photo by Phil
From the DC Office of the Attorney General:
“AG Racine today filed a lawsuit against Liberty Tax, the third largest tax preparation service in the U.S., for misleading and secretly increasing the cost of tax preparation for thousands of DC taxpayers.
The Office of the Attorney General (OAG) alleges that Liberty Tax aggressively markets its services to low-income residents by offering them $50 in cash “just for filing,” but then secretly increases the cost of tax preparation for individuals who accept the cash payment. In the suit, OAG asserts that Liberty Tax’s deceptive advertising and predatory pricing practices harm vulnerable consumers and violate the District’s consumer protection laws. OAG’s lawsuit seeks a court order requiring Liberty Tax to provide accurate and truthful information, provide monetary relief to thousands of harmed District consumers, and pay civil penalties.
“We filed this lawsuit to stop Liberty Tax from illegally preying on DC’s most vulnerable low-income residents. Now is the time for Liberty Tax to be held accountable for persistently and fraudulently tricking D.C. residents into overpaying for tax preparation,” said AG Racine. “Misleading consumers is illegal, and we won’t allow businesses to profit by cheating District residents. We also want to inform DC tax-filers of numerous resources that provide tax assistance for free–with volunteers trained and certified by the Internal Revenue Service. These free resources assist low-income residents, seniors, people with disabilities, and people with limited English proficiency with preparing their taxes each year.”
Liberty Tax is the third largest tax preparation company in the United States. It offers tax preparation to consumers through franchisees, which run individual brick-and-mortar locations. Liberty Tax currently has four locations in the District: 3127 MLK Jr. Ave, SE. (Ward 8), 1629 Benning Rd NE (Ward 7); 3905 Benning Rd. NE (Ward 7); and 1002 H Street NE (Ward 6).
To lure consumers, Liberty Tax aggressively promotes immediate handouts of $50 “just for filing with Liberty Tax” early in tax season (before the end of February). Liberty Tax calls this “cash in a flash” and portrays it as a “perk” with no downside. The company heavily features “cash in a flash” on its own website, in online videos, and by stationing sign-wavers with signs such as “GET $50 NOW” outside of its stores–which are primarily located in lower-income neighborhoods.
OAG alleges that since 2015, Liberty Tax has violated the District’s Consumer Protection Procedures Act and harmed District consumers by:
- Secretly increasing prices for consumers who receive “cash in a flash”: Liberty Tax misleadingly offers consumers $50 in cash “just for filing” their taxes–but does not disclose that consumers who accept the cash will be charged more than those who do not. On average (depending on which forms are filed), consumers who accept the $50 offered by Liberty Tax are then charged anywhere from $67 to $200 more for tax prep services than consumers who do not participate in the “cash in a flash” promotion.
- Falsely advertising cash payments with “no catch”: Liberty Tax misled consumers by claiming that the $50 upfront was a “perk” for doing business with the company and by claiming the payments were offered with “no catch.” In fact, the catch was that Liberty Tax was increasing prices for consumers who accepted upfront cash payments, more than wiping out the benefit of getting the cash.
- Overcharging thousands of DC consumers: Liberty Tax provided over 12,000 cash payments to District consumers as part of its “cash in a flash” promotion from 2015 to 2021–increasing the prices thousands of DC consumers paid for tax prep without their knowledge.
- Exploiting the most vulnerable low-income tax filers: Liberty Tax aggressively advertises immediate cash payments to lure customers, including by advertising on the street in the lower-income DC neighborhoods where its stores are located. And, on average, it increases charges the most for its most disadvantaged consumers who accept these cash payments. Liberty tax charged individuals who file simple returns (with only a 1040 and a W2) an average of $75 more if they accepted the upfront $50 in cash. However, Liberty Tax charged individuals who received the Earned Income Tax Credit (EITC)–a credit aimed at filers with the lowest-paying jobs–an average of $93 to over $200 more than EITC recipients who did not accept the $50 cash.
A copy of the District’s complaint against Liberty Tax is available here.
OAG is seeking a court order to force Liberty Tax to stop misleading consumers, pay restitution to District consumers who were harmed, and pay civil penalties for violating the District’s consumer protection laws.
This matter is being handled by Wendy Weinberg, Senior Assistant Attorney General, and Adam Teitelbaum, Director of the Office of Consumer Protection.
Free Tax Assistance for DC Residents
Every year during tax season, between February and April, community-based organizations working under the IRS Volunteer Income Tax Assistance (VITA) program offer free tax preparation services to District residents at multiple locations across DC, including libraries and recreation centers. The list of current DC sites where this free service is offered will be updated in the coming months. Seniors also can receive free tax preparation services through AARP’s Tax-Aide program, which also will be updating its lists of locations.
How to Report Unfair Business Practices
To report scams, fraud, or unfair business practices, contact OAG’s Office of Consumer Protection by calling (202) 442-9828, emailing consumer.protection@
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We are pleased to welcome our great opera stars to the company!
Juliette Di Bello, Manuela Tomasz Korossy, Kristin Sampson from the NY City Opera Company, and Kevin Short of the Metropolitan Opera.
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Get your tickets now!
Under the Gracious Patronage of H.E. Petra Schneebauer, Ambassador of Austria
Julien Benichou, Conductor
Kevin Short as Figaro
Manna K. Jones as Susanna
Stephen Powell as Count Almaviva
Laquita Mitchell as Contessa
Anna Kelly as Cherubino
Maggie Polglaze as Barbarina
John Gibney as Bartolo
Leah Heater as Marcellina
Christopher Jon Hartung as Antonio & Don Curzio
Narration provided by Robin Phillips
Embassy of Austria
3524 International Court NW
Washington, DC 20008
Doors Open/Cocktails 6:30 pm
Performance including Intermission 7:15 pm
Wine Reception with Heavy Hors d’oeuvres 9:15 to 10:30 pm
Box Seats $250
Orchestra Reserved $150
Seniors (over 65 years old) Unreserved $80 [sold out]
Students with ID $50
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