Liberty Tax Service has closed 28 of its franchised locations in the New York City area, instructing them to cease preparing and filing tax returns for the remainder of the 2015 tax filing season.
The offices involved were licensed to one franchisee and Liberty took the action after learning that the franchisee operating those offices had its electronic filing privileges suspended by the IRS. Liberty and the IRS did not respond to requests for comment.
The franchisee is reportedly one of Liberty’s largest franchisers and owns approximately 50 Liberty Tax stores across the country preparing tens of thousands of tax returns yearly. The franchisee’s electronic filing identification number, or EFIN, was initially revoked by the Internal Revenue Service before the beginning of tax season, according to a source, but he continued to operate the business in his wife’s name using her EFIN instead.
The franchisee and his wife partner with another married couple who operated over a dozen Liberty Tax stores in California and Nevada, whose EFINs were revoked last March. The stores have reportedly since shut down.
A number of Liberty offices in California were raided and closed down by the IRS and federal agents last Thursday, and their computers were seized as evidence.
The state of Maryland has stopped processing tax returns from 23 of Liberty’s franchisers, according to a spokesperson with the Maryland Comptroller’s office (see
Liberty franchises have experienced problems in other parts of the country as well. The Justice Department shut down three franchises in the Columbia, S.C., area in February and five offices in the Detroit, Mich., area.
