LIBERTY TAX SERVICE Franchise Complaints
UnhappyFranchisee.com asked: Are LIBERTY TAX SERVICE Franchise Owners Happy? If you’re familiar
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.
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?
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There are now 2750 post on this site reasons to stay away from Liberty Tax and John Hewitt. If you are considering purchasing a Liberty Franchise take time and research this company very well.
The individuals that have posted on this site are only doing this for your benefit. They do want to see you fall into this aligator pit, and loose your life savings, retirement accounts and your personal home.
John Hewitt is all about taking your money and provide very little in return. I would compare him to Maddoff who made a few people look rich and foiled the rest.
today NASDAQ Issued it’s second warning that the company will face delisting if it does not submit restated 2012 financial statements along with it’s 2013 statements meeting the requirements set forth by the SEC staff. This is the most blatant example of this company’s arrogance and it’s willingness to distort the performance of the company to benefit it’s owners. If they are willing to twist the truth to a regulatory body as powerful as the SEC what do you think their willing to tell the franchisee!
Buyer beware!!!!
Chuckle.
2,750 posts by about 6 people using various names. What does that tell you about those 6 people?
The financial restatements have nothing to do with twisting any truth – just ask the large CPA firms who signed off on those original statements, and the people at that same SEC who took a very close look at this during the IPO last year and didn’t see any issues. In any case, the accounting treatments were fully disclosed – it’s just now the regulatory bodies have asked that those treatments be changed.
Hey Bill:
Great News. This company is going down. Have I mentioned lately how much I hope they all fry in hell? Starting with John T Hewitt himself, on down. Everyone one in corporate should be ashamed of themselves for making people’s lives so miserable. How can they look themselves in the mirror knowing that they RUIN PEOPLE’S LIVES FOR A LIVING???
I saw an article this morning about seniors buying franchises in their retirement. If there are any senior out there looking to buy franchises: STAY AWAY FROM LIBERTY TAX! THEY ARE A HORRIBLE FRANCHISE IN EVERY CAPACITY. NEVER BEFORE HAVE I ENCOUNTERED SUCH CROOKS. THEY BASICALLY STEAL YOUR MONEY FROM RIGHT UNDER YOU AND PROMISE YOU THE WORLD AND DELIVER N – O – T – H – I – N – G. YOU LEAVE AFTER 5 YEARS WITH NOT A PENNY OR A CLIENT TO YOUR NAME. THEY MAKE SURE OF IT.
By-the-way, qctibs and guest 1974: One in the same. :(
SanFranDan: Yesterday I went on Senator Elizabeth Warren’s website
and ask that she work for better disclosure requirements for Franchisors along
the line of “blue sky laws” that states require for stocks. The whole franchising
industry has become an acceptable way to exploit individual investors. What happen to LA Boxing, Curves, not to mention ones like Subway and Dominos.
Tonight I saw a commercial for Dominos offering pizza for 5.99 tell me how those franchisees are going to make any money? Without even seeing their franchise agreement I’m sure there is a required minimum royalty fee. What once was a form of a partnership has turned in to an exploitation of people financial and physically.
We need unity.
qctibs: Unlike you I don’t go by an acronym and I tell you that I was involved in a territory in South Jersey. To be specific the original contract was for the territory in Somers Point NJ. However, after we purchased the territory the company would not agree to any of the locations that we choose. The territory has only two main roads New Rd and Shore Road. Potential franchisees won’t know this but you must be within a certain radius of HR Block or Jackson Hewitt. In our case the AD told us none of the locations we chose was acceptable. Instead of asking for our money back we let them talk us into switching territories to Northfield/Pleasantville where they approved a site on Shore Road. The same road that we chose a location for when we where looking in Somers Point and it was no closer to either an HR Block or a Jackson Hewitt then the Somers Point Territory. The difference was Pleasantville had a higher population that qualified for the earned income credit which meant a higher chance of selling them the refund anticipation loan
I will gladly speak to anyone and offer my honest opinion. I was contacted by a gentleman who was going to buy an AD territory in Pittsburgh. Smart guy, college professor. I know he bought the AD territory and would like to hear from him to see how he is doing. Of course Liberty has him contractedly obligated so he can’t or won’t come on here. My guess based on reviewing locations in his area that he is not doing very well and since I track store addresses I know his locations have increased somewhat from when I talked to him but the location addresses change which is a good indication of someone struggling or change of ownership.
