you will see counter suits since the Zee agreement states all suits have to be in Southeastern VA.

  • September 11, 2016 at 12:31 pm
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    Stores won’t close due to late funding if can pay bills till end of year. There’s more than one way to get operating money for January and February, but it can be expensive – 8 to 20 percent interest. 45 days can be funded on zero percent credit cards. Many ways.
    Real issue now is how many refunds will the IRS hold up, since W-2 and 1099 will be in their system before February 15th.
    If I was in Maryland and believed there could be more problems I would have a backup plan. Not in Maryland but I do have a backup plan. Good business sense at this point. I think of it as having health insurance. Dont want to be without it.

  • September 11, 2016 at 7:21 pm
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    What kind of back up plans are you talking about? If Comptroller of MD is suspending offices for just being Liberty Tax, do you think you could open as an independent and have a case why you did that and breached your contract since the Franchisor sure breached theirs?

  • September 11, 2016 at 7:47 pm
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    What about a line of credit from your bank? The interest should be less than the 8 to 20%.

  • September 12, 2016 at 3:26 pm
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    I’m still is a state of confusion. Tha last time I attended the Liberty discovery day, we were addressed by Mr. Babalulu. He advised us to buy Liberty franchise if we want to make it in tax business. It’s hard to beleive he lost his tax offices.
    It’s not clear how there will be law suits in maryland aginst corporate.
    Looks like we are coming to the end of franchising in tax business. Anybody knows much about 1040taxbiz or American tax office? Their say their franchise fee is less than 2k .

  • September 15, 2016 at 11:58 am
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    Mwangi: the fact that you have to ask if anyone knows about 1040taxbiz or American Tax office should tell you something about these franchises. You have more name brand recognition than they do. You have friends, your known in your community etc. They can’t say that.

    For me I thought franchising would somehow secure my success. But that was far from the truth, it actually was the biggest reason I failed. Operating cash flow is so important in the early years and franchises just sucks the cash out of you, provide very little marketing or technical support and control how you operate. Do yourself a favor and believe in yourself. If you have the education and training to do the job, develop a business plan, buy some good tax software, and market yourself. This way you control all the factors that will determine your success or failure.

    Good Luck!

  • September 15, 2016 at 8:24 pm
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    Don’t we all miss John Barilla? Wonder where he is with all his millions $$$$!! $ hahaha!!!

  • September 16, 2016 at 10:49 am
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    Barf villa may be gone, Mike, but the company is still standing…….for now anyway. This forum has absolutely put a dent in their bottom line. Thank you again ADMIN. Thank you for having the foresight to start this website, not only for your benefit, but for all the unsuspecting people all around the country that pay an awful lot of money to get involved with this so-called franchise and other franchises not knowing or really understanding how ripped off they become. And how terribly difficult it is to untangle yourself from their firm grip, even years after signing on to ONE 5 year contract.

    Next year is that 20 year benchmark for this company. Rather than celebrate their milestone, let’s keep the public informed of how ridiculous this company really is, beginning with the CEO, and their legal dept., their AD’s (the worst) and their territories (marked in the air). The best situation is for LTS to fold up and close it’s doors at this 20 year mark. Nothing would make me happier than to see that CEO put away for fraud and the company ceasing to exist.

    For this man and this company, nothing less than that should be acceptable. Prospective franchisees: there is a reason why this particular company has far more posts on this website than any other franchise. They stink. That’s putting it mildly. Do your due diligence and then back away. You will absolutely have dodged a huge bullet. Yes, and your welcome! :)

  • September 17, 2016 at 1:30 pm
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    Bill: Thank you for your advice. I will not go the franchising way. I will open my own store and I believe I will make it. I have noted a number of LTS store have shut down in my area and I believe I can fill the void. Thank you ADMINISTRATOR for providing this website where tax prepares can share ideas.

  • September 17, 2016 at 7:58 pm
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    Mwangi, before you leap think about what type of clients you want to serve. Liberty specializes in low-income EITC clients, who are very high risk from a preparer point of view. Let me be clear that these returns are complex and these taxpayers really do need help preparing them. The problem is that because there is so much “free” money on the line, there is a huge amount of fraud. The IRS now requires a great deal of due diligence for EITC returns, and preparers have to keep proof of eligibility. Fines for failure to follow the rules are steep. Where I work we do very few EITC returns but don’t worry much because we know our clients well. When new clients come in with EITC, we refer them to HR Block, where the preparers are much better trained in what questions to ask and what records they need. If you decide this is an area you want to specialize in and serve these people well, and you think you can pick up clients from closed Libertys, get the education you need and go for it. You should do well.

  • September 21, 2016 at 11:41 am
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    Saw a recent post under the Liberty tax forum “Are Liberty Tax Franchisees Living the Dream”. The post was from a former franchisee who talks about his success. So I sent a response asking why he isn’t posting on this site. Not to be cynical but he’s probably a Liberty Plant and hoping to keep that
    forum at the top of the list to keep attention from this forum. After all it’s franchise selling season for Liberty and they will do anything to keep people from reviewing this forum.

  • September 25, 2016 at 1:05 pm
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    Can’t wait until the next tax season, does anyone think there will be more offices shut down? John we screwem must be shiating himself:) 6000

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