LIBERTY TAX SERVICE Franchise Complaints 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.

This post was originally published 

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.


5,722 thoughts on “LIBERTY TAX SERVICE Franchise Complaints

  • March 1, 2016 at 8:53 am

    I am so passionate about sharing my ‘real story’ someday. It is way too specific to me to share on this site. But someday I hope to tell it and it will be shocking to what length they will go to destroy you if you stand up against them. I have been sharing this information on this site for years. At some point in the future, when the story can be told, I will hear a collective “WOW” from people on this site.

    Don’t ever think that corporate is not involved in the fraud we see today and don’t ever think that something bad can’t happen to you. It changed the course of my life. That’s how serious it is.

  • March 1, 2016 at 9:38 am

    Still doesn’t mean that corporate promotes fraud. I’ve been in for a very long time and short of unethical crap like Danny telling people to go in the back door or Walmart and hand out stuff until you got thrown out, or Annie riding around picking up random people to bring back to file, or the closing the sale crap years ago with telling people that these are your forms and this is your net refund (without showing the exact cost necessarily) I’ve not seen nor heard anything that elevates to teaching fraud from corporate. Not saying there is none, but most that has emerged has been from the underling level. I said corporate should have known, and should have caught it, and they are culpable. They are not escaping blame. They are incompetent beyond belief. However to say they outright systematically promote fraud is just false. I’ve been to many trainings, listened to many phone calls, and been to corporate many times over the years. Just isn’t true. Doesn’t mean I’d recommend anyone buy in, doesn’t mean I like John, doesn’t mean they don’t need shut down. Just means they didn’t flat out promote fraud on the tax preparation side. Even if they had, only idiots who don’t know better would actually do it. If John Hewitt told me to file with paystubs or fabricate Sch C cash businesses, I’d tell him to pound sand. Those Zees did that out of greed and fear of losing marketplace to others who would do it if they didn’t. Not because anyone told them to do it. They should have known better. Corporate should have caught and stopped them, but they still should have known better.

    Now I do think they border on fraud on the franchising side. They hide info from buyers and churn stores that are known losers and bankrupt poor unsuspecting zees in the most hideous ways possible. You get virtually nothing for your investment, no marketing to speak of, and no support. They are your buddy until you buy, and then you are dead to them. They are a sales and legal team. Not a tax prep and franchise support team. It’s sad.

  • March 1, 2016 at 9:53 am

    “Not saying there is none, but most that has emerged has been from the underling level. I said corporate should have known……………”

    That’s the point, corporate DID know and it was all done with JTH’s blessing & direction. Enough said.

    “They are a sales and legal team. Not a tax prep and franchise support team. It’s sad.”
    Ain’t that the truth. :(

  • March 1, 2016 at 11:19 am

    Anon- You are spot on.

    The cash businesses in early January that AD’s especially in California have 100’s of efiles ready by January 10th. One AD in particular told us on the phone and even sent a picture of the “cash” business people he is dealing with. No checking accounts, not sure of the legal status of the person in general. They are mainly janitors and babysitters. Ya, and I have dry land to sell you in Florida.

    I would like to know, what did LTS tell there people if you don’t have the AFSP certification. I looked up some of the LTS people in my state and no one has the certification.

    Back to the “cash” business, I remember the AD telling us how they would mock up the expenses the person told them and how much money they made. Quite unbelievable. And they are the top 18 zees doing this scam.

  • March 1, 2016 at 11:04 pm

    Back up and notice you’re saying filers in California, Maryland, etc. Means its a problem with the IRS because they could stop it with some effort. All it really takes is requiring the filer to prove a business exist. That can be done with a required EIN number, bank statements etc. They could add banking information or verifying information to the Schedule C. If they crack down for a season it will stop. Don’t forget HRB, Liberty, JH are really just the tip of the iceberg because of the many thousands of mom and pops and self-prepared returns. As far as investing in the stores, we don’t need anymore tax prep offices, regardless. The existing offices will have to diversify to survive. Take a look at Block Advantage… It’s back to the basics – bookkeeping, payroll and advice.

  • March 3, 2016 at 7:15 pm

    Liberty has to face it-this is a dead industry. With all the tax prep software out there as well as reasonably priced Mom and Pop’s, Liberty and the other tax prep businesses are feeling the pinch. HR Block will be the last one standing just because of their long standing penetration in the market. JH and Liberty won’t make it. This is a great business model for the 1990’s, not now.