My goal on here is to provide honest information to potential franchisees.
Buyer Beware!!!!!
I agree on the need to change franchisee disclosure requirements. Hr block is providing better information on their website. They warn you about the high probability you will lose money in the first few years. It says in plain English cash flow may be needed to pay your loans. They also mention that you may need other income for your personal bills. Check under their franchise acquisitions information. This Is what anyone going into a franchise needs to watch out for. Not having enough cash flow to pay your bills. You will NOT get around fee intercept. Company gets paid first. Be better informed.
If you have no debt you might have a chance.
Also, don’t expect to fix a bad location. Throwing away good money.
I’ll tell you something about site selection. They sent someone from corporate to help us select our site!?! Someone from the middle of the country who had never set foot in our state or city and who was going to tell us what location to choose? PULEASE. We picked our own sites. I say plural because there was more than one. The locations that WE selected were fabulous. In fact, as Bill has pointed out and we agree 100 % is that we did this job SO well, there was never a doubt in our minds that WE were the ones succeeding and throwing all of our money into Hewitts hands. If we had not joined LIBERTY TAX FRANCHISE, we would have been quite well off today. But no. As a result of joining this dumb ass company so many years ago as an early zee, we have lost thousands upon thousands and had our lives ruined in several ways.
STAY AWAY FROM JOINING THIS FRANCHISE. THEY ARE COLD HEARTED, CON-ARTISTS….SHARKS WHO TAKE ALL OF YOUR MONEY AND THEN SPIT YOU OUT. THERE IS NOT ONE REDEEMING QUALITY ABOUT THIS PARTICULAR FRANCHISE. I DON’T KNOW ABOUT OTHER FRANCHISES, BUT I WILL NEVER PLUNK ANY MONEY DOWN FOR A FRANCHISE AGAIN AND I AM TELLING EVERYONE WE KNOW TO STAY AWAY.
Bill, thanks for the info. All of us aren’t free to share our identities – that doesn’t mean we’re not being honest. (Nor does it mean that we are). This is obviously a website that makes money from unhappy franchisees – and they do stoke the flames when they can. You may or may not be aware they also pay a small number of posters to keep posting. For the longest time this board rallied around a DOJ investigation that I looked into and found was real. But the investigation seems to have disappeared, which would lead one to believe that the DOJ put a lot of effort into finding something wrong and they came up with nothing…..perhaps it lead to the SEC requiring a restatement of financials for a financial policy that was always fully disclosed and had been heavily reviewed and accepted as appropriate in the past, I don’t know. Those restatements don’t affect franchisees in any way – but I guess would be a concern for stockholders.
If I had invested in a franchise and lost all my money, whether through the fault of an unscrupulous franchisor (As many assert here) or by my own incompetence and lack of business acumen, in either case I would also most likely be upset and it would be good to vent and even better if I thought I was hurting that franchisor. I get it. But much on this board is misinformation – perhaps you see that as well.
For those looking to buy a franchise from Liberty, ask tough questions of the CEO and the successful zees you will be introduced to. Then walk into offices and talk face to face with the owner. Then call a large number of former zees and ask them tough questions also – you will get a list of names and contact numbers from Liberty so that you can do this.
Do the same if you are considering buying into Subway. Or McDonalds. Or HRBLock. Or if you are considering investing in any business – do your own due diligence.
Everyone is in for the money. The market is full of tax firms. This one is pushing more cost to franchisees. This will end up being an expensive hobby since you will only profit pocket change.
WE DID OUR DUE DILIGENCE WAY BACK WHEN WHEN THIS COMPANY WAS JUST STARTING OUT. THERE WAS A LOT OF FLUFF AND NOT A LOT OF FACTS. WE PERSONALLY HAVE A COMBINED TAX AND ACCOUNTING AND BUSINESS EXPERIENCE OF 30+ YEARS, SO DON’T EVER ASSUME IT’S BECAUSE OF A LACK OF “BUSINESS ACUMEN”. WE ALSO CAME INTO THIS FRANCHISE WITH WELL OVER A HUNDRED OF OUR OWN CLIENTS THAT LIBERTY TRIED TO GRAB AS SOON AS OUR 5 YEAR CONTRACT WAS OVER.
