Justice Department Sues to Permanently Shut Down 3 Columbia-Area Liberty Tax Service Franchises

COLUMBIA, S.C. (WOLO) — Three Columbia-area, South Carolina Liberty Tax Service franchises are accused of deliberately preparing false federal income tax returns in order to increase their customers’ refunds, according to a civil lawsuit filed Tuesday by the Justice Department.

The United States’ complaint asks the U.S. District Court for the District of South Carolina to permanently bar the alleged franchisee for all three locations, Christopher Paul Haynes of Irmo, South Carolina, from preparing federal tax returns for others.

According to the suit, Haynes and his employees prepare tax returns that include misstatements such as false or inflated Schedule C (Profit or Loss From Business) income and expenses, bogus dependents, false filing statuses and improper unreimbursed employee business expenses.

The lawsuit states that Haynes’s Liberty Tax Service offices have prepared more than 9,700 federal income tax returns since 2010.  Based on adjustments the IRS has made to tax returns prepared and filed by Haynes’s Liberty Tax Service offices for 2010 to 2013, the average tax deficiency for tax returns audited in connection with the IRS’s investigation of Haynes is $3,834 per tax return, according to the suit.

The complaint also alleges that Haynes does not report to the IRS the wages he pays some of his employees, even though the report is required by law.  According to the complaint, Haynes also fails to withhold and pay over to the IRS federal employment taxes for those same employees.

 

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