Justice Department Asks Federal Court to Shut Down Detroit-Area Liberty Tax Service Franchisee
The United States filed a complaint asking a federal court in Detroit to permanently bar a Liberty Tax Service franchise owner and his company from preparing federal tax returns for others, the Justice Department announced today. The civil complaint against Craig M. Comer of Royal Oak, Michigan, and his business, Comer Inc., alleges that Comer operates five Liberty Tax Service franchise locations in the Detroit area.
According to the complaint, the defendants prepare income tax returns for customers that fraudulently overstate refunds and claim refundable credits by, among other things, claiming false or inflated Schedule C income and expenses, bogus dependents, false filing statuses, improper education credits and false itemized deductions. Based on audit adjustments the IRS has made to tax returns prepared and filed by the defendants for 2008 to 2013, the defendants’ conduct has cost the U.S. Treasury approximately $4.5 million for those years alone, according to the suit.
The complaint also alleges that in order to increase their fees, the defendants have altered completed tax returns already signed by the customers and forged customers’ signatures on returns. Furthermore, the defendants have added false information to internal Liberty Tax Service documents to give the illusion that the franchises are properly verifying customer information when preparing customers’ tax returns, according to the complaint.
Return preparer fraud is one of the Internal Revenue Service’s (IRS)’s Dirty Dozen Tax Scams. The IRS has some tips on their website for choosing a tax preparer. In the past decade, the Tax Division has obtained injunctions against hundreds of unscrupulous tax preparers. Information about these cases is available on the Justice Department website. An alphabetical listing of persons enjoined from preparing returns and promoting tax schemes can be found on this page. If you believe that one of the enjoined persons or businesses may be violating an injunction, please contact the Tax Division with details.