THEY GRAB ANYTHING THAT ISN’T NAILED DOWN. THE ONLY ONE STOKING THE FLAMES IS YOU (AND YOUR ALIAS GUEST 1974)
THE DOJ IS CONTINUING IT’S INVESTIGATION INTO JTH. JUST BECAUSE IT’S “QUIET” DOES NOT MEAN THAT NO ONE IS WORKING TO PUT HIM AWAY.
THE REASON WHY I AM AN UNHAPPY FRANCHISE AND POST ON HERE IS QUITE SIMPLE: THIS IS A FRANCHISE THAT TAKES YOUR MONEY AND GIVES YOU NOTHING IN RETURN. YOU LEAVE AFTER 5 YEARS AND GET SUED. THAT’S THE BEGINNING. THEY TOOK ONE OF MY TERRITORIES AND RE-SOLD IT TO SOME POOR SOUL FOR SEVERAL TIMES WHAT IT’S WORTH.
MOST FRANCHISES THAT ARE NOT “PREDATORY” TEACH AND TRAIN YOU. THIS COMPANY HAS NO MAGIC FORMULA. THEY HAVE BEEN CAUGHT WITH SPYWARE IN THEIR SOFTWARE. JTH HAS BOUGHT HIS ENTREPRENEUR OF THE YEAR AWARDS. IF HE WERE NEARBY, I WOULD SPIT IN HIS FACE. HE’S BEEN CAUGHT WITH A MILLION WOMEN AND WHAT HE’S DOING RIGHT NOW IS SELLING A PIPE DREAM. ITS ALL FRAUD AND HE WILL BE INVESTIGATED AND FOUND GUILTY.
I HAVE A PROBLEM WITH THIS PARTICULAR FRANCHISE. AND I WILL MAKE SURE I NEVER GET INVOLVED WITH ANOTHER FRANCHISE TO COMPARE ONE FOR THE OTHER. AS FAR AS I’M CONCERNED, THIS ONE THAT WE CHOSE TO GET INVOLVED WITH SO MANY YEARS AGO REEKS OF FRAUD, CORRUPTNESS AND RACKETEERING.
SOMEDAY MY “STORY” WILL COME OUT AND THIS FORUM WILL SEE HOW MUCH TRUTH THERE IS. JTH WILL FRY IN HELL.
I agree 100% with what has been said here on this site. I had a site selector, if you could call him that, that had no clue as to the demographics of my territory. He came from somewhere up north and admitted that this was his first trip out of the east.
What Liberty does not provide you with is a list of those of us franchisees that have left. They are quite good at selecting those that are not disgruntled as yet. If you can’t pay attention to what is said here, you deserve to be bilked by comrade Hewitt.
It does not matter if there are 6 or 6000 people posting on this site. The mere fact that there is this many posts should be an indication of how badly franchisees are treated by this company. Look into the lawsuits as well in VA. Most franchisers don’t have this many cases going on. Its expensive to run a legal department. I guess that’s where my franchise fees went.
^^^AMEN, Scammed1. If this is such a legitimate company, maybe someone should ask why John T Hewitt bought an offshore bank??? Hmmm. Looks like he’s going to leave his stockholders high and dry to run this company.
Good point about how many franchisees have left and their reasons for leaving and how many were sued for one reason or another. I betcha a lot more than we think. Find out how much LTS pays for marketing materials and how much they charge the franchisee? In many cases it’s marked up 3000 % or more. FACT.
As far as I’m concerned, and others will agree, this franchise has NO REDEEMING qualities or values. STAY AWAY, please!!
I am sure the DOJ is still looking into LTS JTH or whatever name or acronym his business is going by. Just because there is no rah, rah does not mean they are not quietly working behind the scenes.
I agree with SanfranDan, he is most likely piling money in off shore accounts. It will be interesting to see if we make it to the next tax season. I would not be surprised if this place collapsed prior to tax season. I am ready either way. It makes no difference with my business if they don’t make it. I will just chug along and make more money.
I wish I was getting money for posting on this site, because that would be more money than I am making with LTS. Maybe Quitbs, will give the poorhouse fund since someone is paying money on this website. If that was the case and the DOJ was involved, there would be a ton of laws broken.
