LIBERTY TAX Franchise: Earned Income Tax Fraud?

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• The IRS pays whistleblowers handsomely. But Anon Source says “nah…I’ll just post stuff on the internet.” Have you thought about the hundreds & hundreds of tax preparers that would have to be involved in this? Yet no one’s dropped a dime? On a scheme this large? Doesn’t pass the smell test. #tinfoilonmyhead…

• Anon Source calls BS on Liberty Tax's claim that John Hewitt has created 800 millionaires:

  LIBERTY TAX Illegal Franchise Earnings Claims?

• The EIC fraud that is taught by Liberty and with Hewitt's knowledge is not a new revelation. This has been going on for many years, even from the first meeting I had with Hewitt himself. He made it very clear to me that the IRS ignores this credit and willingly provide it for the "poor people". He also said to me that this was the way to charge exorbitant fees because the people view it as "free money". When I asked him about the legality of this, he had said that everyone in the industry does this and he had observed at HR Block and Jackson Hewitt this was the way he felt they could be making a lot more money, which is why he left both entities. This I took in because I was bedazzled at the time by the slickness of his presentation. Boy was I dumb for falling for that!

  If the IRS was smart, they would just eliminate the EITC altogether in order to eliminate this kind of fraud which is all too common.

  Another reason not to join up with these crooks.

• It seems all of these allegations show up on this website, but are never sent to the IRS. I was a Liberty franchisee for 14 years. I never once heard John Hewitt advise any franchisee to do anything dishonest, much less illegal. This kind of allegation doesn't pass the smell test. Hewitt has been in the tax business for over 40 years and has built two national companies. You think the kind of silly accusations texastee has made up would survive that long? Is the IRS that stupid? There are extensive due diligence requirements for EITC by the IRS, and Liberty has required EITC due diligence certification training and testing for every franchisee.

• The IRS is fully aware of these allegations. They have chosen not to pursue Liberty because of all the lawyers that they employ. It is easier to go after the individual franchisees since they don't have the deep pockets of the corporation. IRS is evaluated on the number of cases closed per year, not those that are opened. Its easier to close cases that have no resources to fight the IRS as opposed to a corporation that can afford to delay results.

  That being said, Liberty was clearly teaching us franchisees on how to take advantage of the EITC in order to increase our client's refunds and hence our fees and their royalties. If this isn't illegal, I'm not sure what is.

  As for motivation for Liberty to "rat out" its franchisees to the IRS, it could be argued that this is yet another way to churn and burn the territories so that they can be resold again to some hapless person. I'm sure Hewitt has a deal with the IRS to turn over the franchisees so he can collect a fee and resell the territory.

  If the EITC were eliminated, this kind of abuse would go away along with Liberty Tax.

• That's not making sense. The choice to commit fraud is on the tax preparer. If a franchisee decides to commit fraud it means you believe the company has more power than the government. I have never been told or taught to do anything illegal in more than 10 years. Those committing fraud it's their greed and choice.

• The reality is there has been enough smoke that the IRS did and may still be investigating these allegations. I was a franchisee for 5 years and while I was never told or encouraged to do any creative tax returns that doesn't mean other people weren't. Maybe their approach was more selective. I am a CPA and didn't operate in a low come area so maybe I wasn't the right candidate. I will say I listened to the many daily conference calls and found much of the advice to be over the top and some down right unethical. During the Annie Fuller period, she with Liberty approval talked about taken her van into poor areas and essentially rounding up people to do their tax returns. There was once incident were she was at a stop and go station at 8 in the morning saw I guy buying beer, bought his beer for him and took him back to the office to prepare his return.

  Liberty was aware there was fraud being committed but they chose to turn a blind eye to it. In my view they may not have directly committed the fraud but they were complicit by their lack of action and the fact they actually benefitted financial by these fraudulent acts.

• Ms. Fuller is long gone and it's not fraud to round up customers if they meet the requirements to file a return. In most cases an adult is smart enough to know right from wrong. I knew right from wrong when I listened to ms. Fuller. and made decisions accordingly. Truth is she doesn't matter anymore. You can encourage someone to not buy a franchise without trying to tell them to believe all the hard working franchisees are committing fraud. That's the point.

• Guest: And what requirements need to be met to file a return? A babysitting business? How do you justify rounding up customers for a service that is filing a tax return. How do you know if they can afford to pay, simple from the bogus refund your going to create. The whole idea that you support smells of fraud.

  As far as fraud stopping with Ms. Fuller, What about Mr. Hussien from Ohio and Mr. Amid from Illinois who where both indicted this year.

  By the way where is your store located? The IRS might want to talk to you.

  When I first got involved and old CPA said to me "you didn't buy a brand your building a brand". What I didn't realize at the time is how the company doesn't care about the brand.

  Buyer beware!!!

• I speak to the IRS all the time because it's part of the tax business. I don't prepare fraudulent returns because I respect the law. That's my point. There are thousands of preparers filing fraudulent returns. It's their choice. Fraud covers more than EIC filers. CPA's are not exempt either.