Published Feb. 10, 2016
The U.S. Justice Department has filed a lawsuit seeking to shut down the franchisee of three Liberty Tax Service stores in the Columbia area.
The lawsuit, filed in U.S. District Court, charges that the three stores “deliberately prepare false federal income tax returns in order to increase their customers’ refunds.”
The United States’ complaint asks the court to “permanently bar the alleged franchisee” for all three locations, Christopher Paul Haynes of Irmo, 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 suit alleges that Haynes’s employees included a bogus “arts and crafts” business on one customer’s tax return and a bogus “hair care” businesses on another’s. In each case, according to the complaint, the false statements purported to allow the customer to qualify for a larger Earned Income Tax Credit and receive inflated tax refunds from the Internal Revenue Service (IRS), according to a Justice Department press release.
The lawsuit says 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.
The lawsuit involves offices at 2700 Broad River Road, 4058 W. Beltline Blvd., and 599 St. Andrews Road.