SanFran and all the others: I hope soon that they catch up with the knuckleheads at Liberty Tax. They are the biggest group of con artists to walk the earth.
Bill:
You’ve mentioned Senator Warren (?) a few times. Who is he? What state? Is he a champion on franchises? If so, tell him about this website and maybe he’ll look into it……..usually those senators are so busy, though it could be worth a try.
But JTH has an entire legal dept. just waiting to shoot down anyone that comes close to him….you listen to JTH on news channels during tax season and he sounds like a broken record and avoids the news reporters questions altogether. They press him and he doesn’t flinch…..he’s been ripping people off for over 40 years, he knows the drill.
^^^Yes, I’m glad to hear that I’m not the only one that thinks he’s a knucklehead, but I wouldn’t be quite that nice about it. :(
SanFran – 30+ years and you had over 100 clients? I think you’re making my point. I’m sorry things didn’t work out for you.
…..and I guess you didn’t look through your disclosure document before becoming a franchisee – because it includes a list of ALL current and former franchisees and their last known contact information. All franchisors provide this.
OK – I’ve had my say for a while – so go ahead and bash for a while without the fear of someone replying with common sense.
The discussion on this board about franchise laws – I do find that interesting – I was disappointed that recent efforts in CA fell flat.
I was a Corporate Tax professional, you bozo, in some of the best Corporations in this country. I had a few Individual clients I prepared taxes for as a part time gig.
Yeah, you’ve had your say for awhile…………bye bye!
SanFranDan,
Please cut the prozac’s in half….. best corporations in this country??? Please….
^^^^^HA, HA, HA, HA, HA, HA!!!!!
LTS is in the process of taking us to court. It took a long time to review and analyise all the court documents but we found the error.
Now we are getting ready to counter sue. Filing FRAUD-MISREPRESTING DATA-RACKERTEERING charges… etc
This must be the biggest error LTS made and right now their team of Lawyers have their collective head tucked so far up their back side that they can see the errors..
Too bad all you that have been had by LTS wont be at the trial and watch the group of lawyers cry….
Qctibs, guest 1974 and guest 4444:
Look, you morons. Just like Bill, I started posting on this website NOT to poke fun at anyone else, but to give factual information about this franchise. And to warn the general public looking into this franchise my opinion as to why they should stay away. As does anyone else posting here and giving their opinions.
I have every right to post whatever I want here about this franchise, as does Bill and anyone else. Including the “three” of you.
I don’t give a rat’s ass what you say about me. I can take it. But when you poke fun at me because I give factual information about my personal experience and the experience of other ex-franchisees, that’s where I draw the line.
No matter who I have talked to in the many years I was associated with this god awful franchise and the many years since my contract ended and I did not renew, I get an overwhelming amount of people who would NEVER go to that franchise for the preparation of their tax returns, let alone buy into it.
That’s the bottom line. They are the most unprofessional bunch I’ve ever encountered. But more than that, they are not ethical one iota. They cheat, they rip off, they scam……….there are not enough adjectives to describe what skunks they really are. NO ONE should plunk down their hard earned money and be treated in such a manner. No matter what dept. I’ve dealt with, they are all clueless. And what they are not clueless about, they steal, lie and cheat. Those are facts.
Yes, I have worked for some of the top Corporations in this country. I have very carefully hid my identity on purpose because of idiots like you. You will never know the real truth, now, will you?
Again, my point is this: Anyone wanting to buy into the Liberty Tax system should back away and find another franchise to buy into. This one reeks of crooks, liars, cheaters, racketeers and not one honest person in the bunch. Over the 5 years of my contract I got to know many people in that Corporate office. Most of Corporate is made up of Lawyers anyway.
And if you think ADMIN here is paying me to make these posts, you’ve got to be joking. They are as ethical as they can be, given the circumstances of this terrible judicial system we have in this country and the disgusting pro-franchise tone so many states have. Yeah, it all comes down to money. Doesn’t everything?
I have absolutely no interest in word games with you “three”. I will keep stating facts and warning the general public to stay away from this so-called franchise. You just stay away. Period.
