Maryland Comptroller Peter Franchot has suspended processing electronic and paper tax returns from 11 private preparers at 14 locations due to what his office called “a high volume of questionable returns received.”
The additional suspensions come on the heels of the comptroller’s office halting the processing of returns from 23 Liberty Tax Service franchises (http://www.accountingtoday.com/news/tax-practice/maryland-suspends-liberty-tax-service-franchises-77118-1.html) and three private preparers in the last two weeks.
The new preparers or businesses notified of the action are: Beverly Branch, Loyalty Tax Services, EMACK Tax Service, People Tax Service (a.k.a. Neighborhood Tax Services), AO Tax Services and Hartley Financial Enterprises, all in Baltimore; Tax Rite Services in Baltimore and Middle River, Md.; Deldan Tax and Accounting Services and Tax Relief Solution in Laurel, Md.; REMG Inc. in Windsor Mill, Md.; and Fred Accounting & Tax Services in Washington, D.C.
Suspicious characteristics on returns prompting the determination included business income reported when taxpayers did not own a business; refund amounts requested that were much higher than previous-year returns; inflated or undocumented, or both, business expenses; dependents claimed when taxpayer did not provide required 50 percent support or care; and inflated wages and withholding information.
In a statement, Liberty said it has 102 active offices in Maryland, almost all of which are operated by independent franchisees. Maryland has also advised Liberty that the suspended offices may continue to file state tax returns on paper, which will be reviewed by the state before processing and the suspension does not affect federal return filing in the offices, the company said.
“Liberty Tax has a robust compliance program, and we expect our franchisees to make sure that their offices comply with all federal and state tax requirements,” said Jim Wheaton, Liberty Tax’s chief compliance officer. “Since we learned of Maryland's concerns … we have cooperated with the state, and immediately began significant efforts to look at the offices identified by the state. We are in the midst of our own investigation of the offices involved, and will continue to conduct that investigation aggressively, and support the state’s review, until all questions are resolved.”