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?




5,246 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • February 4, 2017 at 8:40 am
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    Just in case any potential franchisees or investors have not seen this just wanted to remind them of last tax season and how John Hewitt has remained quiet for over a year hoping this will just blow off.

    FEB 19, 2016 @ 02:39 PM 15,824 VIEWS The Little Black Book of Billionaire Secrets
    Fraud Allegations At Liberty Tax Franchises Raise Questions

    Kelly Phillips Erb , FORBES STAFF
    I cover tax: paying tax is painful but reading about it shouldn’t be.

    Wearing a Statue of Liberty costume, Bud Norman, greets and waves to customers entering a Liberty Tax Service center in Springfield, Ill., Tuesday, April. 15, 2008. (AP Photo/Seth Perlman)

    Earlier this month, the Department of Justice asked a federal court to shut down a South Carolina Liberty Tax TAX +0.75% Service franchise owner for his role in preparing false income tax returns. The owner, Christopher Paul Haynes of Irmo, South Carolina, is accused of deliberately falsifying information on returns in order to receive inflated tax refunds from the Internal Revenue Service (IRS).

    That, in itself, is quite unremarkable. Sadly, tax return preparer fraud is all too common, making the IRS’ “Dirty Dozen” list of schemes and scams yet again in 2016.

    And if that were the only Liberty Tax story involving alleged tax return preparer fraud for 2016, that would be the end of it.

    But just a few days earlier, Maryland Comptroller Peter Franchot announced that he had suspended processing electronic and paper tax returns from 16 Liberty Tax Service franchise locations in the state, citing “a high volume of questionable returns received.” The 16 offices were in addition to seven other Liberty Tax Service franchise locations which had been flagged earlier for the same reasons, bringing the total number of Liberty Tax Service franchise locations under scrutiny to 23. Tax returns which attracted the attention of tax authorities in Maryland included those where business income was reported when taxpayers did not own a business; refund amounts were much higher in previous years; business expenses were inflated and/or undocumented business expenses; dependents were erroneously claimed; and wages were inflated.

    (These willful errors reflect many of the IRS’ Dirty Dozen schemes. For more on those, click here.)

    At first, the story didn’t attract much attention. Unfortunately, tax return preparer fraud happens during tax season and reports have become so commonplace, they’re not even shoulder shrug-worthy in some circles

    But with active investigations involving Liberty Tax franchises in two states, not everyone is sure that this was your run of the mill tax return preparer fraud. Was there something more to this story? Some taxpayers say yes, citing multiple instances of alleged fraud at Liberty Tax Fraud franchises including complaints raised in Illinois and Michigan in late 2015 – in addition to the South Carolina and Maryland reports this year.

    Not surprisingly, Liberty Tax says no. Jim Wheaton, General Counsel, Chief Compliance Officer and Vice President, Legal and Governmental Affairs for Liberty Tax says that the investigations are focused on a “minuscule” percentage of Liberty Tax preparers. In contrast, the company has approximately 4,000 locations in the U.S. and Canada with more than 35,000 tax preparers.

    Today, Liberty Tax is the third largest tax preparation franchise in the United States. As a franchise company, most of those 4,000 offices are owned and operated by individual owners: it’s about 95% franchised. That means, explains Wheaton, that while Liberty Tax establishes training standards and expectations for its franchises, there is a limit to what the company can do when a preparer goes rogue. However, Wheaton stresses, the majority of franchise owners are honest and professional and they are expected to comply with federal and state tax requirements.

    When the company is made aware of potential problems at a franchise, the company does step in with supplemental training and oversight. They engage in a variety of strategies to ensure quality, including mystery shops and ongoing compliance reviews. The company also continuously studies trends and metrics, looking for signs that a franchise might need additional support.

    When a preparer doesn’t comply with attempts to bring them up to the company’s standards, they can be disciplined, including being blacklisted by PTIN or reported to IRS. They can also be terminated as franchise owners (which is the case with former Michigan tax preparer Craig Comer).

    Is that enough? The company thinks so.