Wow, SanFran! You are right about how crooked this franchise is. I can’t believe they are still in business. I see advertising by them to train preparers off the street in 1-6 weeks. Really? I know the ones that attended my classes had probably come out of the LSD testing labs and were still tripping. Probably Like Hewitt. The three posters that San Fran refers to are probably one and the same. We’ll just call them the three stooges. By the way, it is highly likely these three are employed by Liberty. Won’t surprise me since Hewitt has stooped to these types of tactics before.
Speaking of training, is Hewitt still teaching franchisees how to maximize the EIC?Are they training clowns to dress up in Liberty costumes to sell dope? Are you still being trained to barge into offices in costumes during the workday? That should help increase productivity.
Points in this site are well taken and should continue to be a part of due diligence for anybody looking into this franchise.
^^Yeah, thanks, TexasTee and Franchizee too. It’s hard to imagine a more unprofessional company. I’m patiently waiting for the real truth to come out and when it does, people like the above “three” idiots will eat their words.
Again, anyone that is reading this forum to potentially buy a Liberty Tax Service franchise–don’t. It’s not worth the time, money and aggravation. They are out for only one thing, your money. And they find a way to coax it out of you never to be seen again and nothing to show for it.
Yeah, I agree^^ with training legitimate Tax Preparers in less than 6 weeks. What a joke like the rest of the company. Do your research and see how many Lawsuits are pending and you will hopefully back away and save your $$.
I would expect about 1000 new offices between new Wal Mart Locations, acquisitions of Mom & Pops and new franchisees. Meanwhile HR block continues to close offices (Wal Mart, Etc) and Jackson Hewitt is not longer even worth talking about. Liberty will be Number 2 after this tax season and well on pace to be No. 1 tax preparation company in the US by 2020
HR Block ended its relationship with Wal-mart a number of years ago for the simple economic reason that most of them weren’t profitable. Their preparers were paid on commission, and they had to beg them to work there, pay them more, and even tried forcing them to take turns working there. No one wanted to go because they couldn’t make any money. When Block got back into Wal-mart, I believe that those stores were offered to franchisees (which was kind of against the pattern they were into at the time of buying territories back from their zees and not renewing contracts so more offices would come back under corporate ownership). I guess those zees didn’t make any money either and are now getting out, and corporate doesn’t want to keep them for itself. I think the only reason they went back in is to keep Liberty and JH out, but now they realize they can hurt their competitors more by letting them have at these money-losing operations.
In some rural areas where shopping areas are 40 or 50 miles apart, tax kiosks in Wal-mart stores have a chance of serving enough clients to pay the bills. In metro areas where there are lots of Wal-marts, JHs, HRBs, and independents, I wonder. I’d definitely look into that before I purchased a territory that would include a Wal-mart office. Don’t buy the hype that each Wal-mart store has 20k customers or however many walk through their doors each week, many of them more than once. How many people go shopping with their W2 form on them? You can serve the Wal-mart employees too, lots of them, many of whom make so little they will file expensive EITC returns and perhaps be eligible for the new health insurance credit. If those employees were flocking to the kiosks, I don’t think HRB would have left.
When all is said and done the company will show significant growth. This website can help those who want more information about what to expect. Watch your costs and get help if you are not good at figuring it out. The company will grow but don’t go broke as a franchisee funding it.
Those of us who post on this website and offer a negative opinion of JTH/Liberty do it because of our own experience with this company. As most of us have stated our number one goal is to provide good factual information to potential franchisees to help/persuade them not to invest with this company. There are others on this board who’s sole purpose, either for their own reasons or sponsored by JTH/Liberty, is to cast doubt on our knowledge or integrity.
Tomorrow this company will issue restated financial statements because the SEC found that the company material misstated it’s revenue in it’s 2011 & 2012. This is just more proof of the lack of integrity in this company. Of course the pro-liberty people will question why the IPO was accepted by the SEC or blame it on KPMG the accounting firm who signed off on the audit. But the real responsibility for the accuracy of the financial statements is the responsibility of Management and specifically with John Hewitt as CEO and Mark Baumgardner CFO.
The company and it’s supporters will make the argument that revenue recognition can be hard to define and a lot of company’s make this mistake. However, keep in mind that the SEC and Financial Accounting Standard Boards have addressed revenue recognition for franchisors in FASB 45. Also, remember that this is John Hewitt 2nd company that he started franchising and the second company that he was involved with that had an IPO so these arguments don’t hold any water.