    Fraud is common in the industry, especially with the Liberty tax stores. I was part of that after hour “special training” by Liberty. They were quite specific on teaching us how to ‘optimize’ the tax refund and hence, our fees. John even stated to a group of us that is was OK since the likelihood of the IRS catching you is small and the clients are so happy about the extra money, they forget about the $400 fee for preparation. This is the type of corporation Liberty is: tell the big lie because someone will believe it and eventually you do to.

    Can’t get any clearer than this. Liberty is bad news.

  • March 3, 2016 at 8:23 pm

    HRB reported early season results today. Bad, bad, bad. They are down about 8% in store returns YTD through late February. Turbo Tax is eating paid preparers lunch. Liberty will surely be even worse. I shudder to think what they will report tomorrow. Look through the BS about fees (which can and do include the Advance fees that Zees have to pay out) and look for paid returns, not total with freebies. That will tell an even more accurate tale of the health of the stores. They report tomorrow.

  • March 3, 2016 at 9:54 pm

    Kudos to Turbo Tax and Tax Act for their free programs. It is wonderful to know that millions of Americans are wising up to the fact that simple returns can be done – for nothing!

    Too bad for HRB, JTH, and Liberty.

  • March 3, 2016 at 11:05 pm

    As Texastee points out this is a dead industry for Liberty tax’s business model. The company will continue to decline in store locations and eventually John Hewitt will leave his position as CEO, his reason will be retirement or some other BS answer but he will do it sometime after this tax season. For the creditors there are two options maintain the company until they recoup their credit lines and then walk away or spin it off as a private company like Jackson Hewitt and hope you can rebuild the brand to eventually have a successful IPO. The second option is highly unlikely.

    As for the tax prep industry it will survive. Tighter policies by the fed and increased enforcement would be good for the industry but because of budget issues increased enforcement, i.e. in person audits, won’t happen but tighter rules will. With technology and better modeling there will be improved scrutiny this will lead to slower refunds and letter audits. When you consider how important the tax refund is to many people I still see tax prep. preparing over 60% of returns filed.

  • March 4, 2016 at 4:35 pm

    WOW…Liberty revenue up 1.8%!!!!!! Yippeee, returns down 4%, ouch!!! I guess if block is down 8% and Liberty down 4%, then Liberty will be the largest tax prep company in 1000 years!!! hahahahahahahha, oh wait, hmmmmmm…..,,,,,,lots of talk about fraud…..why??????

  • March 4, 2016 at 4:42 pm

    Q3 Fails to impress! Down in Volume 4.4% in Returns yet LTS has more than 150 net new stores! Revenue is better because of higher fees and Financial products that Franchisees eat. John promised the $750 would be a driver for increase in Returns. Turns out only one making great profits is John. Yikes that means average existing store is down around 10% in Returns. Count yourself lucky if you are not in this biz, the industry is in a slow decline but especially so with HRB and LTS. CPA s and Mom and Pops will do fine without the 19% cream off of the top and eating $45 for each RAL. Lots of Zees won’t be able to pay Feb Royalties because of Fee Intercept. Look for Liberty’s acct receivables and interest income to spike upwards on the backs of Zees.

  • March 4, 2016 at 7:50 pm

    I was surprised at how many new locations Liberty says they have.

    Are these new franchisee’s? If so, you ignored us and now you will pay for it. I have no sympathy for people who don’t do due their diligence before investing their money.

    So many negatives in these financials. Bottom line is Liberty Corp home office is making money off the franchisee’s hard work, savings, and loans to them.

    Shame on anyone that buys in now. As Bill has often posted; “buyer beware”

  • March 4, 2016 at 8:10 pm

    Don’t be fooled. Look at financial product income. It’s big. Therefore the majority of the returns are probably $750 loan products. Let’s be generous and say only half. That’s $45 on each return that corporate gets royalties on above and beyond the real tax prep fees collected and kept by Zees. At 50% that is $22.50 extra per return. If average return is $300 that would make Liberty to be collecting royalties on $322.50. That gets them a false 7.5% bump. Back that out and that means tax prep related revenue is not up at all, it’s really down. Sure corporate is making their money, but the Zees are down in YTD income if you use this real life calculation, instead of phony accounting. If the percentage of loans was higher than 50%, the difference is greater than 7.5%. Of course these numbers are just as examples, so John doesn’t get his panties in a bunch, I don’t know the exact numbers. I just know that the return revenue is really worse than they are reporting, even if it’s perfectly legal that way.