    Others aren’t so sure. It’s been alleged that the company knew about the investigations before Maryland Comptroller Peter Franchot moved to suspend processing of returns from certain franchises; Wheaton says the company was not contacted by the state of Maryland prior to the shutdown.

    Liberty has fully cooperated with all authorities when made aware of accusations against the various franchise owners, according to Wheaton (you can read their official response regarding those Maryland franchises here). He also noted that while allegations involve multiple franchises, many of those franchises were controlled by the same owner; in Maryland, for example, three of the franchise offices in question were owned by the same owner.

    As for those tax return preparer fraud allegations in Maryland? They haven’t been restricted to Liberty Tax claims Wheaton. In fact, for 2016, the state of Maryland flagged more tax returns for potential fraud in the first three weeks than all of 2007. And those 23 Liberty tax franchises which were placed on suspension? Comptroller Franchot suspended an additional 15 offices not associated with Liberty over allegations of potential fraud.

    And what about those outside of Maryland? Wheaton reminded me that the company is quite large. There might be bad eggs in some offices but, he says, they are not reflective of the majority of franchise owners of the company, nor of the company’s culture. There is, he says, “not a systemic problem.”

  • February 4, 2017 at 11:27 am
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    The method of doing business by Liberty is to clearly prey upon those poorer people who are not able to discern what is a reputable tax preparing firm and one that gives them immediate gratification such as cash in a flash. It has been painfully obvious that Liberty and Hewitt, at the helm, are out there to scam as many franchisees and taxpayers as possible. This is a true House of Cards. The under served segment of the tax preparation market has been continuously victimized by operators such as Liberty with unsuspecting franchisees bearing the damage from the front lines for the very policies that the Liberty system encourages and requires. Liberty corporate can sit back and have deniability as to the actions of their franchisees while simultaneously creating a system that forces even the most honest operator to make shortcuts in order to pay the enormous royalty fees that Liberty requires. Remember, this cannot be a money making venture. Just look at the number of postings here. There is a pattern of fraud. The Department of Justice should realize by now that a fish stinks from the head down.

    Its time to close down Liberty Tax and bring their fraudulent leaders to justice!

  • February 6, 2017 at 9:55 pm
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    Te former owner of six tax preparation franchises in Baltimore and her staff paid homeless and other vulnerable people to use their services, then submitted false returns to claim refunds they could pocket as fees, according to criminal charges announced Friday by the state.

    The owner and her eight employees were charged with preparing false tax returns and conspiring to steal from the state of Maryland. They were affiliates of Liberty Tax Inc. — a Virginia-based company with thousands of offices nationwide that is known for placing people dressed in Statue of Liberty costumes out in the street to market the firm.

    The nine tax preparers filed almost 1,100 fraudulent returns between Jan. 1, 2015, and Feb. 21, 2015, claiming refunds worth $134,500 from the state and $538,000 from the federal government, Maryland Attorney General Brian E, Frosh and Comptroller Peter Franchot said Friday.
    Just in case anyone missed what happened in Maryland to destroy the Liberty Tax brand, basically, John Hewitt let this happen and pissed off the Comptroller Of Maryland. He took the the offices from this lady and resold them to other franchisees and then got 30 offices suspended by the Comptroller.

    The link is http://www.baltimoresun.com/business/bs-bz-tax-fraud-20160318-story.html

    The charges come as state officials have raised increasing alarms about tax fraud, especially by preparers. In the last few months, the comptroller’s office has stopped accepting returns from about 60 private tax firms at multiple locations, including 23 Liberty Tax franchises.

    “We know this kind of fraud is a major problem,” Frosh said at a news conference in Baltimore announcing the criminal case. “We hope we’re sending a message today that we will not tolerate this kind of behavior.”

    With tax fraud on the rise, experts warn consumers to be wary
    With tax fraud on the rise, experts warn consumers to be wary
    Franchises are independently owned and operated. State officials said Liberty Tax Inc., which has affiliates facing charges in several other states, including Michigan and South Carolina, cooperated with the investigation.

    “We’re looking at every one of these examples as an opportunity to identify additional areas where we can improve our compliance program,” said Jim Wheaton, the firm’s general counsel and chief compliance officer.