A foot note to the above, disparaging and trying to lay blame on someone else is how Liberty always responded to franchisees when their stores where not producing. Just more confirmation of what former franchisees are saying about this company.
More bad news for Liberty Tax, another Liberty franchisee is being charged for falsifying tax returns. This likely the result from the franchisee being pressured to meet numbers, or lack of training on Liberty’s HQ part discouraging falsifying tax returns. Of course Liberty HQ is going to say this was another owner going rouge.
This seems to be a repeated pattern in the southern states.
The United States has asked a federal court in Atlanta, to halt a company which has operated a Liberty Tax Service office, from preparing federal income tax returns for others. The action is being taken against Joan Leger, whose company The 1084 Tax Group, operates under the Liberty name.
Leger’s company has prepared almost 6,000 tax returns, according to the Department of Justice, which estimates the United States has lost more than $2 million in taxes as the result of her actions. Those actions allegedly include using EFINs of relatives in order to file returns.
Leger, a resident of Stone Mountain, Ga., is accused of creating or inflating deductions, wages, income, expenses or credits to boost the amount of earned income tax credits clients receive. She also allegedly fabricated losses for non-existent businesses or businesses not owned and operated by the taxpayer, falsely claiming unreimbursed business expenses and falsely claiming the educational tax credit.
The federal complaint indicates Leger has more than one preparation business and the Internet-based Manta company listing and search service shows her as owner of J&Company Tax Service, based in Stone Mountain.
Looks to me to be a pattern. This is what Liberty has taught its franchisees: How to falsify returns. If I were a current zee, I’d be very nervous about now. I also don’t think is confined to the south in the Liberty system. I seem to remember an issue of this in Michigan. Hmmmmmm………..
Highlights of Liberty’s press conference today
“Additionally, since late August, the Company has been unable to renew its franchise disclosure documents with updated financial statements and is therefore unable to sell franchises until its annual financial statements are completed and franchise disclosure documents are up-to-date, which is expected to occur in October.”
“As a result of the restatement, the Company estimates that non-recurring, pre-tax costs incurred during fiscal year 2014 attributable to the restatement will be in the range of $700,000 – $850,000.”
Add the above to John Hewitt’s resume. If he wasn’t the majority shareholder he would most likely be bounced.
Nc hillbilly,
Did you hear about the Marion, nc franchisee?
Wow, he didn’t just get busted
SBI, FBI, treasury cops, county cops….the whole works surrounded his house.
He was into some other stuff than just frauding the tax returns but everyone in town knew who he was.
Liberty is ruined there and how in the world liberty approved him for a franchise I have no idea. His big thing was doing payroll for people and never sending the wit holdings in
Looks like the restatement was not a big deal. Still very profitable and growing. Liberty now has 4500 offices nationwide…. I guess a lot of disappointed people on here.
How many ex franchisees after leaving Liberty, get into hassles with the IRS? It seems that the IRS investigates the practices of the zees AFTER they leave the Liberty system. We know that Liberty teaches the zees how to make suspect tax returns to maximize the EIC, but do we also know that Hewitt and company also tip off the IRS to their “rogue” practices? Not everyone who has been a zee that left the system can be a rogue. The world according to Hewitt says they are. What a scumbag.
Greg:
Liberty accepts anyone to be a franchisee that has a wallet. You should know that! I am not at all surprised.
Scammed1: I have heard that one too. I am not surprised with that one either. Probably why the DOJ is doing their investigation. They are HUGE scumbags.
Bill, NCHillbilly, SaraEA: Love the info. you gather. Keep it coming! :)
Stillfighting: Good luck! Keep us posted!
I think the main thing that Liberty and franchises in general do is instill fear in the people that sign up and then leave. The best thing that has ever happened for ex-franchises who want to have a way of sharing their experiences and grievances is the invention of the internet and certainly websites like this one.
I began as a franchisee so long ago but I remember distinctly the fear that they instilled in me & my business partner. Don’t do this…this….or this…..or this…. It was also hyped by those stupid conventions that played into our emotions thinking we were a part of a great organization. Being wined & dined………lots of people fall for that crap. It’s all a huge marketing ploy to get you to part with your money.
Bill: It sounds like you & I had similar experiences where we were too unsure about starting on our own and had this franchise as our key to “our own businesses”. Yikes. What an expensive lesson to learn. After all these years I am still paying off lawyers bills, etc.
