Liberty Tax Service is a full-service income tax preparation company. It has more than 2,500 locations across the country where you can get in-person help filing your taxes. It also offers online filing and remote tax support. Its offices are open year-round so you can get help outside of tax season as well. The company offers a variety of plans, including basic and deluxe options for self-employed filers, small business owners and those with more complicated returns.
The District of Columbia’s Office of the Attorney General (OAG) is suing Liberty Tax Service, one of the nation’s largest tax return preparation services, for deceptive advertising and predatory pricing. OAG alleges that Liberty aggressively markets itself to low-income District residents by offering $50 in cash “just for filing,” and that it secretly increases prices for those consumers who accept this upfront payment. These predatory practices harm vulnerable District consumers and violate the District’s consumer protection laws.
According to OAG’s complaint, Liberty advertises this offer of instant cash to disadvantaged consumers, including many residents living in the lower-income DC neighborhoods where the company has its stores, by displaying banners and handing out flyers. On average, consumers who accept the upfront $50 cash payment pay $67 to over $200 more for LIBERTYTAX preparation services than those who do not. In addition, OAG alleges that Liberty secretly increases its prices for consumers who receive the Earned Income Tax Credit (EITC), a federal tax credit aimed at helping those with the lowest wages.
OAG is seeking a court order to require Liberty to refrain from these deceptive practices, provide monetary relief for thousands of harmed District consumers and pay civil penalties. In addition, OAG is requesting that the court order franchisees, who are independently owned and operated by Liberty, to ensure that they are complying with the District’s consumer protection law.
OAG is recommending that people who need help filing their taxes find a different tax preparer. Other options include Jackson Hewitt, which offers free online filing for people with simple returns and a refund advance loan that allows consumers to get their money quickly. Those with more complex returns should consider using a professional who is licensed and certified by the state. They should also be prepared to file a tax return that includes all income sources, even those from retirement accounts. In this way, taxpayers can avoid costly mistakes that could result in late fees and interest charges. In addition, they should be sure to use accurate forms and schedules and keep good records of all tax-related transactions throughout the year. Finally, they should check with the IRS for the most up-to-date information about filing deadlines and other important tax-related issues. This is the best way to avoid paying unnecessary fees and penalties.
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