    Liberty Tax CEO John Hewitt told investors earlier this month that “fraud concerns” would reduce the firm’s profits, but stressed that the cases stem from a small number of the firm’s more than 4,000 offices and said the company is committed to compliance.

    “It unfortunately is inevitable that some franchisees or preparers or their customers will engage in behaviors that Liberty doesn’t condone and will not tolerate,” he said, according to a transcript of the earnings call.

    The indictments announced Friday in Baltimore allege that Liberty Tax franchisee Lateisha Vanessa Kone, 35, also known as Vanessa Dickens, and eight of her employees recruited clients from homeless shelters and drug rehabilitation centers, promising $50 to customers who used the Liberty Tax services. The preparers allegedly sought to collect more than $400 in fees for each return — more than two-thirds of the typical refund.

    The eight employees also charged are Marquea Braxton, 35, Tiona Davis, 33, Miyarta Gray, 29, Whitney Hall, 30, Melinda Ireland, 36, Azucar Johnson, 24, Sharron Lawson, 35, and Krystal Perez, 28.

    On the tax documents, the preparers described their clients as household employees — a category that includes baby sitters and house cleaners — but said they did not make enough to force their employers to withhold Social Security or Medicare taxes, the indictments said.

    The preparers submitted the information knowing it was false, Frosh said.

    The alleged scheme was focused on gaining the maximum credit allowed under the Earned Income Tax Credit program, which provides rebates so that low-income people are encouraged to work.

    “This owner and her associates targeted the most vulnerable — the homeless, disabled, drug addicts, and poor people already struggling for stability,” Franchot said in a statement. “They lured victims by paying them $50, then submitted false tax returns to make a profit without regard to the consequence to their clients.”

    Liberty Tax canceled its contract with Kone in February 2015, cutting ties with a franchisee who had received company recognition for the number of returns processed at her locations, after it noticed anomalies internally, Wheaton said. It also alerted the IRS in June to possible problems with returns prepared at Kone’s franchises after reviewing the files and contacting clients, he added.

    Kone, who registered her Tax Angel Inc. business with Maryland in 2012, declined to comment. Efforts to reach others named in the indictments were unsuccessful, and they did not have attorneys listed in court filings.

    If convicted, the preparers face imprisonment and fines. The tax charges carry potential penalties of up to five years in prison and up to a $10,000 fine. The theft charges carry potential penalties of up to 25 years’ incarceration and up to a $100,000 fine, plus restitution.

    Officials declined to say how much the state ended up paying in refunds for the allegedly fraudulent returns prepared by Kone and others last year. Frosh also declined to discuss any possible actions against the filers, but Franchot said he did not believe they were to blame.

    “Everyone’s responsible for their tax return … but … where destitute people are being taken advantage of by a con job, we cut them some slack,” he said.

    Franchot said this case is “just the tip of the iceberg.” His office identified nearly 20,000 fraudulent returns last year, thanks in part to technology that can rapidly sort through electronic filings flagging suspicious patterns, such as significant changes in refund requests from the previous year or inflated or undocumented business expenses.

    This year’s suspensions include some of the same offices once owned by Kone but now owned by a different Liberty Tax franchisee.

    Franchot has asked the state legislature to expand the powers of the comptroller’s office to investigate income tax preparers and he said he hopes to see additional criminal cases.

    “There are going to be hopefully lots more of these down the road,” he said.

  • February 7, 2017 at 10:51 am
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    I hope that the feds are looking at other Liberty tax offices this tax season. I highly doubt that these few franchisees are alone in the fraud, I know one franchisee now an area developer talked frequently of helping the homeless, I wonder if he meant he was providing shelter and food????:)

  • February 7, 2017 at 10:55 am
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    I hope that the feds are looking at other Liberty tax offices this tax season. I highly doubt that these few franchisees are alone in the fraud, I know one franchisee now an area developer talked frequently of helping the homeless, I wonder if he meant he was providing shelter and food????:) Does anyone have any clue as to any current investigation(s) being conducted currently? Also, if anyone has any information on how Liberty is doing this year, anecdotally, up down or flat for the year would be greatly enjoyed, especially if they are down double digits….:)

  • February 7, 2017 at 1:39 pm
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    Rumor is IRS is way down and all branded tax brands are loosing noticable market share expect TT and HRB according to source. Very reliable source but still very early in the year with the PATH Act.