But I am away from them. They seem almost cult-like. People who are thinking of joining the Liberty Tax Franchise………..please don’t. I want to save you money, time, grief, aggravation and money. Did I mention money??
This thread should be enough for you to decide to back away and think of other ways to earn a living. If you go for it, good luck. You will be forever changed and in a negative way. It will impact your life for years & years to come. Trust me on this. It is not a gamble worth taking. Back away from the contract…..
One positive about SEC not approving the financials from LTS, is they have not been able to sell any franchises since. What a silver lining. This gave people time to see sites like this and they could not sign on the dotted line so fast, but had time to have a possible buyer’s remorse set in before buying.
It also seems they have not been able to renew contract’s either. Listened to John this past week’s call and it was all about the tax school. Ya, let’s teach people to do their own taxes, so they can take business from us. What dumb arse. He might of stated something about complying with the feds, but I was on the phone with a client, so it went in one ear and out the other.
One thing about Liberty College, it is very low key on guerilla marketing to the tune of not going over the top and basically trying to stay within “local laws”.
So, one thing out of this, they may, just may have to comply and straighten up if they want to stay in business. Also John makes about $649K a year in salary. The top people make almost $1.2 million in salary. So now we know where our royalties are mainly going. This came off the restated financials submitted to SEC.
One last thing, in year 2012, LTS owned 75 company stores, but it increased to 234 in year 2013. It is nice they are finally public, so a franchisee can see where money is going and what is really going on.
Franchizee:
The fact that the company stores have more than tripled in one year should be a huge red flag. To me a company store is when they move in because they can’t find some other buyer (translated to “loser with a wallet”) to step in where a bought territory existed. Gee, wonder why? :(
If a potential franchisee wants to see how a store operates…….look not at the company stores, which are probably pristine in their presentations, but rather in lots of cities and towns around the country……asking “normal, everyday” franchisees the real tough questions. Not at the company store people where you would never get an honest answer.
Again, Liberty makes it so tough these days for anyone to make any money. They have become sooooo much stricter than when I was a franchisee and it was tough then too. I can’t even imagine working there today with the noose tightened. You don’t dot your “i” or cross your “t” and you get hit with “notices to cure” for EVERYTHING. Honestly, I would have been so much better off on my own then EVER getting involved with this particular franchise.
It is a losing proposition from Day 1. Lose your money, your rights, your freedom, your ability to say or do anything on your own without severe reprocussions. To prospective franchisees………..again, look elsewhere. This company sucks and is just not worth it. Period.
@SanFran – It is great to have them public. They can’t shove their “culture” and cr@ppola down anyone’s throats, unless they live through the eye’s of John John.
Oh, the “recession proof” scam that John and his AD’s state, is a falsehood. It fails even more than other businesses because we have a shorter payment season than ever.
Company stores triple as many Wal-Mart that were available were in unsold territories so corporate decided that it would set up and then sell the territories later. What a bunch of pear shaped losers on this site.
For anyone with tax knowledge who wants to start a tax practice ask yourself why
you would be better off with a tax franchise vs. going it on your own. Some immediate answers is “brand recognition” and advertising. But with Liberty they don’t do any “national advertising” and outside of tax nerds like ourselves it has been my observation that most people when asked to name a tax retailer would say HR Block or Jackson Hewitt not Liberty Tax Service
Do a cost benefit analysis. Liberty will give you estimated start up cost. They do list the $40,000.00 franchise fee but you need to include the minimum $8,000.00 when doing your analysis. You should change rent to a more realistic number for your area, you can leave payroll but most franchises have much higher payroll then liberty estimates. When projecting your gross fees for the year don’t forget to factor in the 5% advertising fee that liberty charges. On the go it alone side you would need to account for software $1,500 to $2,000. The hard question to answer is how many more returns will you have an opportunity to do because you are a Liberty Franchisee vs. Going out on your own. In my analysis Liberty brand would have to drive more than a 150 returns at $150.00 a return for you to cover the minimum franchise fee, the 5% advertising and a return of 20% on your $40,000 franchise fee.
Bill,
I think you would easily do 150 more returns because of the name brand of Liberty Tax. Also, i guarantee you would be able to charge 20% more by being an national company such as Liberty Tax than Bill’s Tax Services. Your analysis is way off. I agree with Guest1974 about most guys on here being losers.
