Business

Feds permanently shut a Columbia-area Liberty Tax Service franchise

A Columbia area Liberty Tax Service franchise owner has been permanently barred from preparing federal tax returns for others, the U.S. Justice Department said Thursday.

A federal court issued a civil injunction prohibiting Christopher Paul Haynes from acting as a federal tax return preparer and from supervising, managing or employing federal tax return preparers following an eight-month investigation.

Haynes, of Irmo, operated Liberty Tax Service offices located at 2700 Broad River Road, 4058 West Beltline Road and 599 St. Andrews Road.

The order issued Thursday also requires Haynes to provide the U.S. government with a list of all customers for whom Haynes or his businesses prepared a tax return for any tax year from 2010 to the present. The Justice Department said Haynes agreed to the injunction.

On Feb. 8, the government sued Haynes alleging that he and his employees prepared false federal income tax returns at his three Liberty Tax Service franchises in order to increase customers’ refunds.

The government's complaint said Haynes and his employees prepared tax returns that included false or inflated income and expenses on Schedule C (Profit or Loss From Business), bogus dependents, false filing statuses and improper unreimbursed employee business expenses.

The three businesses filed more than 9,700 federal income tax returns since 2010, the February suit alleged, with the “vast majority” — 92 percent or more of returns filed — claiming a refund. Many of the claims were bogus, the Justice Department said.

Google lists at least 20 Liberty Tax Service franchises in the Columbia area, but only three were the focus of the February court filings and U.S. District Court judgement.

The order permanently prohibits Haynes from profiting from any business engaged in tax-return preparation except by selling the three tax preparation offices he owns in Columbia and a Liberty Tax Service affiliation in Chattanooga, Tenn., within 153 days of the judgement.

The IRS said it examined 202 of the federal income tax returns prepared by Haynes’s employees for the tax years 2010 through 2013, the lawsuit states, and 96 percent of them contained "deficiencies that required IRS adjustments." According to IRS calculations, each deficiency amounted to approximately $3,834 per tax return. The total cost to the federal government from the 202 returns checked was more than $700,000, the lawsuit said. The total cost could be "much more."

The lawsuit says Haynes, who has owned the three Columbia Liberty Tax franchises since 2008, had no tax return preparation experience or training prior to becoming a Liberty Tax franchise owner in 2005.

The Internal Revenue Service said return preparer fraud is one of its Dirty Dozen Tax Scams for 2016. The IRS has some tips on its website for choosing a tax preparer and has launched a free directory of federal tax preparers.

The Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers in the past decade, the agency said. Information about these cases is available on the Justice Department’s website.

Roddie Burris: 803-771-8398

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