  • February 7, 2017 at 5:05 pm
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    IRS was DOWN 37.5% TAX PROFESSIONALS, cumulative comparing 1/29/2016 and 1/27/2017!!! THIS IS GREAT NEWS!!

  • February 7, 2017 at 9:16 pm
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    Realize that efile didn’t start until Jan 23 this year, so the numbers show only 3-4 days of filings. It was a few days earlier last year, so the 2016 numbers likely cover an entire week. The news that certain refunds will be delayed this year probably contributed to the shortage too. In our private CPA firm, we have more clients this early in Feb than usual–perhaps because more payers had to get tax forms to the recipients by the end of Jan this year. In Jan, both this year and last, we filed maybe a dozen returns. Feb is busy, and March and April are crazy. (I won’t even talk about the 150 or so who go on extension until Oct.)

    Another thought: The identity thieves who file fake returns always file really early, in order to get their return in before the real taxpayer files. There are many new security measures and filters this year, so just maybe the crooks who padded prior years’ numbers by filing a zillion returns in the first few days aren’t having the same kind of luck this year.

    What this means for the chains that rely on early season filers is the big question. So, to repeat Mike’s question, does anyone know how they are doing?

  • February 8, 2017 at 1:05 am
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    SaraEA:

    General public does not know when the IRS opens and that is more than enough time for all returns to process that where inline. Path Act will be primary cause.

  • February 8, 2017 at 11:39 am
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    Department of Justice
    Office of Public Affairs
    FOR IMMEDIATE RELEASE
    Wednesday, April 22, 2015

    Justice Department Asks Federal Court to Permanently Shut Down Liberty Tax Service Franchise Owner

    The United States filed a complaint asking a federal court in Detroit to bar a Liberty Tax Service franchise owner and his companies based in Illinois and Michigan from preparing federal tax returns for others, the Justice Department announced today.

    The civil complaint against Syed N. Ahmed and his businesses, Nasah Inc., Millinium [sic] Financial Solutions Inc., Mars Inc.-Hamtramck, and Mahad Inc., was filed in the U.S. District Court for the Eastern District of Michigan. The complaint alleges that Ahmed operates at least 10 Liberty Tax Service franchise locations.

    According to the suit, the defendants improperly obtain inflated tax refunds and refundable credits for customers by preparing tax returns that include, among other things, false or inflated Schedule C (Profit or Loss From Business) income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions.

    For example, the complaint alleges that one of defendants’ tax return preparers fabricated a driving business without the customer’s knowledge and reported thousands of dollars of expenses for that business that the customer did not incur. The false expenses enabled the customer to receive an earned income tax credit that she was not otherwise entitled to receive, according to the suit.

    The lawsuit states that the defendants prepared more than 17,000 federal income tax returns between 2010 and 2013. Based on audit adjustments the Internal Revenue Service (IRS) has made to tax returns prepared and filed by the defendants between 2010 and 2013, the defendants’ conduct has cost the U.S. Treasury approximately $2.8 million, according to the suit.

    Return preparer fraud is one of the IRS’s Dirty Dozen Tax Scams for 2015. The IRS has some tips on its website for choosing a tax preparer, and has launched a free directory of federal tax preparers. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers and tax scheme promoters. Information about these cases is available on the Justice Department’s website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on here. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with detailsEmail links icon.

  • February 9, 2017 at 5:01 pm
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    IRS Taxpro down 29.2% through February 3rd, hmmm,wonder how far down Liberty is/was during this same period?

  • February 9, 2017 at 9:22 pm
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    So how can one get DOJ to look at offices in Chicago. I am surrounded by them

  • February 10, 2017 at 12:36 pm
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    Is this a corporate store or a franchise run location? I think this is one corp owns which would be hilarious. But they will blame tax preparers and manager and not get sued like a franchisee would.