    Now to the return count. It looks like we are only down 4%. However that was before peak, which went horribly for many, many Zees. Unless John mentioned the YTD as of 2/29 as well on his call, it wasn’t in the report. That makes me think it wasn’t so hot. HRB reported it in theirs only because their loss became less as of 2/29. Either way, neither of the companies is doing great. It’s not a good sign for the industry.

  • March 4, 2016 at 10:36 pm

    The company presents unaudited financials that show revenue up contrary to the fact that the IRS is reporting 3.1% less tax returns filed and of course these results exceed HR Block’s which decline. Keep in mind these are unaudited results presented by a company who was required by the SEC to restate their “audited” financial statements. So these numbers should be taken with a grain of salt.

    A review of the financials show two abstract areas as being the driver for the company’s good results. Financial products were up 26.8% and income tax preparation fees by company owned stores was up 69%. The company now operates 250 locations compared to 125 locations last year. So in a year when overall tax filings are down by 3.1% which is consistent with the rest of Liberty franchisees your company owned locations are up by 69%. Something just doesn’t add up.

    Wall Street who usually plays loose with there investor’s money couldn’t buy what the company was selling. The company’s stock price fell 20 cents to 16.80. This decline is in spite of the .16 cent dividend the company has authorized.

  • March 6, 2016 at 8:04 pm

    According to an article in Forbes as of 2/16/16 return count about the same number of returns were filed as last year. The percentage is 50/50 between self-prepared and a tax professional. So with two thirds of returns to be filed it still looks good that over 64% of returns will be done by a paid tax preparer.

    But it is a highly competitive market and it takes time and energy to build a tax practice. There is no quick way of acquiring a successfully practice through franchising. As much as I like HR Block, if your not buying an established practice, I would not suggest going that route. Start small, keep your day job and slowly build a base of business. Eventually you will be able to go out on your own.

    I know for those of us who find themselves going through a career change franchising is very appealing but most of these companies are built on capitalizing on your hopes, dreams and greed!!! You don’t need Super Cuts, Curves or Liberty tax to build a business. What you need is a belief in yourself and a good business plan. Either way it will be a challenge but if you go it alone you will have control of your own destiny. Nothing worse then to be paying someone for a plan that doesn’t work and being told it’s because your not “following the system”

    Buyer Beware!!!

  • March 6, 2016 at 10:36 pm

    I agree. But you will probably need to keep your day job. Most clients only change preparers if something happens. It’s also hard to transition into existing office. First year you will need a line of credit or a partner. I’m working 7days a week until April 18th and can work 2 days rest of year but took 6 years to accomplish. Market is full.

  • March 7, 2016 at 1:00 pm

    Liberty stock is doing very well today, as it should be. I am no fan of Liberty Corp. but as long as they can get franchisee’s to burden the cost of doing business, while Liberty Corp. reaps 19% of their income, Liberty Corp. will be profitable.

    It is all legal and to a certain degree ethical. Liberty Corporations business practices are in the open now because of this site and their status as a publicly traded company. People looking to join the Liberty system now have plenty of information to look at before making a buying decision.

    As a franchisee, you foot the bill for a very few to get very rich. If Liberty Corp. had to pay every expense incurred by all of their locations, they would be out of business in no time at all.

    So, I will say to you what John is thinking but keeping to himself; the franchisee’s have made me a very rich man, I cannot believe this!

    He is laughing all the way to the bank.

  • March 11, 2016 at 9:29 pm

    Sad but True: John has made a lot of money off of this business model but he was hoping to cash in on a lot more. Remember he owns 995,849 shares of the company. A year ago this stock was selling at 28.00 a share today it closed at 17.49. His wealth is all on paper and even if he wanted to sell today there are not enough buyers for the stock for him to do so.

    JH cut his salary to zero at the end of last year. He still receives the dividend on his shares which makes his salary around $600,000.00. While he makes it look like he voluntarily made this move. There was pressure from other majority shareholders for him to give up his salary.