I am sure 1/3 of franchisees are successful. 1/3 are doing ok and the bottom 1/3 not so good. The bottom 1% is either writing on here or reading and believing Bill, SanFran and others on here.
I sound like a broken record. Listen to what I’m saying:
NO ONE needs this franchise. I did EVERYTHING and then handed over all my hard earned money to them. For NOTHING. They did not offer me anything that I couldn’t do myself and save a ton of money in the fees.
At that time I even paid for yellow pages advertising. They offered NOTHING in return for 19% royalty! I mean NOTHING. The software was bugged and had spyware on it. I can prove that. The advertising was all done by me and my business partner. The clients were ALL because of my marketing efforts. Back then Liberty was a tiny little nothing of a company and right now the word on the street is H&R Block………..not Liberty. People laugh when they refer to the clowns who dress up and parade around. SO Unprofessional.
Now they have free tax returns done in most cities and towns for seniors and veterans. Liberty is going after the bottom of the heap salary-wise and are instructing their franchisees to maximize their EIC. They fraudulently encourage franchisees to go after the EIC clients. Because RAL is gone, ERC is a rip-off, then the EIC is the only way to increase client refunds by being “value added”.
These guys are in the business of selling territories, not quality tax return work.
Stugotz: I was hopeing one or more of you would respond with your usual generalizations supported by no facts and then insults. This is part of Liberty culture. When challenged attack and degrade. Unfortunately the company is now public and their financials tell a different store about the performance of their franchisees. To support that fact just look at operating loans that were issued in 2012 and divided that by location and it came to over $16,000.00 a store. At 12% interest that is a good deal for the company but not for those franchisees who need to borrow from them to survey till next year,
Buyer Beware!!!!
I don’t think the publicity about the dishonest franchisee in the Atlanta area spells doom for Liberty. This kind of thing unfortunately happens to all of the chains, the mom and pops, and even to CPA firms. Owners get greedy and steal clients’ identities, or hate the federal gov’t so much they help people cheat it out of taxes due.
The important thing is how the company handles it. Block, for example, immediately shuts down the villain and makes the clients whole and comfortable again. They can do it because they’re a big company with a lot of money and a legacy reputation to protect. I’m not sure how JH and Liberty deal with these transgressions on the local level. I disagree with Scammed’s insinuation that Liberty might just turn in its zees after they’ve left the company umbrella. Nobody wants that kind of publicity.
It’s good to see you are honest about the Atlanta crook. I read the filing. She operated for years before she worked for liberty. She worked for liberty under someone else and was not the franchisee. There is serious dishonesty in the tax business. She was probably busted because joined a company and her returns set a pattern. I did notice that her returns dropped 50% when she joined the company. It’s one thing to be unhappy but it’s not true that they teach dishonesty and fraud.
You people are mistaken about Liberty turning in its ex franchisees. This was the problem a friend of mine had within a year after she left the franchise. The facts are this: The IRS knocked on her door and seized her files. She told me that the IRS indicated that she was ratted on by her ex franchise. This is the true culture within Liberty tax. She also knew a few investigators in the IRS and they unofficially confirmed what was told to her by the IRS Agent. She even went as far as to explicitly tell the IRS that this was taught to her by Liberty and they said that her chances of getting caught were slim to none. The after hours parties that the instructors held were where she learned , after a nod and a wink, the ways to create a maximum EIC refund.. I cannot speak for the Atlanta franchisee but I can understand that she could have been mislead. Don’t be so naive.
Scammed, please explain WHY Liberty would turn in its ex-franchisees. If they actually trained people to be dishonest, it would only point the finger at them. And if they didn’t provide that type of training (or did but believed it would stay under the radar), why would they want that type of publicity? Headlines like, “Liberty tax preparer charged with fraud” can damage a company’s reputation, particularly in the local area where the preparer was based.
No point in it. IRS would not discuss either.
This is an absolutely true story. I don’t know the exact circumstances of her departure, but I know this happened. Look around the country to see how many “headlines” are occurring with the same theme. If they are no longer a franchisee, then maybe Liberty’s name never appears in the headlines. It’s much easier for the IRS to go after “small” targets such as individual people than it would be to go after big companies.