  • February 10, 2017 at 12:42 pm
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    Let’s be honest many low income filers go to tax preparers because they believe the preparers will get them more money and if and when there are problems like fraud accusations, they have someone to blame when things go bad. The future of retail income tax as we know it, targeting low income, is all but dead and buried. But only the franchisees and Area Developers who spent their life savings will go home bankrupt. John will go home very rich man!

  • February 10, 2017 at 1:15 pm
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    Screwed by Corp. The article that you provided sounds like it comes right out of Liberty tax’s play
    book. Bring them with Cash in a Flash, follow Annie Fuller’s tactics, whack them with high fees, you bare the risk and Liberty collects the 14% royalty and 5% advertising fee. It’s amazing the DOJ doesn’t see it that way. Maybe there isn’t enough to prosecute but I would think they would have
    some ability to claw back the fees that Liberty received from these illegal activities.

    If you took the two cases sited about there was a total of 18,100 fraudulent returns filed with an average fee of $400. That totals $7,240,000, Liberty’s take was $1,375,600.

  • February 10, 2017 at 4:35 pm
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    They take more than that when you calculate in the high interest short term loans they give to franchisees.

  • February 12, 2017 at 11:54 am
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    Great Job New Compliance department in Maryland. Why did they bother hiring these morons. They got another office suspended! Total incompetent company. They should leave Maryland and let the franchisees out of their contracts!

  • February 12, 2017 at 3:29 pm
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    Screwed, agreed but they should leave the country and reimburse all current and former franchisees for all of the money they ever spent with this crappy company!

  • February 13, 2017 at 8:46 pm
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    I’d love to get reimbursed by these Liberty crooks. Even some of the legal fees would be nice…

  • February 13, 2017 at 11:06 pm
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    I own 3 Liberty Territories and 4 Liberty offices. When I got in I was not aware of the fraud that existed in other offices. I quickly got sick of it. I have since seen most and almost all of the people that I could identify as fraudulent Zees kicked out. Good riddance. I have worked my butt off to file legitimate tax returns and I constantly fight the mom and pop schedule C chop shops all around me. I do it the honest way. Last year I made 85,000. I devote my efforts into stopping people from filing incorrect fraudulent returns. I do charge them to keep them in compliance and to provide advances and cash-in-a-flash. I find that most people want their return done for free whether it is done correctly or not. I believe that there is more fraud done in basements and extra bedrooms than by tax professionals (of which I am one. I have 2 tax degrees.) The IRS needs to approach preparers like they do banks. You need to be audited every 2 years to have a license. They also need to audit the self preparers or delay funding until they can. There are honest hard working Zees out there that actually make money……

  • February 14, 2017 at 1:09 pm
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    Profitable,

    Are you located in Maryland, California, New York, Michigan, South Carolina or Florida? That is where the news has been worse and the bad publicity has killed all zees that were not committing fraud. So basically, the ones that committed fraud and corporate made their profits and when this blows up they will not go to jail and have their profits. The ones that didn’t commit fraud are stuck with the debt and loss of business from bad publicity. This is crazy, when are the zees going to get together to sue corporate? This company needs to go bankrupt once a federal judge awards the zees with monetary damages in addition to punitive damages. Stop being scared and get united to fight John Hewitt and his cronies (not many left now since they mostly have been caught)

  • February 14, 2017 at 3:30 pm
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    ^^^ As was told to Barf villa:

    If you are ‘profitable’, then you don’t need to post here. This forum is for “Unhappyfranchisees”. You sound like one of the very few that is happy. Yay for you.

  • February 14, 2017 at 9:07 pm
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    Disagree. Profitable Zee is being harmed by the fraud and bad publicity surrounding Liberty, and by the free return offers the competitors are pushing. His or her post is as solid a warning to potential franchisees as posts from those who were not profitable.

  • February 14, 2017 at 11:10 pm
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    Probably waste of time. I bet the tax laws will change and the credits get cut. Change will take place before tax season of 2019. Would mean next year last count on eitc returns. The improved turbo tax and increasing apps, etc. will shrink the early market.
    Well trained tax preparers will survive, but there is already some consolidating. After the season anyone looking to buy a tax practice can pick up many, at a discount.
    By the way, there is no conversation about fraud because the focus is on when are the refunds coming. A lot will get fixed if letters come instead of refunds. We know over the next 10 days.