    JH is an egotist and so while he has made money his real source of pleasure is being this go to guru of the tax industry with 40 years of tax experience. However, in the next year or two he will be exposed for the fraud he is. When it happens it’s going to be in large part to this site and the people who were willing to keep pursing this matter.

  • March 12, 2016 at 4:38 pm

    ^^^It has been said many times on this forum, bill, that JTH is NOT a Tax guru with 40 years of Tax experience. That’s where the public needs to know the truth. He is a marketer of Franchises. A seller of B.S. A rip off artist to say the least. He sells on a pipe dream and then goes in for the kill. He is a great Salesperson, not a great Tax Accountant. Not even close. I betcha he still, to this day, cannot do a complicated 1120, 1065, etc.

    He sells “2 x 2 mile territories” made up superficially. It’s all a big show to collect (steal) as much money as he can.

    I pray that he WILL be exposed very shortly for the fraud that he is, bill. That would be awesome and very welcomed. I’m waiting for the headlines.

  • March 13, 2016 at 1:50 am

    SanFranDan: “He is a marketer of Franchises. A seller of B.S. A rip off artist to say the least.” – couldn’t of said it better myself. The whole retail industry is in a massive and quick change it is going to a expertise business quickly and I agree the LTS and JH model is done and he will be exposed shortly.

  • March 13, 2016 at 9:31 am

    The business is getting more complicated and people are looking for professionals in the area of tax code knowledge and having their returns done correctly and teaching them to either defer their income for tax purposes or make sure they owe very little at the end of each year.

    I am finding that when someone is looking for LTS on my old phone number they are not looking for tax expertise, they are looking for $50. It will be interesting to see how much longer this model will last in the next 5 years.

    So many people owe the IRS due to H&R Block errors, LTS and JH in not qualifying for certain credits that it does harm to people financial future.

    This year is the transition year for all of the big three, but it will hit LTS and JH first. The H&R in my area was finally bought out by corporate and is no longer a franchise. It was one of the last ones in my state. I am looking at picking up more people due to H&R is trying the LTS model, sit down we do your return and charge you $390 to $500. Spoke with an insider, people are furious and they are loosing their top preparers. However, just like LTS, these people cannot do any tax returns for 2 years anywhere in the in United States. So, these people will loose their part time lively hood.

  • March 13, 2016 at 8:55 pm

    San Fran Dan: You missed my point. I was trying to say that with as much money as he has made, what he really wants and desires is to be viewed as a mover and shaker in the tax industry which he’s not. He receives a lot of air time because of his years in the industry. I can’t do anything about the money he made but I can certainly work to keep him from getting any more.

  • March 13, 2016 at 9:09 pm

    Franchizee, Block’s old noncompete clause was ruled invalid by the courts years ago. For a true noncompete, the ex-employee has to be compensated for the time he or she cannot work in the industry. Block changed their contract to read that employees who leave cannot solicit their Block clients for two years, and they cannot work within 20 miles of their old Block location.

    Does Liberty still have something like that invalid noncompete in their contract? Well, unless the ex-Liberty preparers are getting paid for their inability to work in the field, it’s simply that–invalid. The rules may be different for franchises. I’d look up the court cases on this issue.

  • March 13, 2016 at 9:33 pm

    Paid preparer returns down 2.5% from last year, as of 3/4.
    Paid preparer returns were down 4% on 3/6/2015 over the same period in 2014.
    Total efiled returns slightly higher over last year, as of 3/4.

    So, with one less day than last year, total efiles are up with paid efiles trending lower again. The early season filers are Liberty’s type of clients.

    These are IRS stats. Go to their website under Tax Professionals, look for tax season stats.

    This information is something that should discourage potential franchisee’s from investing in a Liberty territory. Not to mention that it is almost guaranteed that you will fail just because of the nature of the Liberty business model that only favors the franchisor.

  • March 14, 2016 at 5:44 am

    Liberty does have a non-compete for preparers and franchisee’s.
    It is similar to the second Block non-compete in your post.

    This is another reason not to invest in a Liberty territory. The poor franchisee builds their client base, that stays with Liberty when they fail. All of their money invested to gain market share in their territory, is lost to Liberty Corp. Worst feeling of all is to develop relationships with those in your community, only to lose their business when you realize you cannot or will not absorb all of the expenses for someone else’s benefit – Liberty Corp and mostly John Hewitt’s benefit.