  • February 15, 2017 at 12:59 pm
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    Sad but true:

    I’m not really surprised they are suffering allot they started using the line of credit to run company much earlier than normal according to SEC filings. Plus you have the PATH ACT which is changing peoples habits allot and we all know what ACA and DD did to this market. The PATCH ACT is just more of the same making it a harder market segment. Plus you have HRB which came out strong this year going after early filings in a way it hadn’t done in a long time and i’m sure they have eaten the lunch of many early season offices that use to have a leg up on HRB. Big Law change means big change in season as the IRS numbers show time will tell.

  • February 15, 2017 at 8:04 pm
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    The question for every Franchisee is how long do you hold out before turning back the keys to your offices. If Revenue and returns drop over 10% to 20% year over year, and the prospect for next year likely the same drop due to market and IRS changes. Is it better to bail now or next year? Maybe LTS will just declare Bankruptcy and we will be free of this tainted brand of Fraud and EiTc abuse. Wouldn’t be surprised if every Sch C EItc client gets a letter instead of $$$ next week. Too bad for hundreds of Zees who poured their Blood Sweat and Tears for the last 10 to 15 years. Some will survive others will regroup but many will give up altogther.

  • February 17, 2017 at 4:12 pm
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    If I was John Hewitt I would be working on my Cayman Island or whatever country will not send him back to the Feds. Charges will be announced soon against corporate and this company will be shut down. Horrible what they have done!

  • February 17, 2017 at 7:49 pm
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    JTHsentencedtoprison, I LOVE THAT NAME!! I so hope you have some inside scoop that you are willing to share:) It would be great for him to get his “REFUND” in jail next to the guy from Subway getting his FOOTLONG!

  • February 19, 2017 at 5:46 am
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    This issue came up a short time ago.

    Does a preparer have to provide a copy of the return?

    Yes, it must be done immediately (if a refund is being claimed). The Statute implies that the copy must be given before the signature. (A full copy must be given, including all of the forms.)

    § 1.6107-1 Tax return preparer must furnish copy of return or claim for refund to taxpayer and must retain a copy or record.
    (a)Furnishing copy to taxpayer – (1) A person who is a signing tax return preparer of any return of tax or claim for refund of tax under the Internal Revenue Code shall furnish a completed copy of the return or claim for refund to the taxpayer (or nontaxable entity) not later than the time the return or claim for refund is presented for the signature of the taxpayer (or nontaxable entity). The signing tax return preparer may, at its option, request a receipt or other evidence from the taxpayer (or nontaxable entity) sufficient to show satisfaction of the requirement of this paragraph (a).

  • February 19, 2017 at 11:27 am
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    This is how I see it.

    Someone like Bablu Shannadin , John Balki, Jim Wheaton is going to indicted and then take John Hewitt with them? Nobody is going down quietly. These investigation by the Feds take years. Get out before it is over or don’t get in at all. The company will not last more than 18 more months. Everyone knows that except the franchisees that are not paying attention. Instant Tax went down for a lot less.

  • February 19, 2017 at 3:36 pm
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    More Liberty tax fun??? THIS COMPANY IS INCREDIBLE!

    Police investigating fraudulent tax filings
    Police news
    (NWGA Credit Union) – Coosa Valley Credit Union Riverside Auto Group- Rome
    Posted: Saturday, February 18, 2017 12:15 am | Updated: 12:43 am, Sat Feb 18, 2017.
    dwalker
    Posted on Feb 18, 2017by Doug Walker
    Rome police are investigating the filing of a series of fraudulent tax returns at a local tax preparation business.
    According to Rome police reports:
    A client came into the Liberty Tax office on Shorter Avenue earlier this week to pick up a $1,500 tax advance on a preloaded card.
    At some point, the client discovered someone had already used the card.
    During the course of the investigation, company officials and police discovered several other tax returns that had been filed without the consent of the customer.
    At this point no charges have been filed and the case is still under investigation.

  • February 19, 2017 at 7:37 pm
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    All of a sudden there are many new posters (?!) this week that have inside knowledge of JTH’s wrongdoings? I have heard many times that he bought a bank (?!) in the Cayman Islands. You mean if he flees there, he cannot be brought to justice in the US? How awful…..these feds HAVE been investigating for years already…..how many more years before they pull the trigger? They’re gonna wait till JTH is long gone?!

    JTH and LTS definitely brought this all on themselves. Can you imagine calling the IRS on all of your former franchisees and then bragging about it to the press and admitting that they do this? I know all too well that it’s true, it happened to me. My time with LTS and the many years following that one 5 year contract have been a nightmare I never thought I’d get out of. Here it is many years later and the stress of it all is finally winding down. After YEARS and lots of money lost.

    I would LOVE to read the headlines that he is finally brought to justice and made to pay back every franchisee that he wronged. That would be all of them.

  • February 20, 2017 at 8:05 pm
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    Anyone else notice LTS hasn’t posted an earrings call date yet TT always goes 1st usually with HRB a day or two behind and LTS a day or two behind HRB. TT and HRB set theres up a while ago still crickets from LTS. Wonder if its a sign.

  • February 21, 2017 at 1:05 pm
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    Let’s see Liberty Tax update its website to say that they no longer have 4000 plus offices its closer to 3500 now after all of last years closures and expulsion from the Wal-Mart Contract.

  • February 23, 2017 at 10:24 am
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    T. EA: Liberty releases third quarter results the morning of March 8th. Get your coffee and popcorn ready.

  • February 23, 2017 at 11:34 am
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    If Trump gets his way with tax reform and I believe he will get some of what he wants it will more than likely crush Libertys business model. He states he wants to put Block out of business but in reality he will put Jackson Hewitt and Liberty out first. If tax reform comes, I don’t believe you will see consolidation because a massive percentage of Libertys (TAX) business will be destroyed.

  • February 23, 2017 at 12:34 pm
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    Looking at its efiles so far from IRS data it does not look promising for Liberty or the income tax preperation business all around.

  • February 23, 2017 at 2:32 pm
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    I agree with “Out”, any tax reform will first crush LTS and JH. If you look at the tax reform he is stating, it would cut out all exemptions (meaning children) and all EIC, because most tax fraud happens from $50K on down. It would cut out worthless filings, which LTS, HRB and JH rely on the person who makes $4K a year and has 3 children. WTH, why are you filing when they are clearly on all assistance and should be blocked from receiving EIC year after year.

    I was looking at my people, and I have about 5-10 filers, who would fall in that category.

    But if EIC is ended and standard deductions increased, it would stop the massive fraud we are dealing with at this time. It would put a dent in identity theft. Now he congress could at more credits, which would possibly increase that fraud again, but taking away the exemptions, would be a great start and increasing the standard deductions.

    With that being said, I would be very worried owning any of the above 3 and it is a little disconcerting as an Independent. Especially, we could be mandated out of most of our business.

    I wonder is EA would still be a good fit?

  • February 23, 2017 at 5:00 pm
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    Normally, I don’t discuss EIC on this site, since the sole purpose is to tell the truth here about John I Screwitt’s operations. However, EIC will not go away anytime soon, you think there are riots in the street now because of Trump, imagine if you take away all that free money? Not going to happen, that being said, they need to phase it out over several years, you can’t get a heroin addict to quit cold turkey.

  • February 23, 2017 at 5:25 pm
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    Mike:
    I agree EIC is not going anywhere in the near future for the reason you stated above and others. They had several chances to gut the ACA by cutting the government payments to insurance companies but didn’t because of what the backlash would be. Trump has referenced postcard taxes several times in speaches but in reality anything that has been put out with any detail makes insignificant simplifications such as tax rate changes and reduction of number of tax rates. How many tax payers actually know and under stand what that means to them accurately… very few. Also the other main tax point is Ivanka’s child care benefit which she is currently shopping around according to various recent news sources. Based upon what that appears to be that will only complicate the tax return further and increase areas for abuse. Simplification would be good in many ways as long as enforcement goes up and .etc. We shall all see soon enough but my opinion is it won’t be a drastic as people expect by any means. ACA hasn’t been touch in a noticeable way yet and that is simpler task than the entire tax code.