  • March 14, 2016 at 7:13 am

    This is the thing that bothers me to no end too. I’d have exited years ago, but they have you semi-trapped. They have no plausible exit strategies for those that need to get out or want to exit. HRB at least will buy your store and make it corporate office. Your choices are:

    a. Just give the territory back to them for nothing after the 5 years is up and they get to resell it. They get to keep the customers that you paid for and profit from the money you put into the business. All you get is your furniture and other hard assets. Not hardly fair.

    b. Sell it, which nobody is buying these darn things. They are like timeshares that you can’t get out from under. Almost have to give them away to escape.

    c. Trudge through, as you don’t want them to profit from your hard work.

    If I could figure out how to get around the non-compete just to keep 50 or so of my best clients, I’d give the darn thing back to them and let them have it and the other clients. It’s not worth the hassle anymore. Sad thing is I’d probably make almost as much money doing those 50 out of my house, without the expenses, than I do on more than 800 with them taking their chunk and all the other overhead.

    Before anyone says anything, they do actively pursue the non-compete agreements. Their legal team is the only reasonably proficient group there.

  • March 14, 2016 at 8:20 am

    One thing to remember that with the non-compete for the preparers, it is with the Zee and not Liberty. With the numbers of Zee’s that are leaving or being forced out, is the non-compete enforceable?

  • March 14, 2016 at 10:39 am

    Regarding the non-compete clause with the H&R Block in my area was done by their home office, which means the preparers are signing with corporate on a 2 year compete clause. Now is it enforceable? According to my state, they can enforce them only for 1 year, not 2 years, so people could probably do something later after one tax season. But since this a small area, that might be a problem, easy to find out.

    Regarding Anon, I would take my favorite people and next year buy your own system and write them off premise and start adding people for the next two tax seasons, to build your own separate money. Open separate bank account, get a square and new computer and printer. Now, what I found out, some people only go to LTS because of the brand and they don’t translate to business for your new company. But most went with me.

    With LTS, non-compete’s are enforceable especially if you made over $75K with LTS at anytime. I was blessed not to be in that much money!

  • March 14, 2016 at 10:44 am

    One last thing, this new non-compete clause was in the new LTS 5 year contract, you can’t do taxes anywhere for two years, and the 25 mile radius. I didn’t sign that contract and was only limited to the 25 mile radius, however I did my tax business out of the same location as LTS the year before, which was a non approved location. (2nd floor location)! Also my territory is not viable so there is no LTS in my area and never will be.

    With H&R non compete, they can’t do taxes for 2 years period and people signed the contract in order to keep their jobs.

  • March 14, 2016 at 1:28 pm

    You’re right, bill. I just wanted to clarify it further so that prospective franchisees would understand that this man is an opportunist and not a tax guru. He will be happy to take your money at all costs whether you are prepared to buy a territory or not. If you have the money, you are good to go, regardless of your tax background and your ability to run an office. I am so thrilled the rules & regulations are getting tighter. That should have a big impact on LTS because the people that run the stores should have the proper credentials and experience.

    Franchisee: I’ve been out of LTS for quite a few years and the non compete clause was 2 year/25 miles back then. It was extremely enforceable with Lawyers watching you like a hawk. Not only did they take my pre-exisiting customers, ones that I had before I even signed on with Liberty, it got way, way, way worse than that when I left at the end of the 5 years. You are incredibly lucky they didn’t find you out. How did you get away with not signing??? Lucky you! Oh yeah, that 75K ceiling is very important. It gets the Federal Gov’t involved at that level if you should leave and try to take any of your customers with you, pre-existing before Liberty, or not. It got very messy. And guess who wins? Liberty each & every time. They have the big pockets from collecting your money. They will spend more to squash you down then they would have gotten from fee intercepts, royalties, etc.

    Anon, you are correct. They are extremely enforceable. Which is why no one should go into this franchise to begin with. It’s all about the franchise and what’s in it for you? NOTHING. Really. NOTHING.

    Anyone reading this: Once & for all: Go out on your own and open your own Tax Service OR better yet, back away and look for another business to invest in altogether. This is a losing proposition no matter how you cut it. Keep your money & you will be forever grateful you found this forum.