  • February 23, 2017 at 6:21 pm
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    Well EIC is where Hewitt gets his large money tax returns. If there NO EIC, the fraud would drop off tremendously. EIC is the main purpose of mainly 90% of JH tax returns. Have looked into owning them as a franchise and they are very up front, if they loose EIC, then it would collapse their business. So, that being said, EIC is where Hewitt gets his large refunds, plus cooking the schedules on now A – itemization and false schedule C – business returns.

    So, hopefully, there will be a tapering of the EIC over a 4 year period. But for the purpose of this blog, people need to realize that EIC is how you make your money in the first month of the tax season to hold you over for the rest of the 11 months.

    Basically, if you are looking at the tax preparation services as a career or financial move, wait to see what type if any tax reform is done this next 8 months or so.

    As for my business, I am a head in tax returns, by about 20% which is not a lot, but I’m not behind either.

  • February 23, 2017 at 8:55 pm
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    With the Liberty business model obviously built to cater to EIC filers, the ultimate decline of EIC will lead to the decline of fraudulent returns and thus the demise of Liberty Tax. The only tax preparation service that I see in passing by with any people waiting is at HR Block. Even those numbers seem thinner than in previous years. Several JH’s have closed and the Liberty stores look deserted. I usually drive by a few of these offices on my way home from work at about the same time each evening, so my observation occurs during “prime Time”.

    Liberty is specifically designed to bilk low income filers and cheat the IRS. The whole Tax Preparation industry will be shaken up shortly, not by simpler tax rules necessarily, but by better automation and tax software.

  • February 23, 2017 at 9:37 pm
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    EITC was increased by President Clinton to replace “welfare as we know it.” To get benefits you had to have earned income (hence the name EARNED Income Tax Credit). Welfare benefits used to be doled out by social service agencies but the EITC was placed into the tax system deliberately to avoid the association with welfare checks. Because it really is welfare to assist those with low incomes (and today some with middle-class incomes), I don’t think it will go away anytime soon. It can, however, be removed from the tax system and given back to social service agencies. If that happens, people will complete their tax returns and bring them with supporting documents of income, proof these really are their kids and really do live with them, to social services just like in the old days. Then social services will cut the checks. The advantage is that recipients will have to meet face-to-face with a real person and produce real documents. Crooks will no longer file fake returns with stolen identities because that won’t generate the big bucks from the refundable credits. It won’t be so easy to invent business income and expenses because the agencies will demand verifiable records.

    People will still need to complete tax returns so that market isn’t going to go away, but fees will have to go way down. And without the complexities of applying for the EITC they might just do it themselves. Plus there will be no more refund advances because most of those are tied to the EITC, which will no longer be part of the tax system. I agree that Liberty is doomed. HRB has a more varied clientele and will survive as a smaller company.

    Don’t expect changes anytime soon. Congress has been working for a couple of years on tax reform and has to nail it down. Trump can’t just do it with a tweet or executive order (although someone should tell him that).

  • February 24, 2017 at 3:56 pm
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    Most of my clientele are not any LTS people. If they are still with me, they have morphed into taxpayers and are working on filling their 401K, 403B or TSP and trying to manage their tax liability.

    I remember as a kid from the 1970’s, HRB and CPA did the bulk of tax returns and some independent preparers. My parents owned a privately held C Corporation and my dad did the tax return and their personal tax returns up until 1995.

    I agree with SaraEA – HRB will be reduced, once and if they amend the way people receive the EIC. One thing that has been floating around is like Sara stated, moving that money back to social agencies to dole out as needed, usually monthly, instead of one big check a year. Where total documentation is required and verified before money is allocated.

    So people looking at LTS need to realize that 50% of your income come from EIC people, which if that is adjusted in any way, shape or form, would be a huge impact on your investment in this company. So some locations can be as high as 80-90 percent.

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