  • March 14, 2016 at 3:15 pm

    ^^^Omg, Dr Zhivago:

    That is amazing. Finally!!!!!

    I want to talk about my case so badly, but I can’t yet. But what I CAN tell you guys is that the paragraph (linked above) where Liberty talks about turning in their own preparers to the IRS really DOES happen. But NOT because the preparers or zees did anything wrong. Many times it’s because Liberty is “mad” at you about something and that’s one way to get back at you. Boy, do I have a story to tell you guys. Yikes.

    Whoever is reading this forum: Don’t concentrate on the zee & preparer as the culprit as much as concentrating on Hewitt himself. If you dig, dig, dig, you will turn up all kinds of dirt on HIM. HE needs to be prosecuted and brought to justice. Not the zees or preparers in most cases.

    I REALLY hope they succeed in shutting the whole damn thing down. I do feel bad for the current zees. Maybe they could get a refund if the company is shut down. It needs to be. There are SO many things HE has done illegally for years & years & years. Yes, defrauding the Federal Government.

  • March 14, 2016 at 3:43 pm

    This Virginia Pilot article is a semi “puff-piece” attempt to cover for Liberty’s bad press associated with the fraud at THEIR offices.

    Greed breeds greed. Until caught, they were Liberty heroes.

    Potential franchisee’s, run away fast in your decision to maybe buy with Liberty.

  • March 18, 2016 at 9:54 am

    Another 12 owner zee shut down for bogus eic sch c in California Stacy Sanchez. When will the Justice Department do something for the entire industry instead of going after small fish? Go get the big fish AKA John Hewitt, he makes millions off of fraud returns and just resells these territories and offices for big $$$. Corporate does nothing about audits because if they audit stores they would have to take out their biggest franchisees. They have to stay arms length away from Zees so they keep their own hands clean even if that means seeing massive amounts of Zees going down for Fraud from IRS. Most franchisees at the top are committing huge amounts of fraud either willingly and/ or negilently.

  • March 18, 2016 at 2:18 pm

    Concerned Zee, can you post the link about the California office shutdowns.

  • March 18, 2016 at 3:46 pm

    BALTIMORE (AP) — A prosecutor says a Baltimore grand jury has indicted nine people in a fraud scheme that involved bribing homeless people to file false income tax returns.

    David Nitkin, a spokesman for Maryland Attorney General Brian Frosh, announced the indictments in a news release Friday.

    Charging documents say the owner of several Liberty Tax storefronts in Baltimore targeted homeless shelters, transitional facilities and drug rehabilitation centers, offering vulnerable residents $50 to meet with a tax preparer.

    Tax preparers would create returns that maximized the earned income tax credit the applicant could receive and gave the highest refund without Social Security or Medicare taxes being withheld.

    The earned income tax credit pays money to qualifying poor people. Liberty Tax kept the majority of it. The scheme was used more than 1,000 times.

  • March 18, 2016 at 5:35 pm

    One article stated more federal charges coming. Many zees will drop out for 2017 if in a city with problems. IRS can stop problem just by adding supportiing documentation requirement to Schedule C. They are holding up refunds big-time for a form 1095-A, so why not for a Schedule C with no EIN, etc.
    If guilty as charged, California zee should go to jail. Refunds stolen, W-2’s made up. Why? when you already have 12 stores.

  • March 18, 2016 at 6:25 pm

    Good Job DOJ!!! Now look at the AD in that same area. They love doing “Cash” businesses right after the 1st of January. They can have several hundred returns in the kitty prior to any W-2’s being submitted. The people they serve never have a checking account, no W-2’s nor 1099’s. They “help” the people reconstruct their “Cash” business. Very shady and most likely illegal, well of course it’s illegal. If it is a cash business, you need to pay the full tax rate.

    John Hewitt loves to brag about those guys having tons of returns prior to any documentation is available. These are his 18 Elite people. Looks like they are all going to prison! Just a matter of time that John is going to have 3 squares and a cot for encouraging these shenigans!

  • March 18, 2016 at 7:00 pm

    Will the state allegations cause the Feds to come after them? What is really wrong here is that Liberty is the responsible party because they are the ones causing an environment that breeds fraud. As I have said before, Liberty had taught me how to make those high refund EIC returns in order to maximize my fees and , hence, their share. Liberty takes no risk, only the Zees. The zees are the ones left holding the bag for fraud and tax losses. When will the IRS realize that Liberty has had a pattern of teaching its Zees how to defraud the government?

    The statement that Liberty is helping the government in its case against the Zees is pretty frightening! I am in no way condoning the behavior of these Zees, but I understand where they are coming from and the desperation that Liberty corporate causes. What I don’t agree with is the prosecution and persecution of the little guy that, as a Zee, is as much a victim as the taxpayer in most cases. A corporate culture such as that of Liberty’s should not be allowed to survive. Is the government protecting the consumer or the large corporation?

    Finally, I agree with the statements that the Liberty legal department id their most efficient. This is simply because Hewitt has figured out he can hide behind the so-called shield of justice and steal with impunity. I know, I’ve been there.

  • March 18, 2016 at 7:02 pm

    Fastest growing tax service ever!

    Now we know how they did it!

  • March 18, 2016 at 8:52 pm

    Guerilla marketing at it’s best, Liberty is proud of these go-getters. I always wondered how offices had so many returns very early in the season. Liberty always loves the free press, but not this kind.

  • March 18, 2016 at 9:00 pm

    Yea, the early season heroes were on the conference calls that made the honest zees feel like failures.

    IRS, can’t you see Liberty promoted their fraudsters. They had to know this was going on. Wake up IRS, get the head honcho who acts surprised this is happening.

  • March 19, 2016 at 10:41 am

    Yes, Sad but true, is correct. John would parade these huckersters on his daily call because they wrote the most returns. John Hewitt is responsible for this behavior and profited from these fraudulent returns. These people would be at his beach home for 4-5 days in March to talk about how great they are and how they are writing returns.

    Love that these CEO’s could potentially have jail time but for sure have huge fines they will have to pay. Of course the preparers pretty much get off scott free due to the CEO’s own the EFIN and the franchise. As John would say, you don’t have to know how to do taxes, just know how to market. John apparently was not aware that EFIN holders are the ONLY ones responsible for each and every return going through their number. Foolish people believing John John.

  • March 19, 2016 at 10:53 am

    Just curious, has Liberty had more offices closed then they opened this year?

  • March 19, 2016 at 1:15 pm

    Liberty’s 3rd Quarter report states Permanent U.S. offices increased 196 from last year. Permanent store count represents franchised and company-owned offices open at any point during the tax season. The extra 196 stores were mostly, I believe, company-owned offices.

    They have more stores but tax returns processed for them are down 4% as of 2/28, over the same period in 2015. Industry average returns processed by paid preparers was also down 3.6%, as reported by the IRS as of 2/26/2016. With more stores and lower returns processed, their market share, per office, is shrinking.

    Buying a Liberty territory with their now tarnished reputation, increase in DIY returns (mostly simple early season filings), and the bear all the costs yourself (no help from Liberty); makes buying a territory a very, very bad decision.

  • March 19, 2016 at 3:42 pm

    Whats really scarry they charged the franchisee and the preparers.

    What was the new franchisee thinking? All knew old franchisee was in big trouble. Who would take over the store and do the same things? Maryland’s got some blame since the article mentions 20,000 returns, covering a lot of tax offices. Liberty small part of the pie.
    The company should let any stores closed by feds or state remain closed for at least one year. Clean up the territory before reopening.
    There is no reason to assume everybody in a tax store is filing fake returns. But busted is a reason to close a store for no less than one season.

    Hurts all franchisees, especially if you want to sell.

  • March 19, 2016 at 6:08 pm

    Congratulations to Peter Franchot of the State of Maryland!!

    Hooray for you!!

    Now that you have gone after the Franchisees, PLEASE turn in the CEO of Liberty Tax himself. THAT is where the fraud begins. They make me sick admitting on a news release that they themselves are behind the IRS going after franchisees. The freakin’ company is doing it!!! After they teach the franchisee how to process schedule C’s “properly”!!! So THEY maximize their $$$.

    If you notice, Liberty cares about return count numbers. WHY??? They made you do a whole bunch of free ones so that the numbers would be padded so they could show new franchisees prospective offices where the numbers look good but were artificially inflated.

    We can only hope that these news stories are the “beginning of the end” of this damn company. Music to my ears.

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